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Telcos propose Trai to regulate data tariff by fixing minimum price

Business Finance

Press Trust of India  |  New Delhi 

Telecom operators have proposed sector regulator Trai to fix a minimum price for mobile internet as no company on its own is in a position to decide on it due to fierce competition in the market, industry body COAI said on Tuesday.

The Cellular Operators Association of India (COAI), in a letter to the Telecom Regulatory Authority of India (Trai), said that Reliance Jio, Bharti Airtel and Vodafone Idea have agreed that the data tariffs should be regulated, a move which was vehemently opposed by the industry players in the past.

However, private telecom operators want call rates to continue to remain unregulated.

"All the current telecom service providers in the private sector, namely Bharti Airtel Limited, Reliance Jio and Vodafone Idea limited are in complete agreement that Trai be requested to regulate tariffs by setting floor price for data services," COAI Director General Rajan S Mathews said in the letter dated December 3, 2019.

The development comes following the three private telecom operators, which account for 90 per cent market share, raising mobile call and internet rates by up to 50 per cent from December 3 onwards.

This is the first hike in the past five years in the country's telecom sector facing tariff war, with voice calls becoming almost free in 2016 and a steep 95 per cent fall in data prices to Rs 11.78 per GB at present from Rs 269 per GB in 2014.

"We further submit that the tariff correction in the current level of fierce competition is not possible by any service provider voluntarily and thus the only option available is prescription of a minimum tariff for mobile data service by the authority," Mathews said.

He said that a tariff correction for data services will not be out of sync with global trends as India has the lowest data tariffs globally, estimated to be around 50 times lower than the price in major developing and developed countries.

Telecom Minister Ravi Shankar Prasad on Monday said mobile internet rate in the country remains by far the lowest in the world.

Citing a March 2019 study which compared mobile data charges in 230 countries, Prasad said the average price of USD 0.26 per 1 gigabyte (GB) data in India compares to USD 6.66 in the UK and USD 12.37 for the same amount of data in the US.

"...the Authority would be aware that unlike mobile data, voice services are considered as essential services especially by the subscribers at bottom of pyramid and therefore would need to be continued under the present forbearance regime," Mathews said.

Mobile call and mobile internet rates are not regulated at present and are decided by the companies on their own.

While the industry vigorously opposed regulating phone services rates in the past, Mathews in the latest communication to the Trai said that regulation of data price by setting floor price should be done as soon as possible.

The move to raise mobile call and internet rates follows the Supreme Court judgment on October 24 this year, upholding the government's method of calculating revenue share that it should get from earnings of service providers.

Vodafone Idea last month reported a consolidated loss of Rs 50,921 crore for September quarter -- the highest ever quarterly loss posted by any Indian corporate -- on account of liability arising out of the Supreme Court's order.

The company has estimated liability of Rs 44,150 crore post the apex court order, and made provisioning of Rs 25,680 crore in the second quarter this fiscal.

Vodafone Idea, which is reeling under massive debt of around Rs 1.17 lakh crore, had earlier cited acute financial stress on the company behind the decision to raise mobile call and data charges.

Bharti Airtel had posted a staggering Rs 23,045 crore net loss for the second quarter ended September 30 due to provisioning of Rs 28,450 crore in the aftermath of the SC ruling on statutory dues.

According to government data, the liabilities in the case of Bharti Airtel add up to nearly Rs 35,586 crore, of which Rs 21,682 crore is licence fee and another Rs 13,904.01 crore is the SUC (spectrum usage charges) dues (excluding the dues of Telenor and Tata Teleservices).

The government is currently not considering any proposal on waiver of penalties and interest on outstanding licence fee based on adjusted gross revenue (AGR), or on extending the timelines for telecom companies to pay up their statutory dues.

(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, December 03 2019. 22:40 IST