The Telecom Regulatory Authority of India Act, 1997 to notify, by an Order in the Official Gazette, tariffs at which Telecommunication Services within India and outside India shall be provided, and in view of the decision of the Honorable High Court of Delhi in CW-6483/99, the Telecom Regulatory Authority of India hereby makes the following Order.

REGD. NO. D. L.-33004/99 The Gazette of India

EXTRAORDINARY

PART III—Section 4

PUBLISHED BY AUTHORITY

No. 17] NEW DELHI, WEDNESDAY, JANUARY 25, 2001/MAGHA 5,1922

249 GI/2001

(1)2 THE GAZETTE OF INDIA EXTRAORDINARY [PART III—SEC. A 3 4 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC. 4] 5 6 THE GAZETTE OF INDIA : EXTRAORDINARY [PART HI—SEC. 4] 7 8 THE GAZETTE OF INDIA: EXTRAORDINARY [PART HI—SEC. 4] 9

^"y36//?co/ — j

TELECOM REGULATORY AUTHORITY OF INDIA

NOTIFICATION

New Delhi, the 25th January, 2001

No. 301-9/200O-TRAI (Econ.).— In exercise of the powers conferred upon it under sub- section (2) of section 11 of the Telecom Regulatory Authority of India Act, 1997 to notify, by an Order in the Official Gazette, tariffs at which Telecommunication Services within India and outside India shall be provided, and in view of the decision of the Honorable High Court of Delhi in CW- 6483/99, the Telecom Regulatory Authority of India hereby makes the following Order.

The Telecommunication Tariff (Twelfth Amendment) Order 2001 (2 of 2001)

SECTION I

a) Short title, extent and commencement

i. This Order shall be called "Telecommunication Tariff (Twelfth Amendment) Order 2001."

ii. This Order shall be deemed to have come into force with effect from P¹ August 1999 iii. This Order contains Tables I through VIII in Section II specifying the amount of refunds that shall be made by cellular service providers to subscribers of cellular mobile services as a result of reduction in the license fee payable by the service providers following their acceptance of migration from the fixed license fee regime to revenue sharing.

iv. This Order contains at Annex A, an Explanatory Memorandum that explains the reasons for this amendment to the Telecommunication Tariff Order 1999.

SECTION II

Refunds

Tables I through VIII provide for the amounts of refunds that shall be made to different categories of subscribers in metros and circles following the change in the license fee regime with effect from August 01, 1999.

Table II : Standard Tariff F"ckage - CIRCLES

Refund Amounts from August 1999 to January 2000 (In Rs.)

PLUS Refund Per Minute of use by the subscriber Refund of Rental Per Subscriber

Oct-99

Category

Nov-99

Jan-00

Circle

Aug-99

Sep-99

Dec-99 Operators Aug-99 Sep-99 Oct-99 Nov-99 Dec-99 Jait-00

1 35

178 00

1.35

1.35 1.35 1.35

78 00

A1 Circle

178 00

17K00

78 00

78.00

1.35

Maharashtra BPL

Qirla

178 00

78 00,

1.35

135 Maliarashim

178 00

78 00

1.35

178 00

78.00

1.35

135

1.35

AT&T

1,35

78 00

1.35

135 1.35

1.35

Gujarat

Fascel

78.00

178.00

178.00

78001

135

Gujarat Bula

78 XX)

135

178 00

178.00

135

1.35

178 00 17SW

78 00 78W

1.35 135 AP

135

178 00

78.00

78 00

135

1.35

1.35

178 00

78 00

1.35

Tata

178.00

78 00

135

1.35 ~~T35 ' 1.35

135 A.P

178 00j

78 00

1.35

Bharti

178 00

178 00

78 00

1.35

135

78.00

1.15

135

1.35

78.00

1.15

Ui

Btwtl

17S.0O

J 78.00

7i.OO

1.35

78 00

1.35

1.35

78 00

1.35

178 00

78.00

135

135 Kamataki Spice

178.00

1.35

135

78.001

78 00

1.35

1.35 135

1.15 BPL

178.00

78.00

1.35 178.TO

m.ool moo

fr.N

135

T.N

135

178 00

78.00

1.35

1.35

1.35

1.35 Aircel

178 00

78 00

78 00

178 00

178 00

78 00

1.35

135 1.35 1.35 135 Kerala Escotcl

178 00

1.35

B' Circle

178 00

78 00

78 00

ierala BPL

17-8 00

7800

78,00

135

135 1.35 135 1.35

7SW

1.35

178 00 m.oo

78 00

135 Punjab

1 35

Spice

178.00

178.00

135

1.35

135

178 00

78.00

78.00

Haryana

1.35 Escotcl

178.00 78 00

78 00

135

178 00

1.35

1.35

1.35

178 00

78.00

1.35 135

78 00

1.35

1.35

L\P (W)

78.00

135

Escote!

