Illegal telephony thrives in India (Asia Times Online)

The article looks at the cause and spread of telephony fraud in India.

Most of the fraud is done to avoid paying high fees to the land-line operators like MTNL and BSNL. But the article also touches upon the security aspect of setting up illegal exchanges.

The Telecom Regulatory Authority of India (TRAI) refuses to lower the fees that the private operators have to pay and this has led to increased illegal telephony as well as complex arrangements where even the legit operators find loopholes to avoid apying the fees. This fixed-line operators are supposed to use this fee to make telecom affordable to the poorer segments of the population.

The private operators argue that when a foreign carrier is not involved, they don't have to pay the fee (the TRAI rule requires the private carrier to pay the fee when three parties are involved - a foreign carrier, the private carrier and the fixed line operator). Both Reliance and Tatas have setup companies overseas so that they can originate the calls and avoid paying this charge. The fixed-line operators are, of course, arguing that they still need to be paid.

This is the reason why Reliance can offer rates as low as 11.9c per minute to India from the US. I wonder if they are still paying some fees because China Telecom offers 2c a minute calls to China and the reason is that they own both sides of the network. Now that Reliance and Tatas also own both ends, why can't they reduce their fees?