NEW DELHI:Telecom operators have criticised the sector regulator's order to compensate customers for call drops, saying the "harsh" penalty will have a cost impact and could lead to "confrontation" with subscribers.The Cellular Operators Association of India (COAI), a lobby group representing GSM carriers including Bharti Airtel , Vodafone India and Idea Cellular , told ET it would take recourse to legal remedies if Telecom Regulatory Authority of India (Trai) fails to address operators' concerns over call drops and compensation."We will discuss matters with them to see if they can address our concerns. If they address them adequately, then there is no particular reason to seek legal recourse. If not, then we will definitely have to evaluate that," said Rajan Mathews, director general of COAI."The industry recognises that this is our problem, we own it and we will fix it. But, this particular order distracts from our ability to particularly address the problem and now creates an area of confrontation between consumers and us. So, that's why we're not for it," he said.Some of the top telcos have consulted legal experts to see if their stand holds ground, said a lawyer who had been consulted. "The lawyers opine it is an unfair regulation and will be stayed till such time as a final court ruling comes on the matter," the lawyer said. He however added that legal documents against the order are yet to be drafted, as also arguments against it.On Thursday, Trai said telcos will have to pay their subscribers Rs1 for every call drop they experience on their network, subject to a cap of three call drops a day, starting from January 1, 2016.Industry executives said there are several implementation issues that need to be discussed, including the time it will take and the total cost outgo. COAI will also seek clarity on whether the rule applies even in areas where 100% coverage is not needed, as per licence conditions.There is also ambiguity on who will be penalised in cases where two carriers are involved but the call drop has happened because of inadequacy in one party's network. COAI is expected to meet Trai officials next week to discuss these issues."Trai should have given a margin of 2% of call drops, and beyond that it could have been penalised," said Ashok Sud, general secretary of Auspi, which represents CDMA telcos like Reliance Communications and Sistema Shyam Teleservices. "On any mobile network, 2% call drops are allowed by Trai and it can't be 0%."While the regulator's diktat could placate users who have been seeking quick redressal of the call-drop problem since last year, analysts said compensating subscribers could dent telcos' revenues by nearly 3%.Maximum outgo for a telco can work out to Rs93 for every consumer per month, a big hit considering the Rs120-200 average revenue per user that telcos generate per month from voice calls."Taking an average 4% call drop rate, our analysis shows that the penalty could have 3% hit on revenues and 7-8% hit on mobile EBITDA for Bharti and Idea," Sunil Tirumalai, research analyst at Swiss Brokerage Credit Suisse said in a note to clients, maintaining cautiousness for the sector. "There are many tricky situations which are not resolved in today's regulation. Moreover, we see these rules as open to misuse by enterprising subscribers," he added.Prior to Thursday's order, Trai had come out with a consultation paper on compensation for call drops. It had also conducted drive tests in Mumbai and Delhi in June, July and September, to assess mobile network conditions, specifically radio frequency coverage, network accessibility, and retainability of network, measured by the call drop rate.However, the results showed unsatisfactory network quality, which meant that call drops were still a major concern.The regulator has asked telcos to intimate prepaid customers through SMS or USSD within four hours after a call drop, and the details of amount credited. For post-paid customers, the details of the credit should be provided in the next bill.Trai said it will keep a close watch on the implementation of the mandate as well as the measures being initiated by service providers to minimise the problem of calls dropping. It may review the situation after six months.