TRAI will ask the operators to explain their views on ‘minimum floor price’ for tariffs.
Regulator TRAI will meet all telecom service providers on July 21 to seek their views on ‘minimum floor price’ for voice and data tariffs, as being demanded by some operators, an official has said. The minimum floor price, for both data and voice calls, has been demanded by a section of incumbent telecom operators, but implementing it could mean an end to freebies in the market.
Also, the tariffs are currently under forbearance — operators virtually have a free hand in fixing the rates and report plans to TRAI in 7 days of launch — and, hence, a floor price set, if it happens, would imply a shift from that regime.
The regulator will ask the operators to explain their views on ‘minimum floor price’ for tariffs, and also the formulation or math for the fixing such a rate, the official said. During the meeting, the Telecom Regulatory Authority of India (TRAI) will seek the rationale for the floor price demand and has asked operators to also give a detailed presentation to support their arguments. It is also expected to ask the telcos why an upper ceiling for tariffs is not similarly justified.
The demand for imposition of a floor price first came up last month, at industry’s meetings with the regulator and separately with the inter-ministerial group (IMG). Highlighting the growing financial stress on operators, Idea Cellular, in its presentation to the IMG had said that the industry has been witnessing losses and negative returns driven by below cost tariffs that are “predatory”. ALSO READ: Telephone subscribers grew 0.51% in May: TRAI
“Only solution is to have floor prices for voice, SMS, and data services so mobile telecom businesses generate adequate profits to invest and then compete based on the quality of services” it had said citing nations like Sri Lanka, Zimbabwe and Bangladesh which have such floors. It may be recalled that Mukesh Ambani promoted Reliance Jio had stormed into the telecom market last year, wooing customers with promotional free voice and data services. Jio still offers aggressive data plans and has promised that voice calls will forever be free on its network.
In fact, Jio’s promotional freebies for seven months is blamed by incumbent operators for the financial woes of the sector. The industry’s debt stands at Rs 4.6 lakh crore.