April 23, 2002 – According to an article in the Business Standard, the Telecom Regulatory Authority of India (TRAI) is considering reducing the tariffs for wireless local loop (WLL) service as part of its tariff review process.

"TRAI is aware of the falling prices of telecom networks and equipment. Considering this, it has decided to review the rentals for WLL mobility services every three years. The first review is due next month. If a reduction in rentals is justified because of the latest costs, it will be done," TRAI said.

India’s telecom regulator was responding to the Department of Telecommunications, the Parliamentary Standing Committee on IT and Telecommunications, consumer groups and basic operators who claim that the high tariffs for WLL mobility services defeat the purpose of WLL. The government is allowing basic operators to offer limited mobility services because they are affordable and will encourage increased penetration of telephone service.

In setting a monthly rental of Rs 450, TRAI claims it was attempting to ensure that no operator adopted a predatory pricing strategy to destroy competition. However, basic operators pointed out that the Indian experience with cellular services showed that new entrants might resort to predatory pricing, but not the incumbent.

"A range of rentals has been stipulated, considering the cost of providing such connection," according to TRAI. It added that notwithstanding the consumer benefit of WLL service, providing such services below cost is not feasible.

Basic operators claim that although the requested tariffs for WLL might be below cost, cellular service tariffs are also below cost in some cases. "If cellular operators can have alternative tariffs in spite of their being cost-based, why can't WLL limited mobility?" said a basic operator.

However, TRAI believes that there must be a distinction between cellular services and WLL mobility. TRAI does not intend to have basic operators using WLL to offer undue and unequal competition to cellular operators.