Trai Removes Floor Pricing Agenda from Discussion as Telcos Set to Raise Tariffs

Trai has dismissed the matter of setting floor pricing in the industry since the telecom operators have themselves raised the tariff

By November 28th, 2019 AT 12:37 PM
Highlights
  • As per Trai the move was not workable and was already rejected in 2017
  • The telcos are also getting two-year payment moratorium
  • The telcos will hike tariffs starting December

There were a lot of talks in the industry about the Telecom Regulatory Authority of India (Trai) moving on to set floor pricing, something that would decide a bottom limit for the tariffs in the industry and force the telcos probably to increase their pricing. However, as per a new ET report on the matter now the discussion about setting a floor pricing is off the table as the Department of Telecommunication (DoT) and the telecom regulator have not agreed on the points, and also the telecom operators in the industry have decided to go ahead and raise the tariffs on their own. It is worth noting that all the telecom operators in the industry Reliance Jio, Vodafone Idea, Bharti Airtel and even BSNL have said that they are going to increase tariffs for their plans in December. This has led the officials to drop any ongoing discussions about floor pricing. In fact, a DoT official has said on the matter that the telcos have raised the tariffs, and they can raise them further as well, and the department won’t intervene.

trai-floor-pricing-agenda-telcos

COAI to Watch ARPU Stabilisation

The telecom operators also agree that there is no need for a floor pricing as they themselves are going to raise tariffs. The Cellular Operators Association of India (COAI) which represents all the telecom operators in the country and the gear manufacturers has said that it will watch the Average Revenue Per User (ARPU) and till what levels it stabilises. If it reaches sustainable levels, then there would be no need for a floor pricing, COAI Director General, Rajan Matthews said. He further added, “Floor prices are a complex issue, and for now our focus is on enhancing ARPUs to sustainable levels, which will lead to the recovery of the industry.”

When the panel of secretaries was looking for ways to ease the situation for telecom operators financially, it had suggested the way of floor pricing. However, the telecom regulator had opposed the idea saying that it had been dismissed back in 2017 and was not workable. Also, in a meeting with the telecom regulator, Vodafone Idea was reported to root for floor pricing but was shunned by BSNL. As per the telecom regulator which sees towards regulated pricing in the telecom industry, the move would have been anti-consumer and would have disincentivised investments in future technologies. Trai had also asked for a reference from the ministry which did not come.

No More Relief for Telcos Apart from Moratorium

With the matter in the hang then, the government pushed the telecom operators to increase the pricing, the two telecom operators Vodafone Idea and Bharti Airtel were willing to do so, but they were wary if Jio was going to the same or not. However, Reliance Jio came around the decision then and announced that it would also raise tariffs. But, the Mukesh Ambani led telco was not as forthcoming in its announcement of the tariff increase.

As per the DoT official, the two-year moratorium provided to the telecom operators, on spectrum payments of Rs 42,000 crore will improve the cash flow of the telecom operators and will put them on the path to recovery. Further relief from the Supreme Court will come after the petitions are being reviewed as per the filing from the telcos on the AGR matter. Vodafone Idea had sought two-year moratorium, lower license and spectrum fees and a refund of Rs 35,000 crore in input tax credits. While the moratorium has been provided, the other matters are not likely to be beneficial for the telcos.

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Arpit spends his day closely following the telecom and tech industry. A music connoisseur and a night owl, he also takes a deep interest in the Indian technology start-up scene and spends rest of his time spilling poetry and stories on paper.

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