In August 2014, the Telecom Regulatory Authority of India (TRAI) issued the International Calling Card Services (Access Charges) Regulations, 2014, which fix the rates payable by international long distance (ILD) players to local telecom operators. This move is expected to lead to lower ILD rates. TRAI stated that ILD access charges that are paid by international long distance operators (ILDOs) to local players have been fixed at Re 0.40 per minute for wireless services and Rs 1.20 per minute for wireline services.

Background

Subscribers, at present, do not have the option of selecting their ILDO and are dependent on access providers for making ILD calls. However, this will change as the new regulations enable users to buy calling cards directly from any ILDO and get the advantage of competition in the long distance sector.

To give users the choice of an ILDO, TRAI submitted a consultation paper, “Revenue Sharing Arrangement for Calling Card Services”, in 2013. Earlier, in July 2002, it had issued directions in the matter, but these were not implemented due to various reasons given by telecom service providers (TSPs). “When this issue was revisited by TRAI in 2008, the TSPs had suggested that the primary objective of providing a choice of long distance operator could be achieved by allowing long distance operators to issue calling cards,” TRAI stated in its recent media release.

Finally, in 2010, licences were amended to allow national long distance operators (NLDOs)/ILDOs to issue calling cards directly to customers. The Intelligent Network Regulations were amended in 2012 to facilitate time-bound agreements between TSPs. According to TRAI, the delay in the finalisation of the amendments was primarily on account of the TSPs, who tried to stall the introduction of competition. “Some access providers offered unrealistic access charges to ILDOs, making the entire process a non-starter,” the regulator stated.

Need for regulation

Despite a significant increase in mobile subscribers, there has been a drastic decline in outgoing traffic minutes in the country. The availability of applications that allow long distance voice calls to be made through the internet has also transferred ILD minutes from telecom networks to such applications. Moreover, the prevalence of high ILD tariffs is responsible for distorting the ratio of outgoing to incoming calls.

According to TRAI, access service providers retain a huge margin in ILD calls after the necessary payment to the ILDO for carrying calls to foreign destinations. In this context, TRAI felt the need to prescribe access charges to facilitate the introduction of ILD calling cards so that consumers have a real choice in selecting the ILD carrier that offers the most competitive tariff on a certain route.

Currently, there are about 27 ILDOs with a permit to provide ILD services and 34 NLDOs that can provide national long distance (NLD) services. However, some of these ILDOs and NLDOs are subsidiaries of telecom operators like Bharti Airtel, Reliance Communications, Vodafone and Bharat Sanchar Nigam Limited. To infuse more competition and offer more options to customers, the government has allowed only those companies that have ILD/NLD licences to directly acquire customers by offering ILD and NLD service through calling cards. Earlier, calling card users were required to dial a certain prefix on their phones to make calls using the network of ILDOs or NLDOs. Since companies having only ILD and NLD licences could not have direct access to customers, they were required to go through TSPs, mainly mobile operators.

In the access cost computation, TRAI considered various factors and fixed Re 0.40 per minute for wireless services and Rs 1.20 per minute for wireline services for international calls. However, it has not prescribed access charges for NLD calling cards.

The prescribed access charges are to be the default option in all cases where negotiations between the access service provider and the ILDO are not successful. While the two would be free to enter into mutually agreed access charges, the charges prescribed in TRAI’s regulation will be applicable where no agreements have been entered into.