No need to fix floor price as of now: Trai

This came after Trai's meeting with telcos on Friday and there was consensus against such move

The Telecom Regulatory Authority of India (Trai), the sectoral regulator, has rejected the demand of some incumbent telcos to fix a floor price for voice and data services.

This came after a meeting the regulator had on Friday with industry players, and there was a consensus against any such move.

Trai Chairman R S Sharma, who took part in the more than two-hour discussion, said during the meeting a consensus had emerged that fixing a floor price was not a workable idea and as of now, there was no need for it.

“The consensus is that as of now, we don’t need to pursue the idea of a floor price. We had detailed discussions for over two hours today (Friday). There will be no further discussion or consultation on the issue,” Sharma added.

However, sources said during the meeting the incumbent operators pressed their demand to have tariffs compliant with interconnect usage charges (IUC), so that nobody could do predatory pricing. 

The current IUC stands at 14 paise per minute and Trai will soon announce a framework on IUC.

Sources further added that Idea Cellular gave a one-hour-long presentation during the meeting in support of its demand for a floor price, but in the end, all agreed that there was no need for it.

The demand for floor prices was raised by some telcos last month, when 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 the telecom industry is estimated at Rs 4.5 lakh crore, and companies are facing profit erosion.

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. Trai has 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 Airtel and Vodafone, have maintained that Reliance Jio is offering “predatory pricing” by offering free calls for months.