Govt backs Trai, trashes telcos’ call drop compensation claim impact

The government has backed the telecom regulator in the tussle to get telcos to compensate customers for call drops, saying that the Telecom Regulatory Authority of India (Trai) has legal powers to ask carriers to pay up.


A top government official also trashed telcos’ claims of taking a potential hit of up to Rs 54,000 crore on annual revenue from compensation payments on dropped calls, calling it “nonsense.”

“Trai has got the right to levy penalty,” the government official said, underlining the powers of the regulator to legally penalise mobile phone operators for poor quality of service.

“Incentive or disincentive, is part of their right under the mandate of the Trai Act itself. They monitor their services, lay down the standards,” the official added.

Telcos have been asked by Trai to compensate customers Re 1 for each call that gets dropped due to fault at their end, from January 1, 2016. The compensation was capped at Rs 3 per day per subscriber. The carriers moved court which didn’t stay the order but directed Trai not to take coercive action against the operators. The carriers haven’t started compensating their users, saying they will only do so once the court orders them to.

Telecom companies say that if 50% of the almost 1 billion subscribers in the country were to game the system to seek compensation for call drops, it would hurt the telecom industry by as much as Rs 54,000 crore a year.

The government official on Monday termed this claim of the telcos “nonsense!”.

Trai Chairman RS Sharma too has previously trashed the estimate and told ET that in no case would the maximum figure exceed Rs 800 crore annually.

Telecom analysts at Credit Suisse estimated that the regulation could shave off close to 3% of revenue and 7-8% of Ebitda on mobile operations at telecom companies annually.

Service providers have opposed Trai’s order on the grounds that it went beyond the regulator’s powers and have argued that subscribers may ‘game’ the system to claim compensation. They also say the major reasons for call drops – hurdles in installing telecom towers and scarce spectrum – wasn’t in their hands and they shouldn’t be penalised.

Meanwhile, the minister of telecom and IT Ravi Shankar Prasad said that the government was looking to rationalizing penalties and may introduce some flexibility into the system. “The process for rationalisation of imposition of penalty is under active consideration,” he said. “It will be done very soon.”

Rationalisation on imposing penalties has been another bone of contention between telcos and the government, where the former has been demanding graded scale of penalties for violations.

Show More

Related Articles

Back to top button