Incumbent telcos ask Trai to fix 'floor' price for voice, data

Incumbent telecom operators like Idea and Bharti Airtel today urged Trai to fix a minimum floor rate for voice and data as they look to counter newcomer Reliance Jio's free calls offer, a suggestion that the regulator said it will look into.
If the Telecom Regulatory Authority of India or Trai indeed sets a floor price for tariffs, it would mark the end of free voice and data dole-out to mobile consumers.
This is because operators would then have to abide by the prescribed "floor" in their tariff offerings.
"There is an interesting idea that was presented by some of the operators...Of creating a floor price for voice and data. It is an idea and we will deliberate on it," Trai Chairman RS Sharma said after emerging from a two-and-a-half hour meeting with senior officials of telecom companies.

Sharma admitted that floor price fixation may be contrary to the current practice of tariff forbearance and emphasised that the regulator had "no views" on the matter just yet.
Sources said that the floor price was suggested by Idea Cellular at the Trai meeting today and seconded by other large incumbent operators Airtel and Vodafone.

Tariffs are currently under forbearance meaning that operators are only required to report their plans to Trai within seven days of launching them.
Sharma explained that some operators felt that offering "below cost services" over a period of time was hurting the financial of the sector.

It may be recalled that Mukesh Ambani promoted Reliance Jio had stormed into the telecom market last year, wooing customers with promotional free voice and data services. Jio still offers aggressive data plans and has promised that voice calls will always be free on its network.
In fact, Jio's promotional freebies for seven months is blamed by incumbent operators for the financial woes of the sector. The industry's debt stands at Rs 4.6 lakh crore.
Asked about the merit of mulling floor price at a time when a large operator is giving free voice calls, Sharma said discussing an idea does not mean that a decision has been taken on the matter.

"Trai follow a democratic and consultative process...We believe in discussions and open consultation, arguments and counter arguments," he said.
Terming floor price concept as complex one, Sharma said ultimately it would depend on multiple variables such as technology, utilisation of network, and traffic volumes.
Trai may take up the issue in a separate consultation or as part of one of its ongoing discussions on IUC or tariff principles.
Sharma declined to name the firms that were in favour of a minimum rate (for telephony offers) but said that these operators had cited examples of other nations that had implemented such floors.

He was also quick to point out that there were other operators with contrarian views on the issue.
Trai, which today met all the operators to discuss the industry's financial stress, also received suggestions pertaining to cut in licence fee, and spectrum usage charges.
Telcos have also made a case for lowering GST rates, and extending the period for payment of deferred spectrum liability. Jio has, however, opposed any extension on spectrum-related timelines, saying the past policy had resulted in aggressive bidding for the airwaves.
Trai has also decided to hold a workshop on the contentious call connect charges in July.

"The workshop is aimed at demonstrating the appropriate cost model to compute the Interconnection Usage Charges or IUC, share international experience and the long-term impact," Sharma said.
He also said a distinction needs to be made between IUC and floor price setting, as the former is a settlement between operators, the latter is a consumer facing matter.
While Trai has already given its suggestions on a number of issues, including licence fee reduction, the other proposals given by operators today fall under three broad areas -- IUC, tariff principles and ease of doing business, all of which are under consultation by the regulator, Sharma added.

Industry representatives who attended today meeting included Bharti Airtel CEO Gopal Vittal, Vodafone India MD Sunil Sood, Idea Cellular MD Himanshu Kapania, and Reliance Jio MD Sanjay Mashruwala.
Officials from Reliance Communications, MTS, BSNL, MTNL were also present in the meeting.