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ANNEX TO THE EXECUTIVE SUMMARY

List of Questions and Options

1. Choice of Services to be Subject to Price Regulation

 

  1. Which services should be subject to price regulation?
  2. 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?
  3. 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?
  4. 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 competition?
  5. 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 different services

  1. Should a specific price level be determined for certain services. If yes, which services should be subject to this type of price regulation?
  2. Should only a price floor and ceiling be specified for certain services. If yes, then which services are these?
  3. 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 vice-versa?
  4. 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 cap mechanism?
  5. 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?
  6. 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?
  7. 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

  1. 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?
  2. 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?
  3. 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?
  4. 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 cost-based pricing?
  5. Which type of mark-up should be used? For example, should it be a reasonable commercial return or Ramsey mark-up?
  6. 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 demand-based price?

4. Subsidization and deficit

  1. 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?
  2. Should the mark-up be applied before or after the calculation of the difference between fully-allocated costs and long-run incremental costs?
  3. 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 charges?

5. Increase in rentals; preferential tariffs

  1. 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 increase?
  2. Should the rentals continue to be lower for subscribers covered by exchanges with small capacity?
  3. Should there be a reduction in the number of different categories of exchange capacity which are currently used for pricing rentals?
  4. 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?
  5. 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 non-rural subscribers?
  6. Should the current preferences given to rural areas continue? Be removed? Or be increased?

6. Unbundling of services

  1. 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

  1. Should the prevailing structure of escalating tariffs be replaced by a more simplified one?
  2. Should volume discounts be provided to encourage subscribers to increase the number of their calls?
  3. 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?
  4. 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 subsequent calls?
  5. 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 towards costs?
  6. 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 increases?
  7. If the distance-slab system were to be retained, how many slabs should be considered, and over what range of different distance slabs?
  8. Should the number of different time slabs for domestic off-peak tariffs be reduced?
  9. 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 purpose?
  10. Should the tariffs for operator-assisted trunk calls be made more consistent with the national STD tariffs?
  11. 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?

8. Other

  1. What will be the time period for obtaining the requisite information in adequate detail?
  2. Which of the tariff methodologies could be used even with the data that is presently available?
  3. If the tariff system has to be changed then should there be a phased move towards the expected tariff structure?
  4. Should there be a re-evaluation once the detailed data is made available?

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