AUSPI hits out at Bharti on predatory pricing

The Association of Unified Telecom Service Providers of India (AUSPI), the CDMA operators group, today hit out at Bharti Airtel saying contrary to the allegation of predatory pricing, it is the large incumbent operators who are driving away the smaller players.

"We see instances of predatory pricing where large incumbent operators offer highly subsidised on-network (within the operators' own network) calling rates. A similar proposition by smaller players is not as attractive due to their limited subscriber base," said the association which represents CDMA operators like Tata Tele-Services and Reliance Communications.

Bharti did not offer any comment on the allegation levelled against it by AUSPI.

Earlier this month, Bharti Airtel approached the sectoral regulator Trai to investigate into predatory pricing offered by some of the new operators who have launched with rock bottom tariffs alleging that tariffs are lower than the cost structure for some operators. Their business model is unsustainable and needs to be inspected, Airtel had said.

The AUPSI said, "Airtel offers a 17 per cent discount on calls to its own network (50p/m vs. 60 p/m), and a 25 per cent discount on on-net outgoing roaming calls (60 p/m vs. 80 p/m). This behaviour is tantamount to predatory pricing, as it uses the lure of a large existing subscriber base to drive away the smaller players."

The devious part of this allegation is that in reality the affected parties would be the promoters and shareholders of the firms and not the competition which will eventually gain if the smaller players drive themselves to insolvency.

The CDMA association said a pricing mechanism is predatory when it is offered by a large established operator to drive out the smaller new entrants, who cannot match due to lower scale and higher costs.

"What we currently observe in the market is exactly the opposite. The new entrants and smaller operators have come up with aggressive tariff propositions which the incumbents have been reluctant to follow. Uninor has launched with 29 p/minute for local calls, which is a significant discount from the standard market rates of 50p/minute or 1 p/second," the association pointed out.

Telecom minister A Raja had laid out his vision of 10 p/minute for local calls and 25p/minute for STD calls within the foreseeable future. "We are already on the path to achieving this vision which will tremendously benefit the common man, and any efforts by the incumbents to sabotage that should be checked immediately," AUSPI said.