17S0O

178.00

1.35

1.35

135

178 00

78.00

U.P (E) ADL

178.00

78 00

1.35 1.35 1.35 1.35

178 00

1.35

U.P.{E)

1J5

1.35

178.00

1.35

1.35

178.00

1.35 178.00 PS 00

78 00

78 00

135 135 1 35

178 00

1.35

1.35

178 00

178 00

1.35 135 1.35 1.35

178 00

78.00

1.35

17S00

178 00

1.35

1 35

1.35

78 00

Hctacom RPG Reliance

1.35

135

178 00

178 00

178 00

1.35

1.35

itajasthan ivip. MP WB

Reliance

1.35

135 178.00 178 00

78 00

1.35

178-00

1.35

1.35 HP

178 <)0

78:00

1.35

135

C Circle

Bluuii

135

HP.

Reliance

178.00 i7flee 178 00

1.35 135 135 135 178.00 178 00

78 00

1.35

^ 1.35 Bihar

135

Reliance

178 00 178.00 78 00

135 1.35 135 178.00

Orissa

178 00

1.35 1.35 1.35

78.00

1.35.

Reliance

178.00

178 00

1.35

1.35

135 Assam Reliance

178.00

1.35

1.35

178.00

178 00

78 00

135

NE.

178 DO 1T8 00

78.fl©

135 1.J5 1.35 135 Reliance

ITSflO

Note MOV is minutes of use by the subs nber m a specific month

Table VII: Refund Amount per Minute of Actual Uie (In Ru.)

Alternative Tariff Package (ATP) Subscribers

Circle Service Areas

3'f-\- : /~ . /— j'

Table VIII: Refund Amount per Minute of Actual Use (In Rs.)

Pre-paid Subscribers

Circle Service Areas

Sep-99

By Order,

HARSHA VARDHANA SINGH, Advisor (Economic)

[ADVT. m/IV/Exty./142/2000]27

ANNNEX-A

EXPLANATORY MEMORANDUM

This Order notifies the refunds that must be made by the cellular mobile service providers to their subscribers, consequent to the change in license fee regime from 1st August 1999 A background to this exercise is provided by recalling the Order of the Authority with respect to Calling Party Pays regime, the decision of the Delhi High Court (CW 6483/99) in respect of this Order (in CW 6483/99), and a partial refund provided by the Cellular Mobile Service Providers. The Order specifies amounts of refunds that are required to be made to the cellular mobile subscribers in metros and circles by the different service providers

Calling Party Pays ("CPP"). High Court Judgement, and Partial Refund By Cellular

Service Providers

The Authority had specified a Calling Party Pays ("CPP") regime for Cellular Mobile, to be implemented from Is¹ November 1999 This regime aimed at reducing the tariffs in view of the license fee reduction and at introducing the CPP regime. The regime was challenged in the Honourable High Court of Delhi, which ruled in its Order dated 17th January, 2000 that the Authority did not have the jurisdiction to alter the interconnection revenue share and, therefore, the tariff regime as envisaged could not be implemented Tn addition, the High Court observed that:

a) License fee paid by cellular operators has decreased since 1st August, 1999;

b) The license fee reduction has led to a benefit to cellular operators;

c) It is the duty and function of TRAI to ensure that the benefit which the cellular operators have received is passed on to the consumers; and that ²8 THE GAZETTE OF INDIA : EXTRAORDINARY [PART 111—SEC. 41 d) The Court was sure.that the TRAI would keep this in mind and issue necessary directions in this behalf.

