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The mobile termination charge (MTC), a levy paid by the operator on whose network a call originates to the operator on whose network the call terminates, is in for a revision. However, there are differing opinions in the industry regarding what the new MTC should be. These issues need to be sorted out.

On the one hand, established telecom operators like Bharti Airtel, Vodafone Essar and Idea Cellular are not only fine with the current termination charge of Re 0.30 per minute but are, in fact, suggesting a Re 0.10 per minute hike. A hike in MTC translates into an increase in revenue for these companies as they expect an increase in the number of calls terminating on their networks as the new operators begin services.

On the other hand, new operators like Unitech, Datacom Solutions and Loop Telecom –­ which received licences in January 2008 and are in the process of rolling out services –­ are naturally worried that any increase in the MTC would further burden them at a time when their revenues are at the lowest. These companies find even the current MTC high and are seeking a reduction of 25-50 per cent instead. A downward revision of MTC would reduce costs for these players and help them compete better, especially in the urban areas.

Interestingly, the Cellular Operators Association of India, the GSM operators' body, has decided to support a formula for termination charges that benefits "efficient operators" rather than existing operators or new licensees. The Association of Unified Telecom Service Providers of India, meanwhile, has sought a reduction in the MTC, stating that the exponential rise in minutes of usage has led to operators paying very high termination charges, leading to a drastic plunge in their revenues.

Recently, the Department of Telecommunications (DoT) made clear its mandate that the five-year-old termination charge of Re 0.30 a minute per call for fixed and mobile telephony needs to be reviewed, especially as the cost parameters have changed significantly. "Given that the central aim of the New Telecom Policy, 1999 is to provide telecom services at affordable rates and considering the unprecedented expansion of telecom services, DoT has suggested a review of the MTC by the Telecom Regulatory Authority of India (TRAI) on a priority basis and in a time-bound manner," says a DoT official.

The matter is now with TRAI, which will give its recommendations on revising the charges. DoT officials, however, feel that the regulator is not acting fast enough. "Although DoT referred the matter to TRAI four months ago, TRAI has yet to review the charges for fixed and mobile services," says a senior DoT official.

TRAI had prescribed termination charges through its regulations in October 2003. This was done on the basis of the cost data submitted by various service providers for the preceding years. Now, TRAI will have to review the termination charges based on the present and projected costs and traffic. This, according to TRAI officials, will take time.

Given the difference of opinion amongst operators, the regulator is planning on bringing out a consultation paper on MTC, even though it has recommended a cap on interconnect user charges. It is also examining the various methods and global practices regarding this issue. Regarding MTC reduction, Minister for Communications and IT A. Raja says, "The termination charges reduction reference has gone to TRAI. They have to recommend to us what to do –­ whether to bring it down or not. TRAI is a statutory body and it can't be dictated on what is to be done. It is being discussed in TRAI to look into the possibility of bringing down the termination charges."