Telecom Commission (TC), the inter-ministerial panel has pulled up the telecom regulator Trai for jeopardising the health of the sector by allowing Reliance Jio’s free offers to continue beyond the stipulated time. According to various media reports, Reliance Jio’s free services have cost the government Rs 685 crore.
The Indian government collects license fees and spectrum usage charges from telcos, calculated by their revenue. Jio’s free offers have led to downward pressure on tariffs, resulting in lower government revenues.
TheTelecom Commission expects that the revenue will further decline by 8-10 percent, media reports said.
Indian telecom operators currently owe over Rs 1 lakh crore to the government as deferred payment for spectrum and close to Rs 4 lakh crore to banks. Lower revenues will further impact these telcos.
The telecom industry has lost about 20 percent of revenue due to Reliance Jio's free services, according to India Ratings and Research.
Reliance Jio, which launched commercial operations on September 5 last year, has been offering free voice and data services. The 4G entrant’s free services have forced Bharti Airtel, Vodafone India, and Idea Cellular to cut their rates and modify plans to retain customers. The cut in rates and an increase in freebies have led to a drop in their own revenues.
Telecom Commission, which is the highest decision-making body in the Department of Telecommunication, has asked the regulator to review existing rules to ensure the financial growth of the industry.
Airtel, Vodafone and Idea Cellular have multiple times raised concerns over the financial impact of Reliance Jio’s free voice and data services.
The panel has also asked the Trai to implement orders on promotional mobile tariffs in "letter and spirit." The development comes at a time when Reliance Jio is involved in a public spat with incumbent telecom operators like Bharti Airtel, Vodafone, and Idea Cellular.