Trai to discuss tariff floor price with telecom CEOs on July 21 

Author: Aarohi Khanna
by Aarohi Khanna
Posted: Jul 17, 2017

The Telecom Regulatory Authority of India (Trai) has called top executives of telecom companies for a meeting on July 21, seeking their views on setting floorprices for voice and data tariffs.

The demand to fix a floor price was raised by some telcos last month, when Trai Chairman R S Sharma met them for a discussion on the ongoing financial crisis in the industry. Reliance Jio’s entry in September 2016, with its free services and low tariffs, added to the stress of the telecom operators. The debt in thetelecom industry is estimated at Rs 4.5 lakh crore, andcompanies are facing profit erosion.

In that backdrop, the sectoral regulator has written to all telecom companies and asked them to submit their views on floor pricing, a Trai official said. The regulator also wants to know the industry view on the upper ceiling for tariffs, in case such a cap was necessary.

Currently, telecom tariffs are under forbearance - a practice which has been in place for the past 14 years - and there is no upper or lower ceiling. The Trai has only fixed a ceiling for tariffs during roaming.

Some telcos had raised the issue of operators offering below-cost tariffs to consumers, arguing it could hurt the financials of the industry. The incumbents, including Bharti Airteland Vodafone, have maintained that Reliance Jio is offering "predatory pricing" by offering free calls for months.

Sources indicated that the issue of floor price was raised by Idea Cellular and Bharat Sanchar Nigam during a meeting last month, with Sharma and most operators, barring Jio, agreeing to it. Idea had said there should be one floor price for voice and one for data, and the lowest cost operator data should be taken to work out the floor price.

Analysts pointed out that fixing of floor price is not a norm in most developed markets

Among the other demands made by the incumbent operators is an upward revision of interconnect usage charges (IUC). The incumbents want an early closure of the issue and have suggested to the regulator to raise the charges, as the current regime is not able to recover costs

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Author: Aarohi Khanna

Aarohi Khanna

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Member since: Jun 28, 2017
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