National roaming to get cheaper

Telecom Regulatory Authority of India (Trai) on Monday asked telecom companies to offer special vouchers for pre-paid customers, who use roaming facility, besides offering customized tariff plans to post-paid subscribers. Of the two plans, one will come without a rental and will allow users to pay the same tariff while roaming and when at home. Incoming calls will not be free but the scheme will not have fixed charges or rentals. The other option will have a fixed charge but incoming calls will be free. "Such a regime will significantly bring down cost of roaming and competition will reduce tariffs without a heavy hand (from the regulator)," Trai chairman Rahul Khullar told a press conference. He ruled out a free roaming regime, arguing that it will result in cross-subsidization as only 13% of the mobile subscribers use roaming facility and telecom companies would recover the Rs 2,500 crore hit by jacking up local call charges. "We won't get to zero but we will get jolly close to it," he said, adding that the impact will be reviewed after a year instead of three years. Telecom minister Kapil Sibal had repeatedly spoken of free roaming by October but Khullar clarified that the New Telecom Policy talked of "working towards free roaming". While most telecom companies said their revenues will be impacted, Anil Ambani's Reliance Communications lashed out at the regulator for not moving to a zero-roaming regime. "Roaming charges should have been completely done away with, which is what Reliance Communications has been advocating for a long time now. This would be in the interests of consumers and grow the market, and be in keeping with the MOCIT's (Sibal's) stated intent in NTP 2012. We do not agree with the views expressed by certain operators that free roaming would adversely impact revenues. Instead, the growth of business would be rewarding for service providers, as has been seen and confirmed from the international experience," it said in a statement. Analysts said the impact on telecom companies will not be significant. "We consider the policy to be balanced as it achieves the government objective of allowing free national roaming and does not materially impact revenues of telcos. Most telcos we spoke to (post this news) do not expect any major negative impact on earnings. We believe any positive elasticity led by rate cuts would positively surprise and offset any likely negative impact," Goldman Sachs said in a note.