The Telecom Regulatory Authority of India (TRAI) has said that going for floor pricing is not the correct way to help the industry right now. This is correct, though, because it is not like the financial health of all the telecom operators is bad. Just to save one private company, floor pricing shouldn’t be introduced. Yes, it will help the operators in earning more, but it will also completely destroy the plans and strategies of offering low-cost services such as Reliance Jio.
A TRAI official told ET Telecom that setting a floor tariff is unfeasible right now. Even Sunil Bharti Mittal, Chairman of Bharti Enterprises, said that fixing a floor price is not necessary at the moment. A floor price is what a company like Vodafone Idea (Vi) needs since it will help with tariff hikes and ultimately result in higher average revenue per user (ARPU) and better cash flows in the short term. But it is not actually the need for the sector.
Relief Package from the Government Enough
Yes, while the need for tariff hikes is very much necessary, but the need of the regulator or the government is not necessary for setting tariffs. The government has done its part by offering a relief package to the industry.
The TRAI official also said that fixing a floor price isn’t a very easy thing to do. It will require extensive research and surveys to determine what should be the ideal price. Further, the decision would also require the involvement of the Competition Commission of India (CCI). All of this will take a lot of time and would also require a lot of energy and resources. Since the industry can do without floor tariffs, it would be futile to go through all of this for that.
New and better reforms would be more beneficial for the industry. This is because it will allow new players to step in and offer mobile services to customers.