Raise market power limit to 50% or more, Idea Cellular tells Trai

As the Telecom Regulatory Authority of India (Trai) readies to issue transparent pricing norms, Idea Cellular has expressed concern over the concept of significant market power and how it will be assessed. Trai’s pricing directive is likely to include market power as a key factor in tariff reporting modalities.
 
Idea, which is in the process of being merged with Vodafone, has written to Trai, seeking a change in the definition of significant market power so that the threshold is set at 50 per cent or more. According to the current definition, a service provider holding a share of at least 30 per cent of the total activity in a licensed service area is termed significant market power. Activity means any one or more of factors, including subscriber base, turnover, switching capacity and traffic volume. The market share of the Idea-Vodafone merged entity will far exceed the 30 per cent significant market power definition. While the two together could hold more than 37 per cent, Bharti Airtel is already at around 34 per cent. Reliance Jio’s market share is  pegged at around 14-15 per cent.

 
The Sunil Mittal-led Bharti Group too has written to Trai on the proposed pricing norms, though focusing on issues linked to predatory pricing. Bharti wants Trai to initiate a fresh consultation  on transparent pricing norms such as the issue of performing self-checks for interconnection usage charges (IUC) compliance and ascertaining the principle of non-predation. These issues had neither been dealt within any consultation paper in the past nor had these been discussed in any open house, the Bharti letter pointed out last week.
 

Sources said the telecom industry is apprehensive that the significant market power criteria may be used for reporting requirements of tariffs, which might impact the incumbent operators. Given the changed dynamics of the telecom industry with four to five operators, the definition of SMP needs to be changed, according to the Idea letter. With increasing use of bundled services, factors like number of broadband sites, technology used and available capacity, market share of data traffic, promotional benefits and spectrum holding should be used to determine SMP.

 
The current SMP definition is in conflict with the earlier Trai recommendation, raising the overall spectrum cap from 25 to 35 per cent. Also, in place of intra-band cap, the regulator proposed to have a cap of 50 per cent on the combined spectrum holding in the sub-1 GHz bands (700, 800 and 900 MHz).
 
Trai has acknowledged that market is seeing some very significant consolidation in recent times and a spectrum cap set for a six to ten operators’ market cannot be applied in a four to five operator market, Idea wrote.

“Applying the same ratio and to ensure consistency in public policy, it is imperative that the definition of SMP at 30 per cent should also be changed. In our view, when there are only three to four players in the market after imminent consolidation in the sector, the SMP threshold must be increased to 50 per cent or more,” the telco added.