Terminating telecom

Trai’s latest suggestion to have zero termination charges in three years has, predictably, got the older telcos up in arms and saying Trai’s methodology is dodgy, but more than that, it is not quite clear what Trai hopes to achieve. The idea is to lower call charges and to raise teledensity, but since termination charges are just one part of what firms earn—there are origination charges and carriage costs—if you reduce one, the other two will have to go up if telcos are to remain in the black. If termination charges fall, and the other two don’t rise, it stands to reason that telcos will invest less in rolling out networks to rural areas or to improve the quality of service.

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