During the Court proceedings, Cellular Operators agreed to reduce tariffs for subscribers on the standard tariff package. On this matter, the Court Order of 21A January, 2000 states as follows:

"Mr. Subramanium states that in deference to the observations made by this Court, when it dictated its Judgement on 17th January 2000, the Cellular Operators' Association has on its own voluntarily decided that all Cellular Operators will reduce the monthly rental to Rs. 475/- per month for Metro Service Area and Rs. 500/- per month for Circle Service Area with effect from 1st November 1999. He states that they will also reduce the "Air Time Charges" to Rs. 4/- per minute for Metro Service Area and Rs 4 50 per minute for Circle Service Area with pulse rate of 30 seconds duration with effect from 1* February 2000.

Mr Subramanium further states that the credit for reduction in monthly rentals will be given in the monthly bills of the consumers during the three months starting from February 2000 onwards "

Calculation of Refunds as a result of the change in license fee

In compliance with the High Court's observations, TRAI had undertaken the task of studying the impact of a change in the license fee regime from a fixed license fee to a revenue share license fee regime The refunds which cellular mobile operators have to consequently provide to the customers have been worked out

To work out these refunds, only the impact of licence fee has been studied The methodology used for determining the revised tariffs after a change in the license fee is the same as that used initially to determine the cellular mobile tariffs

Under that methodology, separate cost base for rental and call charge was determined, and the license fee was added to these cost bases to obtain cost based tariffs for cellular services. Different methods of allocating the license fee costs to these bases were29 considered to ascertained reasonable levels for rentals and airtime charge. After such a consideration, cost based tariffs for cellular services were derived on the basis of an equal distribution of license fee costs towards rental and airtime respectively Hence, out of the monthly license fee payable of Rs 500 00 per subscriber per month for metro subscribers, Rs.250.00 was included in the cost based monthly rental charge and Rs. 250.00 was included in the cost based airtime charge The rental so arrived at was Rs 600 00 per month while the airtime was determined at Rs 6 00 per minute. These tariffs were notified in the Telecommunication Tariff Order (TTO) 1999 and were applied as standard tariff for circles also.

From the above tariffs, if we take away the license fee component, the cost-base for rental becomes Rs 350.00 per month (i e, Rs. 600 00 - Rs 250.00). The cost-base for airtime charge by applying the same logic becomes Rs. 3 92 per minute. To this cost base, which includes all costs other than license, the license fee has to be added to arrive at the final rental and airtime charge. The formula to be used thus becomes

Cost Base

J-L

Where Cost Base = All costs other than license fee; and

L= license fee i.e. 17% of revenue

The resultant amount works out to be Rs. 422.00 per month and the revised airtime charge becomes Rs. 4.65 per minute (i e Rs. 4.72 rounded down to Rs, 4.65 in view of the pulse rate of 20 seconds specified in the standard tariff package) These revised tariffs (Rs.

422 00 per month rental and Rs. 4 65 per minute air time charge) provide a basis for estimating the refunds from cellular service providers.

< •', ?6i -l/-? c-Gf — £T30 THE GAZETTE OF INDIA : EXTRAORDINARY [PAKI 111—Sa. 4) In working out the refunds, the Authority has taken into account also the fact that the Cellular Mobile operators had themselves provided certain refunds for the period November, 1999 onwards for standard tariff subscribers. The refunds have therefore been calculated for the period from August 1999 (i e. since the change in the license fee regime) taking account the following tariff reductions already made by the operators themselves.

a) November 1999 to January 2000 Service providers gave a refund to the subscribers of standard tariff package at the rate of Rs 125 00 per month for metros and Rs. 100.00 per month for circles,

b) February 2000 onwards In addition to the above mentioned refund, a lower airtime charge was levied for standard tariff subscribers In metros it was Rs 4 00 per minute and in circles Rs 4 50 per minute In both cases, pulse duration of 30 seconds was used.

In view of the above, refunds due to the subscribers have been calculated separately for the period upto January 2000 and from February 2000 onwards.

