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Incumbent telcos feel Trai's tariff order favours Jio, may move courts

Industry body COAI has already said the new rules will deal a fatal blow to whole industry while benefitting just one operator

Kiran Rathee  |  New Delhi 


The incumbent operators are likely to approach the courts against Trai's non-predatory tariff rules as they feel that the regulations favour

As per multiple industry sources, incumbent players such as Bharti Airtel, and are likely to take legal recourse individually. Industry body has already stated that the new rules will deal a fatal blow to the whole industry while benefitting just one operator.

The older telcos believe that Telecom Regulatory Authority of India (Trai) has removed two factors from the definition of (SMP) just to benefit Jio. In the latest regulations, has defined based on any of these two parameters -- subscriber base and gross revenue. However, earlier, there were four factors: subscriber base, turnover or gross revenue, network capacity and traffic volume.

As per Rajan Mathews, Director General, COAI, Jio could have been termed an had network capacity and traffic volume been retained to define the concept. However, with a changed definition, all the old players are now SMPs in various markets whereas Jio has been left untouched.

To make matters worse, the regulator has linked predatory pricing with SMPs, limiting the incumbents' flexibility in offering tariffs, even while allowing Jio to offer below-cost tariffs and become a monopolistic player in the market, added.

Reacting to COAI, a Jio spokesperson said the association, controlled by the incumbent operators, has been continuing its malicious, misleading and derogatory campaign against the regulator and the fair regulatory process over the past year and a half.

"While one can understand their sense of despair that the era of over-charging consumers is coming to an end, there cannot be any justification for such irresponsible conduct, which is unbecoming of a so-called industry association," Jio said.

The Mukesh Ambani-owned firm further said consumers have benefitted by the reduced tariffs during the past 18 months and "there are not-so-veiled, unsubstantiated and baseless allegations against We reserve our right to take all possible steps as legally advised."

As per Trai, a tariff can be considered predatory if an offers services at a price that is below the average variable cost in a "relevant market", with a view to reducing competition or eliminating competitors.

Analysts feel that average variable cost is a weak metric to be used as the floor price for identifying predatory pricing in a sector like telecom, which has a very high component of fixed costs such as spectrum, network, employee and advertisements, with minimum linkage to volumes.

The analysts further said even if Jio becomes an in certain circles, its low-priced offers can continue as its variable cost per minute or per GB is likely to be very low, thus making this proposal redundant and incapable of providing any long-term solution to the sector's problems.

Also, has disallowed operators from sending special offers to select customers through SMS or messages, which is likely to impact old operators as they have historically been making segmented offers which at times are used to prevent customers from porting. The regulator has directed that all tariff plans have to be publicly disclosed to all customers and filed with Currently, Jio has a single transparent pricing for all customers.

said old players were within their rights to offer segmented tariffs to existing customers in the bid to retain them on their network and such tariffs can vary with different customers, so they can't be disclosed openely.

Mathews said players offer special tariffs to customers based on their usage and history and the perks of a promotional offer are much higher for higher spending customers as compared to others.

First Published: Wed, February 21 2018. 23:40 IST