Reliance Jio’s free offers did not violate rules: TDSAT
New Delhi: After proceedings that lasted almost a year, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) on Thursday ruled that Reliance Jio Infocomm Ltd’s ‘welcome offer’ and ‘happy new year’ offers did not violate rules.
While Reliance Jio’s offers were IUC (interconnect usage charge) compliant, non-discriminatory and non-predatory, the company had failed to comply with the tariff reporting requirements to the regulator in respect of the ‘welcome offer’, the order said.
In the 31-page order issued on Thursday, the tribunal also asked the Telecom Regulatory Authority of India (Trai) to issue a suitable order on benchmarks that can be applied for ascertaining consistency with non-predatory principles.
Trai chairman R.S. Sharma had said in an interview on 4 January that the regulator would soon issue rules that will define whether a particular tariff announced by an operator is transparent, non-predatory and non-discriminatory or not.
“We also observe that ‘all services free’ offer is an extreme form of below cost tariff and therefore rigorous tests must be applied for regulatory compliance. Till Trai issues the required guidelines, we further direct that no ‘all services free’ offer in any manner will be launched by Jio or any other similarly placed telecom service provider without making written submissions to Trai for self-check for consistency with regulatory principles of non-predation,” the order said. Trai will examine these submissions within one week and convey its approval or disapproval within writing with reasons.
The controversy had started when Jio, which entered the telecom sector in September 2016, announced a ‘welcome offer’ giving free data and voice for three months starting 5 September 2016. Jio on 1 December 2016 announced the extension of these free services till 31 March 2017 under its ‘happy new year’ offer.
Incumbent operators had then contended that existing regulations stated that any promotional offer by a telecom operator must be limited to 90 days. Idea Cellular and Bharti Airtel had, over a year ago, had moved the TDSAT against Trai and Jio over the extension of free services by the latter.
During that time, Jio had written to the regulator contesting the view of its rivals and had said that its free data offer was not predatory as the company was not a significant market player in the cellular mobile services category.
Moreover, Jio had also told Trai that the second offer can in no way be construed as an extension of the first offer as current regulations consider two plans as distinct even if there is only a small difference in the terms and conditions. The ‘welcome offer’ was a fully free offer, whereas the ‘happy new year’ offer had a different data limit with the option of paying to avail of higher speed after exhaustion of the said limit, it had said.
While Trai had then ruled that Jio’s plans were not violative of current norms, it faced a backlash from rival operators. The regulator subsequently issued a consultation paper on “Regulatory Principles of Tariff Assessment” in February 2016, through which it had sought views on the matter, including which tariff offers should qualify as promotional offers and what should be the features of such an offer, among others.
The TDSAT on Thursday ruled that the two offers—‘welcome offer’ and ‘happy new year’ offer were distinct. “A change in offer which is based on a rational reason (usage pattern in this case) and a rational objective (such as to fine tune data usage to reduce congestion) will distinguish one offer from another,” it said in the order.
Stating that the reporting requirements by an operator for a tariff is central to regulations on tariff, TDSAT said that it found the reporting of ‘happy new year’ offer in order but Trai’s position on ‘welcome offer’ as untenable.
The tribunal noted that the start date of ‘welcome offer’ was reported to Trai on 1 September 2016 in which Jio listed a base plan with special benefits.
“This tariff which is filed as a plan voucher does not mention ‘welcome offer’...a letter dated 27 September mentions welcome offer but does not specify what it is...in a letter dated 12 October, Jio asked Trai to consider special benefits offered under tariffs filed on 1 September as promotional offer...since Trai accepted this request of Jio made vide letter dated 12 October, the best we can agree is that ‘welcome offer’ came into existence on 12 October,” the order stated.
Reliance Jio did not meet the reporting requirements in respect of ‘welcome offer’, the tribunal said, directing Trai to take appropriate action for such non-compliance by Jio.
All operators are mandated to file their tariffs with Trai within seven working days from the date of implementation of the tariff. If an operator fails to do so, it is liable to pay Rs5,000 for every day of delay, subject to maximum of Rs2 lakh.
The tribunal also asked Trai to issue clear guidelines for performing self-check for consistency with principles of IUC compliance as open-ended provisions make verification of IUC compliance difficult.
IUC consistency of tariffs implies that the operator should be able to meet IUC expenses on a weighted average basis. Jio had argued that since its tariff composed of voice and data services, post the promotional offers it will be able to recoup the IUC expenses in a short period.
IUC is what an operator pays another to land calls on the latter’s network.