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COAI attacks Trai, says regulations distorted competitive market

Business Finance

Press Trust of India  |  New Delhi 

Cellular operators' body COAI today launched a scathing attack on sector regulator Trai, alleging that its regulations have distorted the market and placed at a "serious disadvantage" all but one operator.

The Cellular Operators Association of India (COAI), which is a body of various mobile operators including newcomer Reliance Jio, alleged in a statement that Trai's orders and regulations "seem to be strengthening the ambitions of one particular operator with deep pockets and monopolistic designs at the expense of other operators".

COAI, however, did not name Jio.

The association said that a majority of its members agreed with the assessment of Trai's regulations, except Reliance Jio which had a divergent view on the matter.

"Over the past 12-18 months, regulation after regulation put out by Trai (Telecom Regulatory Authority of India) has ended up in distorting the competitive landscape in favour of one operator, while putting all other operators at a serious disadvantage," the COAI statement said.

This had "destroyed" the financials of the industry with tens of thousands of jobs and tens of billions of dollars of investment at stake, it added.

"The COAI today expressed its deep disappointment and alarming concern regarding Trais tariff order amendment. For some reason these orders seem to be strengthening the ambitions of one particular operator with deep pockets and monopolistic designs at the expense of other operators," it said.

COAI Director General Rajan Mathews said that all the member operators, with the exception of one, felt "deeply victimised and let down" by the regulations.

"An environment of regulation and policy that is not based on an equal footing will further aggravate the deep financial stress and kill future investments, innovation in an industry that has put India on the global map," Mathews added.

The COAI termed Trai's past regulations on call connect charges as "regressive" and went on to say that the regulator's recent amendment to Telecom Tariff Policy (that defined the nuances of predatory pricing) had dealt a "near fatal blow" to the industry.

"The TTO (Telecom Tariff Policy) has left the industry completely perplexed. The operators are at pains to understand the rush on the part of Trai to issue the TTO amendment without following due process in compliance with TDSATs recent judgement," the COAI alleged.

The association also flagged the revised definition of Significant Market Power (SMP) that now excludes parameters like traffic volume and switching capacity, and said such changes will place older operators at a disadvantage and stop them from responding to "what may be actual predatory tariff plans".

"In a cruel twist of fate, one operator who by its own admission is the worlds largest data network may be free to offer any sort of predatory tariffs while older operators are now subject to regulation and cannot compete without falling foul of a new definition of what constitutes predatory pricing," it said.

It contended that the recent regulation has also taken away flexibility from the operators to offer benefits to customers.

"Even more strangely, they will find it practically difficult to offer any discounts/provide benefits to retain their customers if a competitor chose to poach them, effectively taking away their ability to compete and conduct business," the COAI said.

Last week, Trai said it will impose financial disincentive of up to Rs 50 lakh per circle on operators if their service rates are found to be predatory in nature.

The regulator had said it will determine "relevant market" based on relevant product against which it receives a complaint.

Trai's new rules came in the backdrop of allegations by established players like Bharti Airtel, Vodafone and Idea Cellular that Reliance Jio is offering predatory pricing.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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First Published: Tue, February 20 2018. 23:00 IST