Let operators decide pricing model: Airtel

New Delhi, Sept 15 (UNI) Bharti Airtel today said it is unlikely to cut the SMS charges as desired by telecom regulator TRAI as the prices in India are lowest compared globally.

''It is a wrong notion. I have not seen anyone complaining of the high SMS rates. Tariffing is best left to the regulator,'' Bharti Enterprises CEO and Managing Director Akhil Gupta told reporters here.

Telecom Regulatory Authority of India (TRAI) had asked mobile operators to slash tariffs voluntarily.

''The market is competitive. The prices in the country are perhaps the lowest compared globally,'' he said.

Unlike the voice traffic, the cost component in SMS is negligible, around two paise. Still, SMS tariffs are either higher than voice rates or at best comparable.

The average tariff for local calls is Re one, the same as the local SMS rate, while for STD calls, the average tariff is Rs 1.50 and the SMS rate is higher at Rs two.

Operators have resisted the move, as SMS makes up 50 per cent revenue of their value-added services (VAS).

The situation has become tougher as average revenue per user (ARPU) has dropped and the revenue from VAS remains critical to the operator's profitability.

TRAI's stance is that while service providers have to pay termination charges and carriage costs for voice calls, no such cost is involved in SMS traffic, apart from negligible capital expenditure.

For voice call, for instance, service providers pay a termination charge of 30 paise per minute--in cases where a call originates from one operator's network and terminates in anothers.

In cases where service providers do not possess a long distance network, they pay a carriage charge, with a ceiling of 60 paise per minute to the ILD/NLD operator whose network is used for carrying the calls.

No termination charge is payable in the case of SMS traffic. For carrying SMS traffic, operators use a signalling channel, which is distinct from the channel used for carrying voice traffic. It is to bring parity between voice calls and SMS that the regulator has asked operators to bring down the SMS charges sharply.

For a telecom company, around 14 per cent revenue comes from VAS, with SMS constituting almost half of it. Estimates show that over the next five years, VAS could contribute 30 per cent revenues to a telecom company.

UNI SR/AK SG VC1541