Telecom CEOs warn mobile tariff may double

Mobile call rates would double in some circles if the recommendations of sectoral regulator Telecom and Regulatory Authority of India (TRAI) on spectrum pricing are accepted, telecom CEOs who met telecom minister Kapil Sibal warned on Tuesday.

‘There will be circles which will have more than a 100 per cent price rise (in tariffs) if they were to absorb the impact of what is being recommended,’ Bharti Airtel CEO Sanjay Kapoor said.

‘In one circle, the cost of spectrum, the reserve price is Rs 7 crore and on other end, there are metros where it is Rs 717 crore, which is a 100 times differential,’ he said.

The chiefs of Bharti Airtel, Vodafone India, Idea Cellular, Uninor and Videocon met Sibal and department of telecom secretary R Chandrashekhar to discuss the implications of TRAI recommendations.

Top officials of CDMA operators Sistema Shyam Teleservices, Reliance Communications, Tata Teleservices and CDMA body AUSPI also met the minister.

Kapoor said, ‘The discussion was about 2 things - one is the TRAI recommendations made on the reserve price and auction, and basically [it saying] that the recommendations will have an impact of 2 paise on the industry, and the other was about refarming.’

TRAI has not considered the price elasticity of demand while formulating the 2 paise assumption, he said.

‘As the prices rise, the consumption goes down. And it has been absolutely assumed as if the consumption will remain constant which is not correct,’ Kapoor said, adding that there is a 30 paise per minute impact and not 2 paise as TRAI has assumed.
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