Trai has been planning to fix floor prices from a long time now as the telecom industry is facing substantial financial distress because of massive AGR burden. Recently, Reliance Jio addressed Trai and suggested that increase in floor prices must be done gradually and fixed at Rs 15 per GB which must eventually increase to Rs 20 per GB after a period of six to nine months. As per the sources of ET Telecom, Jio has marked that wireless data rates will depend upon the data consumption growth by consumers. Reliance Jio also stated that voice tariff must continue under forbearance as earlier as it will disrupt the market functioning and will be challenging to implement.
Indian Customers are Price Sensitive
As per their statement on the consultation paper of Trai on “Tariff issues in Telecom services”, Jio said that Indian customers are highly price sensitive. In order to increase the floor prices, the target floor price must be rolled out in 2 to 3 tranches as it will minimise the burden of the increased tariff.
Jio also marked that the target floor price must be rolled out in uniformity in all the existing tariffs and applicable segments. Also, it should include both individuals and corporates. Mukesh Ambani, who is the chairman and largest shareholder of Reliance Industries, noted that targeted data floor price must cover all the mixed tariffs with clearly defined elements.
Floor Price Will Revive the Telecom Sector
Telecom Industry has been lately facing massive financial burden as the telco giants have not paid their AGR dues. Telcos such as Vodafone Idea and Bharti Airtel has to pay a whopping amount of Rs 53,000 crore and Rs 35,000 crore respectively. However, Reliance Jio noted that once a target floor price is fixed, it will be a vital element in the telecom industry, and it will act as an aid in the distressed sector. Also, a fixed floor price will slowly remove the financial burden from the telco giants and will ensure their viability in the market as they are facing massive cash crunched situation without any interim relief measures from the government.
Right now, BSNL is providing the cheapest tariff plans in the industry, but the telco lacks 4G services. So when it comes to cheapest 4G plans, Reliance Jio wins the race. Vodafone Idea recently rolled out a limited period extra data offer to provide additional data of 1.5GB per day on select recharges. With this offer, Vodafone Idea managed to beat Reliance Jio and Bharti Airtel. Floor pricing will bring slight relief to the telecom operators and it will also help Airtel reach its goal of reaching Rs 300 ARPU.