A. Period from August 1999 to January 2000

Standard Tariff Subscribers

The refunds due to standard tariff package subscribers in metros and circles from August 1999 until October 1999 are specified as a combination of two amounts One is a fixed amount per subscriber i e Rs 178 00 (Rs 600 00 - Rs 422 00) per subscriber per month on account of difference in rental, while the other amount is linked to actual airtime usage by the customer during the month For each minute of airtime used, the subscriber is eligible for a refund of Rs 1 35 (i.e Rs 6 00 - Rs 4.65) These refund amounts are given in Table I for metros and Table 11 for circles31 The corresponding estimate of refund from November 1999 onwards takes into account the fact that from November 1999 cellular operators have made refunds of Rs 125.00 per month for metros and Rs. 100 00 per month for circles to the standard tariff package subscribers Thus for the period November 1999 to January 2000 the refund to standard tariff subscribers in metros is estimated to be Rs. 53 00 (Rs 178 00 - Rs 125 00) per subscriber for rental plus Rs 135 per minute of actual airtime usage For circles it is Rs. 78 00 (Rs. 178 00 - Rs 100 00) per subscriber on account of rental plus Rs 1 35 per minute of actual airtime usage. These refund amounts are given in Table 1 for metros and Table II for circles

Alternative Tariff Subscribers

In alternative tariff packages, the service providers have built in different combinations of monthly rentals and airtime charges In calculating refunds due to the subscribers on alternative tariff packages, the Authority has been constrained by the fact that the variety of tariff packages and the relatively large number of changes in these tariffs render it difficult to make detailed and accurate calculations of average tariffs during the period under consideration. For the sake of implementing the refund scheme, therefore, the Authority has had to work out the average level, based only on the available data To determine the amount of refund for alternative tariff packages which would be in line with the refunds determined for standard tariff packages, the following procedure has been followed First, Rs 422.00 is deducted from the aggregate of amount of rentals realised under alternative tariff packages from the total number of subscribers to these packages The residual amount which then represents airtime charges is added to the airtime revenue charged To arrive at per minute charge, this figure is divided by the total minutes of airtime used The32 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SLC. 4] resultant figure is the effective per minute airtime charged. From this per minute airtime charge Rs. 4 65 per minute which is the charge arrived at after taking the revised license fee into question is deducted to find out whether any refund on account of airtime charges is due to the users of these packages.

In cases where average airtime tariff charged by the service provider based on the method described above is lower than the cost based tariff estimated following the reduction in license fee liability (i e. Rs 4.65 per minute), no refund is proposed because it follows that benefits of the license fee reduction have already been passed on to subscribers It would thus be seen that in Tabl"" V and VII, in case of some service providers, subscribers to Alternative Tariff Package do not get any refund.

On the other hand, if the estimated average airtime tariff is higher than the cost based airtime tariff (i e. Rs 4.65 per minute), the excess is determined to be the refund amount per minute of use Thus, for alternative tariff packages the refund amount is computed in rupees per minute For example, if the refund amount determined by the Authority is Rs. 1.66 per minute for a given month, a subscriber who has used 100 minutes of airtime in that month shall be eligible to receive Rs 166.00 from the service provider for that month. The refund amounts for alternative tariff subscribers are shown in Table V for metros and Table VII for circles Prepaid Tariff Package Subscribers

The same methodology as for alternative tariff packages is used for pre-paid tariff subscribers. These refund amounts are shown in Table VI for metros .and Table VU1 for circles.

p. Period from February 200Q onwards

Standard Tariff Subscribers

In addition to the monthly rental reduction of Rs. 125.00 provided to standard tariff subscribers from November 1999 onwards, metro service providers reduced airtime charge from Rs. 6.00 to Rs. 4.00 per minute to these subscribers from February 2000 onwards. Thus, the 'new standard tariff package' provided from February 2000 comprises a monthly rental of Rs.

475 00 and airtime charge of Rs. 4.00 per minute in metros.

For the period February 2000 onwards, the standard tariff package with reduced license fee is compared to the package provided by the service providers The change in pulse duration from 20 seconds to 30 seconds makes the comparison difficult. Depending upon the average duration of calls, the average price may differ in the case of the two pulse rates. For want of any other alternative, the calculations have assumed that the change in pulse rates does not affect the average price substantially.

