Here's a quick quiz for telephone users: Will telecom tariffs fall any further? Are basic phones dead?  Will cellphones do all the talking? And, are WLL limited mobile phones not the great deal they were once touted as?

These are the questions facing the country's top telecom companies. Last week the Telecom Regulatory Authority kicked off a fundamental restructuring of the country's telecom business by announcing a new interconnect regime (that's the charges which different telecom services -- fixed, WLL and GSM mobile -- pay each other to access one another's networks).

The TRAI's decision will have a sweeping impact on all customers. In one move it made fixed line services more expensive by hiking rentals in cities by around 11 per cent. At the same time it cut free calls by half so that callers will now have to pay Rs 1.20 for every one-and-a-half minutes instead of three minutes as it was before.

The regulator also made it more expensive (40 per cent in some cases) to use WLL limited mobile phones. That's because WLL service operators must now pay interconnect charges to GSM and fixed line operators for each call. Earlier they paid nothing.

At the same time the biggest winners have been GSM mobile users -- TRAI has ordered that incoming calls from land lines will be free from April 1. Even before the deadline, Bharti has offered free incoming calls across the board for a rental of Rs 999, since Friday.

Also, TRAI has warned the mobile operators not to pass on extra costs by hiking phone rentals. It will also be cheaper to call fixed line or WLL phones because interconnect charges are now lower.

Says M S Verma chairman, TRAI: "The whole attempt has been to make services cost based."

There have, of course, been rumblings of protest in the industry. But for the time being no one is taking their battle to the courts. Says Prakash C Bajpai, president, Reliance Infocomm: "It is true our costs for offering WLL limited mobile have gone up because of the interconnection regime. We have not been given a level playing field vis-ŕ-vis cellular operators."

Counters Asim Ghosh, managing director, Hutchison India: "Incoming has been made free but the interconnect income is not enough to meet our costs. The TRAI order has favoured WLL limited mobile in many areas." Both the cell and basic operators may appeal to the TRAI.

But what does the new regime mean for customers and the companies? For one, the TRAI ruling has narrowed the gap in tariffs between limited mobile and GSM fully mobile services. Says Anil Nayar, president, mobility, Bharti Televentures: "Yes the tariff gap has narrowed down and now the difference will not be more than 15 per cent to 25 per cent."

The TRAI ruling that incoming calls will now be free has virtually neutralised one key advantage of using a WLL phone.

The WLL limited mobile service companies concede that customers will have to pay more. Reliance Infocomm has already made it clear that customers have to fork out the extra interconnect charges when calling GSM or fixed line operators.

But WLL players say they've also gained from TRAI's ruling. While calls to GSM phones will be more expensive, calls to BSNL fixed line phones will be cheaper. Says a WLL limited mobile operator: "Earlier we had signed an agreement to pay 66 paise a minute to BSNL for terminating our calls -- which means effectively customers had to pay Rs 1.06 a minute.

"Now the termination charge by TRAI has been fixed to 50 paise so customers have to pay 0.90 paise."

But he points out that a call from a WLL phone to a GSM mobile will now cost 70 paise compared to the 40 paise that had been planned on.

So how can WLL operators make their services more attractive? One way is to offer even lower tariffs for calls within their networks (for instance Reliance charges currently 40 paise for calls made within the network for the first 400 minutes. It also offers STD on its network at the same rate). The WLL operators hope to build a large customer base who will be able to talk to each other at cheaper rates that GSM operators won't match.

At Tata Teleservices, however, they are recasting targets and strategy. Says Rajiv Kataria chief operating officer, Tata Teleservices, Delhi: "We were expecting to get 1 lakh customers in Delhi but we have to wait and see now. It will all depend on the new tariffs that we announce."

The GSM operators also have their grouses. They are thrilled because the tariff gaps between them and the WLL operators have narrowed. But they are extremely alarmed about the revenue loss from free incoming calls.

Says T V Ramachandran, director general, Cellular Operators Association of India: "Sixty-five per cent of all the calls are incoming so the revenue implications are huge. But the money we are getting from interconnect for incoming calls is a pittance."

Ramachandran's worries are very real. Incoming calls produces about Rs 2,700 crore (Rs 27 billion) annually for the cellular operators. But the extra revenue from access charge which has been provided by TRAI covers only one-fifth of this loss in revenue. Worse, the TRAI has pre-empted any move to hike monthly rentals -- which is what they did when announcing that cell to cell incoming calls would be free.

So, what will happen next? One possibility is that customers will have to pay more to cover the loss of revenue. Or, the telecom operators will have to make up for the loss of revenue by getting more customers and calls. Says Nayar: "I think tariffs have reached the lowest ebb, they will stabilise and will only go up in a year."

But it's the fixed line operators who've been worst hit by last week's order. The TRAI order has made it attractive for customers to shift from fixed lines to wireless services like WLL limited mobile. Says Sanjay Mehta  partner, telecom, Ernst & Young: "The TRAI order hastened a process which is happening worldwide, where most of the growth in telecom subscribers is happening in wireless." 

Mehta estimates that  in the next three to four years 50 per cent of customers will be on wireless (compared to 20 per cent now).

For the companies too it makes sense to install more wireless lines and get quicker returns. It costs four times as much to install a fixed line (Rs 22,000- Rs 24,000 per line) than it does to deploy a wireless line (Rs 8,000). It's also much faster to install a wireless line.

Nobody in the fixed line business is making expansive predictions. Says S Ramakrishnan managing director, Tata Teleservices: "The growth of fixed line will slow down, but fixed line will be used for data -- like Internet and broadband services. So I don't see it dying out."

Companies already acknowledge that the role of fixed line phones is about to change. Reliance Infocomm, for instance, is wiring up commercial buildings this year to offer broadband services to companies. By next year offer it plans to offer broadband to homes for around Rs 500 a month (which will include Internet, cable, interactive TV and video streaming amongst others). Even BSNL has launched trials of its broadband services and plans to go all-India very soon.

Clearly, the TRAI ruling has forced telecom companies to rework business plans and tariff numbers. But the government's great slogan to offer cheap telecom services has been given a quiet burial. What is clear is that customers will have to pay more for telecom services -- whether they are using WLL, GSM or fixed lines.