Issue guidelines to ascertain predatory pricing: TDSAT to telecom regulator

Telecom Disputes Settlement & Appellate Tribunal (TDSAT) has asked telecom regulator Telecon Regulatory Authority of India (Trai) to come out with guidelines or regulations to ascertain if a mobile operator is offering tariffs that are predatory in nature.

The order of TDSAT came after hearing pleas of Bharti Airtel and Idea Cellular, which had approached the tribunal against Trai for allowing Reliance Jio to launch a free promotional offer while launching its commercial services and also letting the new entrant to extend it beyond the stipulated 90 days.

The tribunal though accepted Trai’s submission that the offer was non-predatory and also can be accepted beyond 90 days. TDSAT also agreed with Trai that the promotional offer of Reliance Jio was consistent with the principles of interconnect usage charges (IUC) compliance. Incumbent operators including Airtel and Idea Cellular had alleged that Jio’s tariffs were non-IUC compliant as the calls were offered for free when the IUC stood at 14 paisa per minute. 

But Jio, which was also a respondent in the matter, said free calls were permissible under the guidelines. Trai had also termed the tariffs non-discriminatory. On that TDSAT said that in the absence of a specified regulation, no floor price can be assumed for tariffs.    

However, the tribunal said it would red flag the issue that if such promotional offers continue in some form or other for a longer period, open–ended provision may make every tariff justifiable, thereby making the provision irrelevant. “Open-ended provisions make the verification of IUC compliance difficult, if not impossible. We, therefore, direct Trai to issue clear guidelines for performing self-check for consistency with the principles of IUC compliance,” the TDSAT order said, a copy of which is seen by Business Standard.

The tribunal also asked Trai to work out quick collection and dissemination of relevant data relegated to subscriber base, turn over, switching capacity and volume of traffic, subject to practicality. 

Sources in Trai told Business Standard that the regulator will soon come out guidelines that will fix the regulatory gaps regarding tariff principles and clearly defining predatory pricing and other architecture. The sources further said when Jio launched its commercial services; there were no specified rules or regulations regarding free promotional offers that were offered for more than six months. “There were regulatory gaps at that time but the new tariff rules will specify everything,” sources said.

TDSAT also directed Trai to take appropriate action in accordance with the provisions in clause 7 of Telecommunication Tariff Order (TTO) 1999 as amended for non-compliance the reporting requirement in respect of the welcome offer (free promotional offer by Jio).

Reliance Jio had entered the telecom space in the country by launching its commercial services starting September 5, 2016. As part of the promotional offer named Welcome offer, the firm gave free calls and data for three months. The telco than further extended the offer by another three months by making small changes and naming it Happy new year offer.