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New Telecoms Pricing Scheme in India. From the Financial Times
Feb 9, 2003

India's telecommunications regulator unveiled a new pricing regime at the weekend designed to end months of propaganda, price wars and tit-for-tat disconnections between mobile and fixed-line telecoms networks.

The new tariffs, effective from April 1st, come after millions of subscribers were cut off earlier this month.

Cellular operators had intensified their battle with operators of wireless local loop (WLL) technology, known as the poor man's cellular service, by disconnecting their subscribers. Then, fixed-line operators refused to connect cellular subscribers to their networks.

The Telecom Regulatory Authority of India (TRAI) announced a tariff regime that lays down guidelines on access charges for connecting calls between mobile and fixed phone lines. The new pricing will mean across-the-board price rises for consumers, including WLL subscribers.

The new tariffs lay down a guideline for interconnection charges between cellular and WLL and should ensure that there is not a repeat of the turmoil of the past few weeks. It also introduces a level of transparency and parity between cellular and WLL subscribers.

At the heart of the dispute between the rival operators is new technology and the race for India's telecoms market. Both fixed and mobile phone companies are battling to exploit one of the biggest untapped markets in the world.

India's teledensity is 4.1 per 1,000 people, which compares unfavourably with a global average of 15 per 1,000. The government's target is to raise teledensity to 7 per 1,000 by 2005.

However, the weekend price rises could damage these ambitions. The latest battle in what has been dubbed the "War of the Rings" was triggered by a ruling last month by the Supreme Court that allowed fixed-line phone companies to provide city-wide roaming using WLL technology. This means callers can use cordless handsets to dial not just from inside their houses but also from anywhere in their home city--in effect offering a limited mobile service without a cell phone.

The move angered the mobile companies, which argued that 75% of their customers use mobiles for calls within their home city, so even a limited "mobile" service from fixed-line companies was a direct attack on their market. The Supreme Court had also asked the regulator to address calls for a level playing field--something the mobile companies have demanded for some time.

Cellphone companies including Bharti, AT&T and Hutchison's Essar have publicly accused the regulator of bias in favour of fixed-line operators. Unlike the mobile companies, fixed-line operators do not pay a licence fee to offer limited mobility or charge customers interconnection fees.

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