The Telecom Regulatory Authority's (Trai) new tariff structure for basic telephony services is causing a shortfall of Rs 2.5 bn every month in the Department of Telecommunications (DoT) revenue collections. This has sparked off a fresh debate with DoT demanding that the Trai rework the tariff structure for basic telephony services.
The Trai's new tariff plan was based on the premise that the decline in calling rates would be compensated by the increase in volume of traffic and a hike in rentals. However, the rise in volumes has failed to materialise and this has led to the shortfall, estimated to be Rs 25 bn for the entire year.
The DoT has accepted the tariff cuts for the first year proposed under the three-year plan implemented by the Trai. With revenues falling short, and the government setting ambitious targets for increase in telephone density, DoT is likely to object to implementing the planned cuts for the coming two years. This will again lead to a deadlock between the two bodies, as the government is yet to give complete authority to the DoT.
The Trai's proposals are in line with the global trend of declining telecom rates. To implement these proposals, the authority needs complete autonomy and authority over the telecom sector. Until then, no dramatic improvement in the tariff structure can be expected.
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