In metros, calculations show that for standard tariff subscribers, the revised standard tariff offered by service providers has a higher rental by Rs 53.00 (i.e. Rs. 475.00 - Rs. 422.00) compared to the benchmark standard tariff package estimated with reduced license fee The charge however is lower by Rs. 0 65 (i.e. Rs. 4.65 - Rs. 4.00) per minute Accordingly, the refund amount shall be Rs 53.00 per subscriber less Rs. 0.65 multiplied by actual minutes of airtime usage. For example, a subscriber who used 50 minutes of airtime, the refund amount shall be Rs. 53.00 - Rs. 0.65 • 50 = Rs. 10.50, This formula for refunds shall be applicable to metro standard tariff subscribers from February 2000 (for the formula please see Table III) until a new standard tariff package for metros is specified.

The situation in Circles is different from in metros. The reductions in monthly rental Rs. 500.00 and in airtime charge to Rs. 4,50 per minute (from February 2000 onwards) are lower than that offered by metro service providers. Based on these figures the standard tariff subscribers in circles have been charged Rs 78.00 per month more than the benchmark rental (Rs 500.00 - Rs. 422 00), while being provided a benefit of Rs 0 15 per minute (Rs. 4 65 - Rs 4.50) compared to the benchmark airtime charge The refund amounts for circle standard tariff package subscribers, therefore, shall have to be Rs. 78.00 per subscriber per month less Rs 0 15 multiplied by the number of minutes of actual airtime usage in the month This refund formula (please see Table IV) shall be applicable to circle standard tariff subscribers from February 2000 onwards until a new standard tariff package for circles is specified.

Alternative Tariff Package and Pre-paid Tariff Package Subscribers

For alternative tariff package subscribers, including pre paid subscribers, average monthly airtime tariff is estimated using the same methodology as mentioned above for these tariff packages Data verification for this period has been done in the same manner as for the period prior to February 2000. Calculations show that the average alternative tariff charged for the months of February and March 2000 for most service providers is lower than the benchmark tariff estimated above for both metro and circle service providers. The same is true for pre-paid tariff subscribers as well. Accordingly, no refund accrues and, therefore, is not proposed for alternative tariff subscribers from February 2000 in such cases. In these cases as it stands the benefits of license fee reduction have already been passed on to subscribers Where refund is due for the months of February and March 2000 it has been shown in the relevant tables. The Authority is seeking additional information on revenue and usage from service providers and as it monitors the situation carefully it would review/modify the tariffs should that become necessary at any stage35 Methodology for Providing Refunds

RefUnds that are notified in this Order shall be made by each service provider to its subscribers after due verification of the records available with the service provider and/or the consumer. It is proposed that for all subscribers who are still with the service provider, refunds could take place by reduction of bills over a period of four months beginning from Ja April 2001 In all other cases, the refund should take place in a manner mutually agreed upon between the subscriber and service provider.

Extensive publicity on refunds should be made by all service providers, though not necessarily by publishing names of individual subscribers. Every service provider is required to submit to the TRAI by the 28th of February 2001 its detailed plan of providing to the subscribers the refund notified herein and at the end of the prescribed four month period (April to July). A report on the actual amounts refunded under each of the tariff plans offered by it to its customers.

In certain cases, especially for the pre-paid platform, subscribers who have left the network will need to be traced by the service provider in order to effect the refund. The following steps shall be taken by the service provider to trace such subscribers.

a) By reaching him at the address given at the time of registration;

b) General advertisement in the leading newspapers;

c) By prominently displaying the plan for refund at all its sales and services outlets and at other centers where it has interface with the public.

At the end of the stipulated period of four months beginning 1st April 2001, the service providers shall also provide to TRAI a list of untraced subscribers with the refund amounts due where these can be worked out on the basis of data available A list of pre-paid subscribers where adequate data was not available to work out the individual refund amounts should also be provided separately In light of the data received, TRAI would consider the option for appropriate utilization of the amount which should have been refunded but has remained with the Service providers because the subscriber could not be traced

Further change in tariffs

The Authority recognizes that some component(s) of the present calculation could undergo changes in the future necessitating minor adjustments in the calculations made and the refunds notified In that event, should the adjustment called for be material and practicable, TRAI shall notify their implementation An important test of practicability of implementing the required adjustment would be that the cost of implementation is commensurate with the amount being adjusted The Authority is keeping the tariff situation under constant review

Printed bv the M"n*| ;er, Govt of India Pr"s. Rmg Road, Ma) apun, New Delhi- U 0064