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Letter to BS: Rock bottom tariffs are hurting telecom service providers

The fear of losing market share because of tariff and fare hike is real, but exaggerated

Business Standard 

This refers to “Govt nudges telcos, airlines to raise rates” (December 1). Both telecom and aviation sectors are battling a huge debt burden and declining revenues. The current situation is entirely of their own making. The rock bottom tariffs are hurting telecom service providers (TSP) big time. The Jio effect is quite evident in the low tariffs being offered by TSPs. The time has come for TSPs to take calculated risks by increasing tariffs even at the cost of losing some market share temporarily. In the aviation sector, most of the airlines have been registering losses for the last few quarters. The crisis faced by Jet Airways is well known too. The airline companies need to suitably hike the fares so as to strengthen their revenue stream.

The fear of losing market share because of and fare hike is real, but exaggerated. Companies in both these sectors need to improve their services. The market will find its equilibrium amid reasonable and fares and improved services. Sector regulator needs to take appropriate measures to ensure that the sector remains in good health despite price wars. The Competition Commission of India too needs to step in to stop any unfair practices which may stifle the competition.

The government quite right in nudging TSPs and airlines to raise rates as it is the government only that will be asked to give a bailout package to rescue these sectors. Remember, any bailout package comes at a cost and potentially affects other sectors of the economy.

Sanjeev Kumar Singh Jabalpur

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First Published: Tue, December 04 2018. 23:35 IST
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