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

Telecom firms have been asked to share their view on the upper ceiling for tariffs

Kiran Rathee  |  New Delhi 

Telecom

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

The demand to fix a floor price was raised by some telcos last month, when Chairman R S Sharma met them for a discussion on the ongoing financial crisis in the 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 the is estimated at Rs 4.5 lakh crore, and are facing profit erosion.

In that backdrop, the sectoral regulator has written to all telecom and asked them to submit their views on floor pricing, a official said. The regulator also wants to know the 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 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 The incumbents, including Bharti and Vodafone, have maintained that is offering “predatory pricing” by offering free calls for months.

However, an official at the said that an operator can offer free calls, as this was part of the original telecom tariff order, which described tariffs. 

Sources indicated that the issue of floor price was raised by Cellular and Bharat Sanchar Nigam during a meeting last month, with Sharma and most operators, barring Jio, agreeing to it. 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.

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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. The current call-connect charges are below cost and need to be corrected, according to executives at incumbent telecom

Interconnect charges are paid by a telecom operator to another, when its call terminates on another network.

Currently, the charges are 14 paise per minute for wireless calls, but the has sought comments from stakeholders on reviewing these charges. The is meeting telcos on Tuesday for a workshop where operators will give presentations on IUC. In addition, the regulator will also have an open-house discussion on Thursday on the matter.

Most telcos are in favour of increasing the IUC, but Jio and Reliance Communications have suggested the charges be brought down to zero. 

The incumbent operators want IUC to be fixed on a “full-cost” basis, whereas Jio wants a “bill-and-keep” method.  

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