Telcos threaten tariff hike to make up for paying call drop compensation

Telecom operators have hit back against TRAI’s call drop compensation order, warning the scheme could lead to an increase in mobile tariffs. The players further believe it’s impossible to guarantee zero call drops.

Network industry bodies AUSPI and COAI think the payback system will be misused by consumers. In a joint letter addressed to TRAI, they claim the scheme will result in a rise in call drop rates. They justified this by asserting that numerous customers would forcibly cause this to happen in order to get Rs 3 per day.

Man With Phone

According to the order passed by TRAI, people are entitled to receive compensation for up to 3 call drops in a day. Brands have to pay Rs 1 for each failed connection. The industry bodies believe individuals will be able to game the regulation on a daily basis so they get a Rs 90 reduction in their monthly bill.

The letter goes on to explain the financial ramifications limitless exploitation and engineering of the call drop scheme could have on telecom companies. As per PTI, it may result in a 3% hit on total revenue and a 7% to 8% blow to mobile EBITDA (earnings before interest, taxes, depreciation and amortization).

AUSPI and COAI explained that the average ARPU (average revenue per user) is Rs 125 in India, and a Rs 90 cut in that would force them to take measures in order to recover that amount. Namely, it would have to raise cellular tariffs, leading to consumers spending more to buy a provider’s telecom services.

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In the joint letter, the industry organizations state it is impossible to design wireless networks for zero call drops. According to it, full coverage and capacity is unfeasible and are essentially an oxymoron. The call drop order assumes the existence of ideal conditions conducive to such a scenario.

COAI had earlier declared that the compensation system might compel players to pay over Rs 150 crore every day, even if only half the user base in India were dealing with call drops.