TRAI dismisses operator demands for price floor

TRAI dismisses operator demands for price floor

The Telecom Regulatory Authority of India (TRAI) has shot down demands from India’s mobile operators to set a tariff floor, arguing that no action should be taken until the fallout from the Covid-19 pandemic has been contained.

India’s three largest mobile operators – Reliance Jio, Bharti Airtel and Vodafone Idea – argue that the measure would make tariffs affordable for consumers and sustainable for operators. Following the redefinition of adjusted gross revenue (AGR), operators in India now face substantial tax increases and claim the price floor would help to safeguard their profits in lieu of government relief.

In a letter to TRAI, the Cellular Operators Association of India (COAI) – which represents Jio, Airtel and VIL – argued that “given the financial pressure on the sector and the fact that ARPU and tariffs of the Indian telecom sector are the lowest in the world, floor pricing is imperative to ensure that the sector is sustainable, and is in a position to bear the deferred spectrum and AGR dues.”

COAI began pursuing a tariff floor in December 2019, prompting TRAI to open a public consultation on the matter. It would have marked the first time India’s government intervened to set a minimum price across any sector, but the request was dropped in March 2020 after the CCI (Competition Commission of India) and the Policy Commission declared that it would likely have a negative impact on competition while ensuring operators continued to profit.

Speaking to The Economic Times, COAI director general Rajan Mathews said that the body was now demanding that TRAI hold open house discussions online in order to address the issue so that this “critical avenue is not put at risk at this critical juncture”. The body argues that Covid-19 crisis has amplified the need for healthy industry capable of investment, and that a price floor would aid this.

However, TRAI chairman RS Sharma effectively dismissed this request, arguing that the current upheaval as a result of Covid-19 (coronavirus) meant that protecting consumers was paramount, saying: "it may be a better option that any further discussion on the issue is held after the lockdown is completely lifted and normalcy is restored.”

“TRAI is always open to discussion, and has initiated a consultation on the issue on the demand of industry before the pandemic engulfed the country and the whole world. With changed circumstances, most consumers are in severe distress”, added Sharma.

The regulator has noted that while operators are only demanding a floor tariff for data, it would be open to discussing a similar system for voice services as well as a price ceiling.

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