Call Drops May Cost Telcos Rs. 54,000 Crore, Threaten Hike In Mobile Tariffs


Mobile Wireline call tariffs

Earlier this month, TRAI came up with a directive stating that Telecom Operators will be forced to pay Re 1 for each instance of a dropped call, and maximum of 3 calls will need to be compensated per day.

This decision has not gone down  well with Telecom service providers, and for a good reason – according to some estimates, they could end up paying users as much as ?54,000 crore per annum as compensation for call drops.

The Telco’s have now shot a letter to TRAI stating that if the order is not reviewed, it would result in closure of some networks or then they will need to hike the tariff to accommodate the compensation.

The letter to TRAI stated, “The annual industry compensation due to dropped calls may range from ?10,000 crore in case 10 per cent of subscribers claim compensation to ?54,000 crore in case 50 per cent of subscribers claim the same. This amount would represent up to 37 per cent of the industry’s annualized adjusted gross revenue in case of 50 per cent claims. Compensation costs of this magnitude will result in either closure of networks or increase in tariffs

Telco Operator bodies – Association of Unified Telecom Service Providers of India (AUSPI) and Cellular Operators Association of India (COAI) have both called the TRAI order “grossly unjust”.

Our Take

It is a fact that call drops have been one of the major issues for mobile consumers. The reason for same might are many, including Network congestion, infrastructure issues etc.

We do understand the reason for TRAI’s order, as they want to reduce or eliminate this problem completely, but we also sympathize with the operators. They already operate on wafer thin margins as India has one of the lowest mobile call rates in the world.

The ARPU (average revenue per user) in India is around Rs. 125 and when operators ( in a worst case scenario) are asked to compensate Rs. 90 per month (3 calls X 30 days), it becomes a hopeless situation for them. Its just not that – there are many consumers who will game the system and will try to extract Rs. 90 every month from their service providers!

While the TRAI’s compensation order has been done with good intentions, it may actually end up hurting consumers (through fare hike) as well as telecom operators.

What is your view?

  1. […] Last year, they had claimed that TRAI’s solution for call drops (Re 1 /call drop) will bleed them by Rs 54,000 crore, and they had even threatened to increase mobile […]

  2. DigitalGalaxy says

    The issue is probably not enough towers. So, the operators should have to take half of that “fee” they pay the users and invest it back in towers. The users get the other half! Pretty soon the drop call issues would go away with more towers in place!

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