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TRAI may review telcos' freedom to fix call rates, moots extension of DTH licences

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The regulator has also proposed bringing
down licence fees for DTH firms to 8 per
cent of the adjusted gross revenue.
Telecom regulator Trai today warned that it
will review service providers' freedom to fix
mobile call and service rates if they increase
tariffs beyond the current base rates.
"I do not expect headlines tariff to change. If
they change, as and when they change, I have
told the industry, then the regulator reserves
its right to go back and look at it again if
forbearance should be continued or not. I am
being open, there is nothing to hide," Trai
Chairman Rahul Khullar said here.
He was responding to a question on the
possible changes in mobile rates following
recent recommendations by the Telecom
Regulatory Authority of India on issues such as
spectrum sharing and lowering of maximum of
rates on leased lines that could lead to cost
saving for mobile operators.
Base rates or headline tariffs are the maximum
call or service rates that a telecom operator
can charge to its customers but normally
companies charge less than these rates.
At present most of the telecom operators have
fixed base rate at 2 paise per second.
The regulator allows free hand to fix telecom
call and service rates as it feels that
competition in the market will keep control on
tariffs.
"Its a separate matter, if (spectrum) sharing
leads to lower cost they may be able plough it
back or they may want to put that cost in to
larger profits. Better yet if they can use to
service debt. All telecom operators are in
heavy debt and debt has to be paid otherwise
what will happen to banks," Khullar said.
Trai has recommended that government should
allow sharing of all categories of spectrum held
by telecom companies for mobile services.
If this recommendation is approved, telecom
operators will be able to bring down cost of
ownership of radiowaves which has increased
to about 5 times compared to its price of Rs
1,658 crore under old licencing regime.
Khullar said mobile rates were low earlier
because telecom operators were having
fighting to attract the customers of their
competitors, and in the process they were
offering calls at lower rates than their actual
costs.
He said telecom operators who were in heavy
debt or making losses starting cutting down on
freebies and some changed their headline
tariff.
"They did it at rate of something like 2
percentage," Khullar said.
Telecom companies have raised mobile base
rates by about 100 per cent between 2011 to
2013 and more frequently after cancellation of
122 2G telecom permits by Supreme Court in
February 2012.
On a proposal that STD call rates should be
equal to local calls, Khullar said that
government will have to look for solution to
compensate national long distance operators -
a key intermediary for transmitting calls, to
bring STD call rates at par with local.
"No such reference has come to us from
government. If it comes we will see what all
can be done," Khullar said.
Broadcast regulator TRAI today recommended
extension of licence period of direct-to-home
(DTH) operators to 20 years, while proposing
bringing down fees to 8 per cent of the
adjusted gross revenue.
In its recommendations on a new DTH licensing
regime, the Telecom Regulatory Authority of
India (TRAI) said vertically integrated
broadcasters must be subjected to a set of
additional regulations, allowing them to
control only one distribution platform
operators (DPOs).
Vertically integrated broadcasters are entities
which run TV channels as well as distribution
platforms as MSO and DTH.
On the tenure of DTH licence, TRAI suggested
that it to be increased from 10 years to 20
years, renewable by 10 years at a time.
To bring parity with telecom operators in
terms of licence fee with the DTH operators,
TRAI also recommended a reduction in existing
licence fee from 10 per cent of gross revenue
(GR) to 8 per cent of the adjusted gross
revenue (AGR).
The sectoral regulator also recommended a
one-time entry fee of Rs 10 crore for the DTH
industry.
Moreover, TRAI has also suggested giving
liberty to the existing DTH operators to
"migrate to the new regime at any time during
their currency of their existing licenses".
The DTH operators are paying 10 per cent of
their GR, while the telecom operators pay only
8 per cent of their AGR.
Under AGR, revenues arising out from other
activities like interest on savings, dividends,
bundling of handsets and others are excluded
for calculating the licence fee.
TRAI has also suggested BIS (Bureau of Indian
Standards) to come out with updated
specifications for the set-top-boxes (STBs) in
consultation with the regulator.
On the issue of cross holdings in the
broadcasting and the distribution sectors, TRAI
said there was a need to bring "uniformity" in
the sector.
"Comprehensive definition of 'control' to be
uniformly adopted in all segments of
broadcasting and distribution sectors," it
recommended.
It has also suggested for additional set of
regulations for vertically integrated
broadcasters and DPO. Moreover, it also said
that a vertically integrated broadcaster should
be permitted to take control of only one DPO.
TRAI also said that a "vertically integrated DPO
to be restricted from controlling any other
DPO of other category in the relevant market"
and "not to be permitted to acquire more than
33 per cent of the market share".
The sectoral regulator has also suggested that a
vertically integrated DPO should declare its
channel carrying capacity and not to reserve
more than 15 per cent of its capacity for
channels of its vertically integrated
broadcaster.
Over the carriage fee charged by the DPOs
from broadcasters to put their channels on
their network, TRAI has suggested them to
publish the access fees for it.
"The charging of the access fee should be on
non- discriminatory basis," said TRAI.
It also called for distinguishing between the
DTH and cable TV providers, Multi System
Operators (MSOs) and Headend in the Sky
(HITS). It suggested DTH would have a national
market, while the latter would have state wise.
"Relevant market for DTH would be the entire
country and for MSI/HITS - state," TRAI said,
adding that broadcasters and distribution
platform operators (DPOs) as MSOs and HITS
which are also now providing digitised cable TV
feed would have a separate legal entity.
Under the additional regulation suggested by
the TRAI for the integrated broadcasters, the
regulator said all agreements with DPOs should
be 'non-discriminatory' and 'on charge per
subscriber basis'.
It also suggested that such integrated
broadcasters should "file the reference
interconnect offer (RIO) for approval by the
authority. All interconnection agreements to be
only on the terms specified by RIO".
RIO specifies commercial terms for operators
to get signals from broadcasters. http://www.vccircle.com/news/tmt/2014/07/23/trai-may-review-telcos-freedom-fix-call-rates-moots-extension-dth-licences
 
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