The Telecom Regulatory Authority of India (Trai), which constantly denied the set up of floor pricing in the Indian telecom industry, has now dropped the first signs of considering floor pricing to ensure stability in the sector. According to a PTI report, Trai says it may be open to the idea of setting floor pricing for calls and data in the telecom sector. A few weeks ago, telcos had approached Trai asking to implement floor pricing so that the financial health of the telcos and the industry will be improved. But in 2017, telcos denied the concept of having floor pricing, but now, they are asking for the same owing to AGR setback and dipping revenues.
Trai May Look at Floor Pricing if Necessary, Says RS Sharma
It was going good for the telecom operators in India until 2016 as their ARPU was well over Rs 250. However, Reliance Jio entered the market and started providing lifetime free voice calls and cheap data. On the backing of affordable tariff plans, Reliance Jio became popular and began minting subscribers in a large number. The financial status of telcos wasn't that great in recent times and the AGR setback has a very bad impact which made them approach Trai for floor pricing.
"It is only recently that the telecom companies have together written to us that regulate us, so it's for the first time," Trai Chairman RS Sharma said, as reported by PTI. He was speaking at the AVIA India Video 360 event and these words came from him right after Airtel's head Sunil Mittal spoke in length regarding floor pricing with Telecom Secretary.
Setting up a minimum price for data and voice calls will be a useful thing for the telecom operators as subscribers will get to choose the right option based on the quality of service being provided and not on the backing of cheap tariffs. Reliance Jio has dominated the subscriber addition graph for the last three years and surely floor pricing will have a massive impact on the same.
"In the past, in 2012, I remember they had opposed tooth and nail the Trai's proposal to regulate tariffs. They said tariffs must be left under forbearance," Sharma further added.
Trai Will Intervene in Tariffs if There are Any Market Failures
Trai always said that it doesn't want to involve in the tariffs department because it will be an anti-consumer move. However, if there are any market failures, then it has every right to step in and change that."But if there are certain market failures, if there are certain aberrations, if one of the objectives, for example, consumer protection, is not being met with, then obviously we will have to think of ways to ensure that these objectives are met with," Sharma said.
Incumbent telcos Airtel and Vodafone Idea even approached the PM Narendra Modi Cabinet seeking relief. At the moment, Trai did not receive any official information from either the Cabinet or the DoT to introduce floor pricing, but with Trai considering the same, it will be interesting to see how it folds.
"And again they have said in a couple of weeks back, so we will have to consider what to do," Sharma concluded.
In other news, telcos raised tariffs by up to 40% very recently which may bring some stability to the industry. However, the financial burden on their shoulders will not go away with just 40% hike in tariff prices.