After denying several times, Trai has finally come up with a new consultation paper to set floor pricing in the bleeding Indian telecom industry. Trai's latest "Tariff Issues of Telecom Services," consultation paper seeks the stakeholder and public views on setting minium price for data and voice calls. Trai never intervened in the tariff department and left it entirely to the telcos on designing tariff plans of their choice in the respective markets. However, with the telecom sector now reeling and heading for a monopoly, top telcos have approached Trai to introduce floor pricing. That said, telcos themselves were against the floor pricing back in the year 2017, but they are now asking the regulator to implement it at the earliest. Before issuing the consultation paper, Trai also had a meeting with telecom operators and sought their views as well. This essentially means that the tariff plans of Reliance Jio, Vodafone Idea, Bharti Airtel, BSNL and MTNL will get even costlier in the coming months, but yes, the tariff plans of all the telcos will start at the same price.
Floor Pricing by Trai: What Exactly is It?
Indian telecom industry witnessed several changes over the last few years, especially in the tariff department. India now has the cheapest 4G data plans in the world, but at the same times, telecom operators are facing the heat and the industry is said to be headed towards monopoly. Right after the AGR setback, UK-based Vodafone approached the Indian government seeking relief, and if the government fails to provide the same, it's on the verge of leaving the country.
In the consultation paper, Trai said that the telecom operators approached DoT for setting a minimum price for data and voice services, and the same has been forwarded to Trai now.
"Department of Telecommunications has recently forwarded representations received by it from the telecom service providers regarding various issues, inter alia, including a plea from some of the Telecom Service Providers (TSPs) seeking floor tariff fixation by the regulator/Government," said Trai in the paper.
This essentially means that Trai will have complete control over tariffs and there will be a minimum price for data and voice calling services. Having said that, once the floor pricing comes into effect, Reliance Jio or any other operator will not have an advantage in the tariffs department, instead, subscribers will have to choose the operator based on the Quality of Service (QoS). Already, telecom operators recently increased tariffs by up to 40%, but still, Reliance Jio is enjoying a decent pricing advantage over Airtel and Vodafone Idea.
Trai always stayed away from intervening in the tariffs department, however, it now believes the time has come to save the reeling telecom sector. "Accordingly, the Authority has decided to float a consultation paper on the issue so that all the stakeholders in the value chain can get an opportunity to fully participate in the deliberations and give their views on such crucial issues affecting consumer interest," added Trai.
The regulator is looking for comments from stakeholders till January 17, 2020, and the counter comments by January 31, 2020.
Is Floor Pricing a Must in the Telecom Industry?
Right now, Vodafone is on the verge of exiting the Indian market if there's no relief from the government. Floor pricing is one such aspect which will help the telcos continue generating revenues. We have never seen the Indian telecom sector is such shape over the last 20 years and operators had very good revenues and ARPU used to be over Rs 200 for each operator in 2016. But everything changed in the sector after Reliance Jio's aggressive approach.
Floor pricing will surely help the telcos gain back their ARPU and also gain subscribers by providing better services to the customers.