Google

Tuesday, September 9, 2008

Trai asks telcos to bring down SMS charges

 
 

In a move that could halve SMS charges, the Telecom Regulatory Authority of India (Trai) has asked mobile operators to slash tariffs voluntarily. Unlike the voice traffic, the cost component in SMS is negligible–around 2 paise. Still, SMS tariffs are either higher than voice rates or at best comparable.

Sources say Trai has held two rounds of negotiations with the Cellular Operators Association of India (COAI), the apex of body of GSM mobile operators, convincing them to voluntarily bring down the tariffs, failing which it would intervene through regulation. In fact, two years back also Trai had urged the operators to bring down SMS rates.

The average tariff for local calls is Re 1, the same as the local SMS rate, while for STD calls, the average tariff is Rs 1.50 and the SMS rate is higher at Rs 2.

The operators, however, are resisting the move, as SMS makes up 50% revenue of their value added services. T hey feel this move would imply micro-managing of their operations by the regulator and argue that the rates be best left to market forces. Further, operators say that facing low average revenue per user (Arpu), revenue from value-added services (VAS) is critical to their profitability.

According to Trai, while service providers have to pay termination charges and carriage costs for voice calls, no such cost is involved in SMS traffic, apart from negligible capital expenditure.

For voice call, for instance, service providers pay a termination charge of 30 paise per minute---in cases where a call originates from one operator's network and terminates in another's. In cases where service providers do not possess a long distance network they pay a carriage charge, with a ceiling of.60 paise per minute to the ILD/NLD operator whose network is used for carrying the calls.

No termination charge is payable in the case of SMS traffic. For carrying SMS traffic, operators use a signalling channel, which is distinct from the channel used for carrying voice traffic. It is to bring parity between voice calls and SMS that the regulator has asked operators to bring down the SMS charges sharply.

For a telecom company, around 14% revenue comes from VAS, with SMS constituting almost half of it. Over the next five years, VAS could contribute 30% revenues to a telecom company

 
 
 

No comments:

Sify.com - News

NDTV - Business News

Moneycontrol - Buzzing Stocks

Moneycontrol Top Headlines

News Flash from IndiaEarnings

Saraswat Bk seeks RBI nod to acquire ailing South Ind Co Bk
Telekom Malaysia to pick up addl 15% stake in Idea: Srcs
Hind Rectifiers brd meet on June 24 to consider bonus issue
Inflation will touch double digit mark next week: I-Sec
NY Times in talks to buy 5% stake in Deccan Chron Arm
Inflation for wk ended Apr5 revised to 7.71% vs 7.14%earlier
Inflation for week ended May 31 at 8.75% vs 8.24%
Indian economy won't be as badly hit as the global eco:DCB
Over a period of time mkt may drift down to 4060 :Atul Suri
Shriram Cap likely seller in Shriram City Un Fin block deal
Shriram City Union Fin changes 12.2% Eq via block deal
No big rally in mkt till oil pices cool off: Lehman Bros
BoJ keeps key interest rate unchanged at 0.5%
J&K Bank raises Prime Lending Rates by 100 bps to 14%
L&T aays plan to list IT sdubsidiary in FY09
IFCI okays initiation of legal process to align LIC stk
Rupee opens at 42.82/USD vs 42.84/USD on Thursday
Karnataka Bank board approves 1:5 rights issue at Rs 100/sh
45.37 lakh Suzlon shr change hands on BSE at Rs 250.95/sh
Oil India plans to launch IPO by Sep: NW18
ABG Shipyard bags order worth Rs 127 Cr
Nutrient base pricing is good for industry:RCF
FM says avg prc of complex fert to decline by Rs 1416/t
Deccan Chronicle likely to place Sieger Eq at EV of USD750 m
BNP Paribas see 25 bps CRR hike before RBI July policy
Disclaimer