Top Indian Telcos Want to End Free Services via Floor Price, Jio Opposes

India’s incumbent telecom operators have urged the Telecom Regulatory Authority of India (TRAI) to set a floor price for voice and data services. The request if accepted by the telecom regulator would put an end of free services for customers in India and would mean that telcos would need to get tariffs cleared by the regulator for various plans.

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The demand follows pressure on top telecom operators’ revenue and profitability that have been impacted after the launch of Reliance Jio’s disruptive free services in the country. Following the launch, incumbent telcos were forced to cut the cost of data services bundled with free voice service in the country. Jio’s free offers helped the telco gain 100 million users in record time.

Jio’s free service faced criticism from incumbents which termed it against norms. The regulator however previously cleared Jio’s free voice and data offers and said they don’t violate pricing standards. The matter is currently in the court and the telecom tribunal, the TDSAT.

According to media reports, the TRAI Chairman RS Sharma said that the telcos are demanding that no one should offer a tariff that is lower than the cost of services. He stated that the demand is being examined.

“There was an interesting idea mooted by some of the operators for creating a floor or minimum price for voice and data. Some examples of fixed floor pricing by some countries were given, and of course, there were contrarian views also…I raised the issue that floor price of a commodity will depend on multiple variables, technology, utilisation of network, volumes, etc. So, it’s a complex issue of operationalising this principle,” Sharma was quoted as saying.

The chairman gave a hint that the TRAI may include the discussion around floor price in the consultation paper on tariff principles, which is currently underway.

A Times of India report said that India’s leading telco Airtel stayed away from the demand of a floor price, while Reliance Jio did not support the proposal, and made a demand for creating an open-market competition.

In the country, tariffs for telecom services are currently under forbearance and telcos are free to decide on consumer offerings. According to reports, incumbent telecom operators Bharti Airtel, Vodafone and Idea previously urged the regulator to consider the current interconnect usage charge (IUC) of 14 paise a minute as the retail floor price for voice, and any service below that be considered as predatory pricing.

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