Right call: TDSAT's interim ruling is judicious for many reasons

The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) recently stayed a regulatory order that had sought to define significant market power (SMP) and predatory pricing differently. The TDSAT ruling, though interim, would provide relief to the country’s incumbent telecom operators facing severe financial stress. Companies such as Bharti Airtel and Idea had appealed to the tribunal against the Telecom Regulatory Authority of India’s (Trai’s) mid-February order arguing that the revised norms benefit only Reliance Jio, the newest player in the sector. The tribunal’s intervention is timely and sends out a signal for a fair and unbiased regulatory environment. In its ruling, the TDSAT said the changed definition of SMP for determining predatory pricing and the regulator’s order asking telcos to report all discounts or concessions offered to subscribers have a “significant impact and ramifications”. While Trai can ask for details of segmented discounts for analytical purposes, there will be no penalty on that basis till further orders.

Trai’s tariff order allowed pricing flexibility to telcos with less than 30 per cent of the market subscribers or industry revenue through the new definition of SMP. Parameters such as volume of traffic including data and switching capacity were dropped from the definition. The Trai order meant Bharti Airtel and Vodafone-Idea (the merged entity) would face restrictions while offering customised discounts to retain or acquire subscribers as they have crossed the 30 per cent SMP cap. However, Jio, with 13 to 14 per cent market share, was left out of the purview.

The tribunal’s interim ruling is judicious for many reasons, the most important being it is not the job of the telecom regulator to get into competition issues. As former Trai chief Rahul Khullar rightly pointed out earlier, it is for the anti-trust body to decide if a firm is behaving competitively vis-à-vis others or not. So, Trai should have let the Competition Commission of India (CCI) take a call on SMP and other issues related to it. Also, since Trai had not intervened at the time Jio was offering zero and then negligible tariffs for months, it doesn’t seem appropriate for it to step in with a formula, seen as one-sided, to re-invent SMP. In fact, Jio’s rock-bottom tariffs adversely affected industry revenue as well as government income. Part of the telcos’ revenue is shared with the government. The fact that the India business of the largest telecom service provider, Bharti, recorded a loss in the fourth quarter of 2017-18, a first in 15 years, shows the state of the industry. All others, including Idea and Vodafone India, have been in the red for several quarters.

Through its ruling, the TDSAT has also set at rest the industry concern about disclosing names of customers and other sensitive information, as required by the Trai order on predatory pricing. Telcos had in their appeal told the tribunal that such disclosures would hit their business interests. After the TDSAT ruling, telcos needn’t disclose business sensitive information if there’s a just reason. Trai has maintained that its order on predatory pricing is in the interests of consumers and the principle of non-discrimination of customers in the same class. But the watchdog’s responsibility is also to ensure a non-biased and non-partial approach towards all stakeholders, and that includes the industry.