Ronnie05's Blog

Indian Telecom Story: Reduction in Mobile Termination Charges

Posted in Industry updates by Manas Ganguly on March 9, 2009

I had discussed the Mobile Termination charges in an earlier blog and this was a month back (9th February 2009). TRAI has finally taken the mid road to the question of Mobile termination charges. Mobile termination charges are basically the per minute charge paid by an operator to another, if a call of the first operator is terminated on the second’s network. To that effect, any operator with a national coverage has lesser probability of paying this termination charge because chances are that the call will be terminated on its network owing to its ubiquitous presence. Thus the incumbents could use this as a pricing barrier against newer entrants. The chief beneficiaries of the MTC regime are the 100% footprint operator such as Airtel, Reliance, Vodafone etc. Lobbying for the case of MTC as a means to generate returns to serve their rural expansion, it can be debated that the Lobby had tried to impress TRAi and DoT hard on this subject. On the other hand the new players to the party have clamored that a MTC regime would make it difficult for them to establish a reasonable presence because of the price disparities.

As of today TRAI has slashed the MTC charges from 30 paise per minute to 20 paise per minute there by taking the mid road between these two views. The effects of this:
1. Likely reduction in Revenues for the incumbents
2. A more uniform battle ground for new entrants
3. Lowering of the telephone tarriffs for consumers on roaming
4. ARPUs further reducing on account of roaming charges.

Thus to an open market, reduced prices, commoditized products and more competition, here it is: Jaye Ho!


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