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"Government believes in the telecom sector. The quality of service must improve and industry has responsibility," Telecom Secretary told PTI. Picture: Representational Imageen.wikipedia.org

Indian telecom companies have warned that they will be forced to increase tariffs if they have to compensate subscribers for call drops. Mobile phone operators said they will not be able to bear the additional cost of compensation and will need to pass it on.

Telecom Regulatory Authority of India (TRAI) had earlier asked telecom operators to compensate mobile phone subscribers Re 1 for every call drop, capped at three call drops per day, with effect from 1 January, 2016.

"Any increase in operation costs, of which penalties are a part, puts upward pressure on tariffs. The final impact of the actual tariff is subject to the competitive landscape," Rajan S Mathews, Director General of Cellular Operations Association of India (COAI) India, told The Economic Times.

Telecom operators are yet to begin compensating their customers, and had earlier said they would wait for a Delhi High Court order on the issue. The next hearing in the case is scheduled to be heard on Wednesday in the high court.

On 5 January, the government had backed TRAI to get telecom companies to pay for call drops, Business Insider said.

According to reports, the telecom companies had argued they would have to face an additional burden of Rs 54,000 crore annually if the penalty was levied, but TRAI had disputed the claim, stating that the maximum expenditure would be Rs 800 crore.

COAI, which includes telecom companies such as Bharti Airtel, Reliance and Vodafone, had said the laws of physics make it impossible to provide 100% call-drop-free network.