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What is a Telecom Tariff?

Douglas Bonderud
Douglas Bonderud

A telecom tariff is a document that must be filed, by a communications provider, with the regulatory body in its area of operations. This document outlines the types of services the carrier will offer, along with the rates it intends to charge. The tariff also designates the rights the company will grant its customers, as well as both parties' obligations in any agreement.

Typically, carriers are required to submit a telecom tariff for both state or provincial approval, as well as for federal approval. These documents are reviewed and have no force or effect until officially approved. Often, this review process includes public input. Despite having a general telecom tariff with a federal government, tariff rules and regulations can vary significantly from state to state, even for the same company.

Businesswoman talking on a mobile phone
Businesswoman talking on a mobile phone

This type of tariff should not be confused with a import or export tariff, which is an extra fee put on goods entering or leaving a country by that country's government. These types of tariffs are intended to generate revenue for the government, or to prevent certain goods from being imported. While there can be those specifically aimed at telecommunications goods, a telecom tariff is simply a document used by a carrier to declare what it will charge a consumer to use its products and services.

With the advent of many new telecommunications companies, what are known as tariff wars have begun. This is an especially popular phenomenon in India, where cellular and data service rates are already extremely low. The pre-existing wars, coupled with an influx of new companies, has led to some companies rewriting their tariff documents on an almost daily basis.

In a tariff war, companies try to retain the largest base of customers they can by offering special promotions or rates. Some examples of this include the advent of per second billing, rather than per minute, and lowering the cost of roaming charges — which are applied when a cellular device is used outside of the provider's area of coverage. Per second billing can significantly reduce costs as compared to the per minute system, since — under the old system — any use of the device, no matter how brief, would result in a one minute charge. A per second billing structure is often both more accurate and cheaper.

Most governments post telecom tariff documents on their websites, for public review. Hard copies can also be obtained, if necessary. The goal in requiring carriers to submit telecom tariff plans is to have a clear listing of charges and regulations, in the event of a dispute.

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