ANNEX TO THE EXECUTIVE
List of Questions and Options
1. Choice of Services to be Subject to Price
- Which services should be subject to price
- What should be the basis for categorizing
services into those subject to price regulation and the
other services which should not be so regulated? Should
these two categories correspond to, for example,
basic/non-basic telecom services, or voice/non-voice
telecom services? If basic/non-basic services were used
as the criteria then what should be the coverage of basic
services in this context?
- Should the services not subject to price
regulation be those services which are considered not
essential? Or, should non-essential services be
categorized into those subject to weaker price regulation
and others not subject to such regulation? If yes for the
latter query, then on what criteria should such a
categorization take place? What should be the definition
of essential services in this context?
- Should the type of price regulation depend
on the extent of competition in the market? If yes, then
what is the link between the type of price regulation and
the extent of competition? For example, should there be
price regulation for services whose markets have adequate
- What is adequate competition? Should one
use a thumb-rule that three or more operators in the
market result in adequate competition for reconsidering
the pricing methodology to be applied to the service
provided by these operators?
2. Choice of the type of price regulation for
- Should a specific price level be
determined for certain services. If yes, which services
should be subject to this type of price regulation?
- Should only a price floor and ceiling be
specified for certain services. If yes, then which
services are these?
- Should price flexibility be greater than
that provided by floor and ceiling prices, i.e. should
only a price cap be provided and not the floor, or
- Should a combination of different types of
regulation be used to regulate the same service, e.g.,
should the cost-based price be supplemented by a price
- If a price cap mechanism were to be used,
then which services (and methodologies) should it apply
to? For example, should it apply to both tariffs
specified in terms of a specific level as well as tariffs
specified in terms of floor and ceiling?
- In an overall price cap, which telecom
services should be subject to sub-caps, and what should
be emphasized in these sub-categories when the specific
price cap is being decided for them?
- Should a price floor be defined for all
services in order to address the issues of unfair
competition? If not, for which types of services should a
price floor be provided? If such a price floor were to be
specified, should a rebuttable presumption be that prices
lower than the floor result in unfair competition.
3. Methodology for price regulation
- Is long run incremental cost an
appropriate concept to use for determining cost-based
prices? If yes, would it be better to focus on a wider
coverage of long run incremental costs, such as TSLRIC?
- Would demand-based pricing be a relevant
basis to use instead? If yes, would this be so for all
situations/services or only for some of them? What should
be the criteria for making such a decision?
- Should the floor and ceiling prices be
linked to certain concepts of costs? If yes, which
concepts should be used for this purpose (e.g. certain
version of long-run incremental costs, stand-alone
costs)? If not, what should be the basis for choosing
floor and ceiling prices?
- Does the fact that new entrants would be
coming into the market and that there will be a
substantial increase in telecom capacity in particular
imply that TSLRIC is an appropriate concept for
- Which type of mark-up should be used? For
example, should it be a reasonable commercial return or
- Should certain services which provide
greater use or value to the subscribers be charged a
higher mark-up on cost, i.e. a mark-up which reflects a
4. Subsidization and deficit
- Should actual costs or forward-looking
costs be used to calculate the fully-allocated costs
(FAC) for deriving the difference between FAC and
long-run incremental costs (LRIC)? The use of
forward-looking costs is likely to maintain a link with
efficiency and future developments. Is this an objective
important enough to over-ride other considerations?
- Should the mark-up be applied before or
after the calculation of the difference between
fully-allocated costs and long-run incremental costs?
- Regarding the issue of lower telecom
tariffs for certain users, there is a need to consider to
whom subsidies should be provided, and how much? For
example, should there be an upper limit on local call
5. Increase in rentals; preferential tariffs
- Should rentals be increased or remain
unchanged? If rental should increase, then by how much
and for which user groups (e.g., for all subscribers; for
certain user-groups such as business subscribers,
residential subscribers, rural subscribers, non-rural
subscribers)? What criteria should be used for
determining the user-groups whose rentals should
- Should the rentals continue to be lower
for subscribers covered by exchanges with small capacity?
- Should there be a reduction in the number
of different categories of exchange capacity which are
currently used for pricing rentals?
- Should there be a differentiation among
subscribers only on the basis of whether they are rural
or non-rural subscribers, e.g. for purposes of rentals,
there would not be any distinction of subscribers on the
basis of exchange-capacity?
- Would it be preferable to provide a
flexible option which combines two possibilities, namely,
a high rental together with lower usage fee, or a lower
rental combined with higher usage fee? Should the same
flexible options be provided to subscribers in rural and
non-rural areas. If not, then what should be the nature
of the difference in the options provided to rural and
- Should the current preferences given to
rural areas continue? Be removed? Or be increased?
6. Unbundling of services
- To what extent, and which, services should
be unbundled? Should one ensure consistency between the
price of a service when it is provided in an unbundled
form and the price of that service when it is provided
together with another service.
7. Structure of Prevailing Indian tariffs
- Should the prevailing structure of
escalating tariffs be replaced by a more simplified one?
- Should volume discounts be provided to
encourage subscribers to increase the number of their
- Should the basis of timing used for
charging for calls be changed? For example, should an
initial flat rate tariff be charged for a specified time,
followed by a per second charge applied to the time of
the call that exceeds the initial flat rate period?
- Should the current number of free calls
continue to be provided, or should the free calls not be
provided at all? If free calls were not to be provided,
then should a specified number of initial calls be
charged a lower/higher price than subsequent calls? What
should this specified number be, and what should be the
link between the price of these initial calls and the
- Should the national STD tariff structure
be altered to correspond more closely to the difference
in costs that arise with a change in distance? Similarly,
should the tariffs for international calls be oriented
- If the national STD distance-based tariff
system were to be changed to better reflect costs, should
the discrete distance-slabs as in the present structure
of tariffs be retained, or should a more continuous and
smooth increase in tariffs be used as the distance
- If the distance-slab system were to be
retained, how many slabs should be considered, and over
what range of different distance slabs?
- Should the number of different time slabs
for domestic off-peak tariffs be reduced?
- Are the incentives provided by the current
structure of off-peak tariffs such that there is a
greater likelihood of congestion in the non-peak period
adjacent to the peak-period? Could a larger number of
calls be encouraged during late night off-peak period?
What type of a change in tariff should be used for that
- Should the tariffs for operator-assisted
trunk calls be made more consistent with the national STD
- Should the time difference with various
countries and the prevailing pattern of calls to these
countries be considered for deciding when off-peak rates
should be provided for calls to different countries?
Alternatively, should the off-peak times be the same for
international calls to all countries?
- What will be the time period for obtaining
the requisite information in adequate detail?
- Which of the tariff methodologies could be
used even with the data that is presently available?
- If the tariff system has to be changed
then should there be a phased move towards the expected
- Should there be a re-evaluation once the
detailed data is made available?
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