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Uninor accuses bigger operators of overcharging and restrictive trade practice

Two days after the Telecom Regulatory Authority of India re-opened the vexed issue of ‘termination charges,’ new operator Uninor (a joint venture of Unitech and Telenor) has struck back at bigger operators accusing them of “restrictive trade practice” against newer ones.

TRAI had, two days ago, asked for suggestions on whether to increase or decrease the 20 paise per minute charge that an operator charges another operator for completing or terminating its call. An operator whose subscriber calls another subscriber who is on another operator’s network, has to pay the second operator 20 paise per minute to complete the call.

TRAI had asked whether 20 paise per minute was a fair amount or not, considering the expenses involved in completing a mobile phone call. Big operators like Airtel and Idea Cellular want the Authority to increase the amount while smaller operators like Uninor want TRAI to reduce it and make it applicable on a per-second basis.

Since big operators ‘own’ most of the subscribers, an increase in termination charge benefits them as smaller operators are forced to pay a larger amount to them for completing calls to their subscribers.

Airtel and Idea have been arguing that when arriving at the ‘cost of completing’ a call (20 paise,) TRAI must also take into account ‘fixed costs’ and not just the actual cost of completion. In other words, while it may only take an incremental 2 or 5 paise to connect the call to its subscriber, that is only the operational part of the expense.

The other part is the part that went in to creating the network — towers, lines etc. — without which the call could not have been completed at all. In other words, capital expenditure must be allocated to these calls on a pro-rata basis.

Uninor today came out strongly against this position and opposed the inclusion of capital expenditure in calculating connection expenses. It argued that if the operator in question was to refuse to connect the call, that operator would be no closer to recovering its capital expenditure than it would be if it connected the call.

Uninor, therefore, wants capital expenditure kept out of the cost calculation. The cost, and the termination fees, must be based only on the actual expenditure that the operator would incur if it chose to connect the call, compared to if it chose not to do so. The networks, after all, would have to be put in place whether or not they chose to terminate other operators’ calls or not.

It also pointed out that big operators who say that 20 paise per minute is not enough to cover their expenses are offering calls to their own subscribers for less than that. In other words, while they claim 20 paise is not enough to terminate a call, they not only terminate, but also originate a call for their own subscribers for less than 20 paise per minute — exposing their claim, according to Uninor.

“.. avoidable cost’ alone is then the basis to price termination charges,” it said in a statment.

“Most established operators charge on-net tariffs that are even lower than the current termination rate. This means that either the current termination rates are higher than costs operators incur or dominant operators are subsidizing their own on-net calls at the expense of younger operators who are forced to pay these termination charges to them. What is this if not a restrictive trade practice,” it asked.

“We are not advocating any subsidization or special privileges to young operators. We are saying fair competition. We are simply saying that no operator should make losses on account of extending interconnect service to another, but also not be allowed to make undue profits from a young operator’s compulsions. At the end of it all, we are all here for the customer. Right now, these interconnect charges are standing between what tariffs on voice and sms are and what they can be,” it added.

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