Telecom regulator TRAI may fix minimum tariff soon. The telecom regulator has given such signs. This will ensure equality in the telecom sector. That is, no company will be able to decide the tariff rate on its own.
The Telecom Regulatory Authority of India (TRAI) had in past, strongly opposed for any intervention by the regulator in the setting of floor pricing in the Indian telecom industry, but now there is a U-turn and have given the first sign of consideration for floor pricing to ensure stability in the telecom sector. This change came after Bharti Airtel’s head Mr. Sunil Mittal reportedly pressed Telecom Secretary for setting a floor or minimum price rate so that the financial condition of the telecom operators and the industry can be improved.
Telecom regulator TRAI may fix minimum tariff soon. The telecom regulator has given such signs. This will ensure equality in the telecom sector. That is, no company will be able to decide the tariff rate on its own. According to experts, it is also possible that the facility of free voice calls and data will also be eliminated, but TRAI has already denied this.
TRAI May Fix Floor Pricing if Required: RS Sharma
The telecom time and financial stats were going good in India till 2016 as their Average Revenue Per User (ARPU) was ranging over Rs 250. In the year of 2017, Reliance Jio entered the Indian telecom market and started providing unlimited free voice calls and affordable mobile internet. At the same time, the company was becoming popular and started acquiring the subscriber. From that time, the financials of telecom operators was not that great as subscribers were moving to Reliance Jio and the existing ARPU was in declining trend and the AGR obstacle has a very bad impact that forces telecom operators to approach TRAI for floor pricing.
“It is only recently that the telecom companies have together written to us that regulate us, so it’s for the first time,” TRAI Chairman Mr. R S Sharma said, as reported by PTI. He was speaking at the AVIA India Video 360 event and these words came from him right after Airtel’s head Sunil Mittal spoke in length regarding floor pricing with Telecom Secretary.
Fixing a base price for voice calls and mobile internet data will be helpful for the telecom operators as subscribers will have an option to choose the right option based on the quality of service being provided, and we have seen this from recent DTH tariff regime which was initiated from TRAI. Also, from 2017, we have seen a subscriber addition trend for Reliance Jio and the floor pricing will surely have a massive impact on this.
Stating that the regulator is focused on three overarching principles of consumer protection, fair competition, and growth of the industry, Mr. R S Sharma said,
TRAI had, in the past, allowed telecom companies to decide tariffs and stepped in only when operators sought intervention from the regulator. But if there are certain market failures, if there are certain aberrations, if one of the objectives, for example, consumer protection, is not being met with, then obviously we will have to think of ways to ensure that these objectives are met with. The telecom operators in 2017 had given a proposal, asking the regulator to fix a floor price, which TRAI had observed to be a “bad idea”.
And again they have said in a couple of weeks back, so we will have to consider what to do, but what I am saying is that ideally, we would not like to put any regulation, if the market is functioning in an efficient and fair manner, that is our broad principle. So, achieving the objective without doing anything is the best.
The proposal surfaced again after the October 24 ruling of the Supreme Court that upheld the government position on including non-telecom revenues in calculating statutory dues. After the ruling, Bharti Airtel, Vodafone Idea and other telecom operators have to pay Rs 1.47 lakh crore in past dues.
Tariff Hikes May Not Help
On November 20, the Narendra Modi government announced a two-year moratorium on pending spectrum charges for the stressed sector. This, too, may fall short of ringing in a sustained recovery as there are other policy issues to be resolved. TRAI is yet to decide on interconnect usage charges, which is paid by one operator to its rival when its customer connects a call on the latter’s network. Currently, IUC is 6 paisa per minute. Airtel and Vodafone Idea want the current IUC structure to continue while Reliance Jio wants Trai to do away with the charge altogether.
Then, there’s the question of fixing a floor price for data tariffs, which the Cellular Operators Association of India has taken up with TRAI. “If we are not getting anything, then I think it is the end of the story for Vodafone Idea,” said the telco’s chairman Kumar Mangalam Birla on December 6. “It does not make sense to put good money after bad… we will shut shop the big elephant in the room is adjusted gross revenues.”