TRAI has ordered maximum penalty of Rs200k per quarter per circle on every parameter that the telco fails to meet the minimum benchmark, payable to the government. There are 18 parameters and the worst-case annual penalty for any telco is insignificant at Rs0.32bn. From January 1, TRAI has imposed Rs 1 compensation to a sub on every dropped call per day but has capped the daily compensation to Rs 3.
TRAI’s high percentage of call drops is based on driving through congested areas in Delhi and Mumbai. These areas have also seen some shutdown of BTSes and frequency changes following the recent auctions. TRAI’s own quarterly audit covering the entire circle gives a lower % (<1.5%) of dropped calls. Back of the envelop calculations suggest compensation to subscribers could be 0.4%-0.5% of Telco’s revenue.
We believe the call drop issue has been blown out of proportion as it happened in Lutyens, Delhi and CBD, Mumbai. While call drops have happened in other cities as well, it is severe in Delhi, especially because of the downshift from 8MHz each of 900 to 6/5MHz by Airtel / Vodafone. Telcos say that the issue also has to do with changing of frequencies post the assignment of frequencies in late 2014 (after the Feb 2014 auctions).
Call drops could be because of issues in the originating and terminating networks or in NLD. In 2009, Tata DoCoMo’s plan to compensate users (“Service Guarantee”) was based on network records of the Release Cause in call drops. These and other ambiguities suggest that this “haste makes waste” regulation is a result of pressure on TRAI from the government.