DoT revenue loss due to new tariffs

BANGALORE, August 26: The Telecom Regulatory Authority

of India (TRAI) officials have refuted statements issued by the Department

of Telecommunications (DoT) officials on the extent of revenue loss due to

the new telecom tariffs, stating that estimates could not be obtained in

three months. "Estimates for three months cannot be extrapolated for

a whole year'', pointed out TRAI director Dr Rajat Kathuria.

The DoT officials have been stating that revenue loss

would be about Rs 1,500-2,000 crore due to implementation of the TRAI

tariffs. In March this year, TRAI announced new tariffs for long distance

and local calls. The tariffs for long distance calls were very high, since

they were subsidizing local call charges. The new tariff rates sought to

rebalance the tariffs by reducing the rates for long distance calls and

raising the rates of local calls.

TRAI has also been pointing out that the loss had been

accentuated due to the decision of the DoT to retain old rentals and call

charges, which were lower than the levels prescribed by the regulator. Dr.

Kathuria also said that the TRAI estimates of 10-15 per cent price

elasticity (which would counter the effect of lower unit tariffs) would be

proven correct at the end of the year. In any case, he pointed out, three

months was too short to arrive at definite conclusions. He also pointed

out that, the TRAI had never called for elimination of cross-subsidy.

``The aim of re-balancing is only to reduce cross-subsidy. In fact, the

highest level of rentals (Rs 250) is far lower than the cost-based rental

of Rs 600'', he is reported to have said.