Indian operators’ efforts to add base stations to improve coverage and reduce dropped calls, which have become a major problem over the past year, have been slowed by higher fees by local governments and rising site rentals.

The Economic Times reported that local authorities have imposed a number of fees for adding new sites, renewing existing sites and even bringing in new tenancies, which have led to a sharp increase in tower installation costs and bureaucracy.

Tower operators said the higher costs will inevitably hurt margins and they will likely be forced to pass some of the increase on to operators.

“Multiple levies under the guise of renewal fees, sharing fees [and] development charges coupled with property tax demands are being imposed on tower companies with the sole aim of revenue maximisation for the government,” a representative from Tower & Infrastructure Providers Association (TAIPA) told the Times.

TAIPA members include American Tower, Bharti Infratel, GTL, Indus Towers, Reliance Infratel, Tower Vision and Viom Networks.

In addition, monthly site rentals have increased by at least 10 per cent over the past six months, and in Mumbai and Delhi the increases have been much higher, a tower company executive said.

The telecoms regulator in October ordered mobile operators to pay customers INR1 ($0.015) for each dropped call. Mobile operators then complained to the Department of Telecom that the new penalty would cost the industry INR540 billion ($8.3 billion) a year and called on the minister to intervene.

Despite the regulator sending operators a letter reminding them to compensate customers for dropped calls, the Association of Unified Service Providers of India (AUSPI) said members won’t follow the new regulation until required to by the courts.

Local governments have also initiated a campaign to shut down towers that have been set up without the required permits. In New Delhi alone, about 300 mobile towers have been “sealed” by municipal agencies, which say there are more than 2,3000 illegal sites, the Times said.

The TAIPA representative accused local authorities across states of using tactics like tower sealing as a pure money-spinning ploy. He told the Times, “the sealing drive is solely aimed at generating extra revenue and has increased the financial burden of tower companies”.

When a site it sealed, he said, the cost to secure one in the same location will increase sharply since the site rental will jump 50 to 100 per cent.