Last week, major news came out from the industry that the government is looking to provide relief to telecom operators by asking Trai to implement floor pricing. However, a new report from ET Telecom now says Trai did not receive any official update from the government and setting floor pricing in the industry will be an anti-consumer move. The officials from Trai also informed the publication that setting floor pricing is not a practical option, and at the same time, it will also be impossible to attempt. Trai also clarified that it would never intervene in the tariffs department, and if floor pricing gets implemented, Trai will have to ask the telcos to change the tariff prices, something which it is not supposed to do.
Trai Not in Favour of Implementing Floor Pricing
The Telecom Regulatory Authority of India (Trai) is completely against floor pricing rule which the government is planning to ask the regulator to implement to bring stability to the telecom sector. According to the report, Trai did not receive any official information from the government regarding floor pricing implementation. “We have not received any official communication. It will be extremely difficult to do suo motu. Besides, it (setting a floor) is not practical and not possible,” said an official of Trai to ET Telecom.
Furthermore, floor pricing implementation will be impossible to implement in the sector. Trai officials also said there are no plans of bringing consultation papers on floor pricing implementation. Trai also believes that the floor pricing implementation will be an anti-consumer move as it will never intervene in the tariff prices department.
To recall, back in 2017, Trai rejected the floor pricing proposal already because of the same reasons. Back then, Trai rejected the proposal as not being 'workable' one. Reliance Jio completely opposed the floor pricing aspect, whereas incumbent telcos wanted Trai to implement the same. For the unaware, Reliance Jio offered free services to the customers for at least six months after launching the services commercially.
Reliance Jio shattered the Indian telecom market completely with its aggressive pricing and low-cost data plans. Last week's report highlighted that the telcos approached the government to bring stability in the sector. And the only way to bring stability is by implementing floor pricing altogether. For now, Trai did not receive any official information from the government.
Trai is also cautious that telcos should not come back at a later date and blame the regulator for implementing the floor pricing. For Trai to consider the implementation of floor pricing again, there should be a proper written communication which has not been received for now.
If Trai receives the written communication from the government, then it may begin the consultation process on the matter. “Then we can discuss or ask them, whether we should put a floor price on 2G, or only voice calls,” said another official to ET Telecom.
Why Are Telcos Looking for the Implementation of Floor Pricing?
Indian telecom operators are reeling under losses right now. For the first time ever, telcos had the opportunity to go hard at Reliance Jio for breaking the promise of unlimited voice calls on its network. Last month, Jio introduced IUC Top-Up vouchers and also started charging for outgoing voice calls made to non-Jio mobile numbers. Just when telcos thought that they now have an opportunity to tackle Reliance Jio, they were hit with another roadblock from the Supreme Court decision of paying adjusted gross revenue (AGR) dues of as much as 20 years.
Telcos had to pay a whopping Rs 1.3 lakh crore dues in the form of spectrum usage charges, license fee and penalties now. Bharti Airtel and Vodafone Idea opposed the decision of the Supreme Court and sought relief from the government, which is said to approach Trai for implementing the floor pricing. Telcos are already reeling with over Rs 7 lakh crore debt and the AGR dues made the matter even worse.
The UK-based Vodafone was said to leave the Indian telecom market right after the announcement from Supreme Court. Things are getting worse for telcos, but floor pricing will bring stability to the industry. However, tariff prices will rise again if Trai comes out with floor pricing. The future is exciting and it will be interesting to see how Trai takes the floor pricing aspect forward if it receives an official note from the government.