Home / Industry / Telecom /  Trai seeks views on need for a floor price for mobile services

NEW DELHI : The Telecom Regulatory Authority of India (Trai) on Tuesday kick-started a consultation process to determine if regulatory intervention is required in fixing tariffs and the need for a floor price for mobile services.

The regulator has also sought consultation on issues such as the methodology to fix a floor price and how to ensure that it does not benefit a section of operators with windfall profits. It has also sought suggestions on whether floor prices should be fixed for both data and voice services.

Mobile tariffs are currently under forbearance, which means operators have a free hand in fixing rates—they only have to report tariff plans to Trai within seven days of the launch. If a floor price is set, free services could become a thing of the past. This would come as relief for Bharti Airtel Ltd and Vodafone Idea Ltd, which have been clamouring for an increase mobile tariffs.

The regulator’s fresh consultation paper comes at a time when the sector is reeling under severe financial stress. In fact, a special panel set up by the government in October to recommend steps to revive the telecom sector had suggested that the regulator examine the aspect of a minimum charge (floor tariff) for voice and data services to ensure that the sector remains financially viable.

“In the last few months, many concerns have been raised about the health of the Indian telecom sector and the need to fix a floor price for telecom services. The Department of Telecommunications has recently forwarded representations received by it from the telecom service providers, regarding various issues, inter alia, including plea from some of the telecom operators seeking floor tariff fixation by the regulator/government," the regulator said in a statement.

Even in 2017, following the September 2016 entry of Reliance Jio with free data and voice tariffs, existing telcos had approached the regulator to consider setting up a floor price as their revenue streams started shrinking. At the time, Trai had said a floor price “was not a workable idea"; subsequently, operators, too, were in agreement.

“The fast pace of technological changes in the sector require huge capital investments. Telecom sector is the infrastructure provider for many other sectors. Thus, making sure that the telecom sector remains healthy and its orderly growth are equally important. These are crucial issues currently impacting the telecom sector and a detailed deliberation by all the stakeholders is necessary to find the best way forward," Trai added.

Emailed queries to Jio, Airtel and Vodafone Idea did not elicit any response till press time.

Written comments on the issues raised in the consultation paper have been invited from the stakeholders by 17 January 2020, and counter-comments by 31 January, 2020.

Vodafone Idea and Bharti Airtel have reported record losses for the September quarter, ravaged by a Supreme Court verdict that upheld the government’s broader definition of telecom revenues, based on which it calculates the licence fees of operators.

Vodafone Idea’s loss for the September quarter was at 50,922 crore—the highest in India’s corporate history. Airtel, too, reported its highest quarterly loss in 14 years at 23,045 crore in the quarter ended 30 September.

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