The across-the-board restructuring in telecom tariffs also includes increase in local call and paging charges. TRAI has also suggested significant reduction in leased lines rentals, Internet tariffs and inter-connectivity charges.

Airtime charges for cellular services have been reduced to Rs 6 per minute in peak hours, but rentals have been increased four-fold to Rs 600 a month.

Releasing the consultation paper on telecom pricing here on Wednesday, chairman justice SS Sodhi said: "We have now embarked on a round of consultations with the department of telecommunications, industry and consumer groups to incorporate any modifications before issuing a final notification by the end of this year".

TRAI has also proposed to introduce a concept of "calling party to pay" which will make incoming calls to a cellular subscriber free. Landline calls made to mobile phones will be charged to the caller at a rate of Rs 3.90 per minute.

TRAI has suggested that the Rs 3.90 charge per minute be shared between basic operators who will retain 15 per cent of the revenue with the remaining 85 per cent going to cellular operators.

In a major sop for Internet service providers, VSNL port charges are proposed to be slashed from Rs 1.1 - 72 lakh to Rs 70,000-41.8 lakh. Leased line charges have also been rationalised to encourage usage.

The TRAI has also proposed to give a lift to the paging industry by suggesting that messages to pager numbers cost Rs 1.50 per call. It has proposed a hike in pager rentals of alphanumeric and numeric type from Rs 250 to Rs 300 & Rs 150 to Rs 175 per month respectively.

Inter-exchange junction charges have also been reduced from a range of Rs 12,900 to Rs 2.16 lakh and Rs 7100 to Rs 36,940 per port.

TRAI has proposed to revise telephone rentals in rural areas from the existing Rs 50 to a maximum of Rs 120. For the semi-urban and urban areas, the rental slab has been raised to Rs 160 - Rs 310 from the current Rs 75 - 190.

Local call charges which range from 60 paise to Rs 1.40 per unit are now proposed to be raised to a flat rate of Rs 1.30 at the maximum. These calls will be charged every three minutes instead of the earlier five minute call period.

In non-rural areas, where current charges are in the range of 80 paise to Rs 1.40, the rates have been capped at a uniform Rs 1.40. This cap means that this rate would be the maximum chargeable rate by a service provider, however, operators would be free to charge lower rates than the cap.

The number of free calls allowed in every bimonthly billing cycle, currently fixed at 150 calls in urban and 25O in rural areas, is now proposed to be brought down to a uniform 120 calls.

For domestic long distance calls or STD calls, the TRAI has proposed the existing eight distance categories for call charges to four slabs of 0 to 50 km, 51 to 200 km, 201 to 500 km and above 500 km. The earlier rates applicable to these slabs varied between Rs 0.27 to Rs 2.33 per minute, the revised rates will now only be Rs 0.43 for distances upto 50 km.

Between 51 to 200 km, the existing slab of Rs 4 to Rs 10.73 per minute will now be Rs 3.90.

For distances in the slab of 201 to 500 km where charges vary between Rs 12 to Rs 28, the rates will be slashed to Rs 9.75. For 500 km and above, the charges will be Rs 19.50 per minute, down from the earlier Rs 16 to Rs 42. A revenue sharing agreement has also been proposed to resolve the controversy between new service providers and the DoT.

The rates for international (ISD) calls have been capped at Rs 30 for Europe, Gulf, Asia, Africa and Oceania, Rs 39 for the American continent and Western Hemisphere and Rs 19.50 per minute for SAARC and neighbouring countries.

INSIGHT

Proposed shake-out in telecom charges

In a telecom system, the proportion of fixed costs is high and of variable costs low: so TRAI has proposed to reduce call charges and raise rentals. But residential phone users, especially those who make fewer than 500 calls per month, will pay higher call charges as also rentals. The principal beneficiaries will be business and government. Their telephone costs, for local, domestic trunk and international calls, will come down.

TRAI has sought to resolve the controversy over interconnectivity by proposing revenue sharing between the new entrant (private) and DOT in the ratio of 60:40 for domestic long distance calls. The dominant investment is in long distance cabling, but the private service provider (whose investment is confined to the allotted circle) will get to keep the lion's share of the revenue from trunk calls.

For international calls, revenue will be shared in the ratio of 45:55 between the new entrant and VSNL. The problem is that VSNL only gets a part of the revenue from international calls under the half circuit arrangement; so its effective share will come under a squeeze. DOT/VSNL are bound to raise a howl on the ground that TRAI's tariff recommendations are not "revenue-neutral", as claimed, and are less than fair to them.

The cell-phone rental takes a steep hike but call charges have been brought down under a cap of Rs 6 per minute. There will be only standard and peak hours, the latter confined to a maximum of eight hours a day. TRAI wants the caller to a cell-phone to pay. But if the call originates from a fixed phone, it will be DOT/MTNL's thankless task to bill and transmit funds to cell service providers.