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Can a floor price for mobile tariffs save beleaguered telecom players?

Within hours of IUC announcement, TRAI released a consultation paper to fix minimum rates for mobile services, a move that can effectively end the regime of free calling and dirt cheap data

Kanishka Gupta  |  New Delhi 

On Tuesday, the Telecom Regulatory Authority of India (Trai) commenced a consultation process to inquire if there is any regulatory intervention required for fixing tariffs and the floor price of mobile services. Besides this, the regulator also deferred by one year the scrapping of the charge paid by mobile phone users for calls made to rival networks.

At present, call and data tariffs are under forbearance. This means that the have a free hand in fixing rates and have to report tariff plans to Trai, within seven days prior to the launch.

Well, if you are wondering what changes after the introduction of fixed floor price, let me tell you, if that happens, free calls on mobile services may become a thing of the past, as it leads to effectively ending free mobile/phone call and data regime.

However, in 2017, just a year after the entry of Reliance Jio with free data and voice tariffs, existing telcos had approached the regulator to consider setting up a floor price as their revenue streams started shrinking. But, the idea of a floor price didn’t seem workable to the regulators then and subsequently, operators, too, agreed.

But now, considering the perilous state of the country’s telecom sector, especially of telecom giants like Vodafone Idea, which posted the highest loss in India’s corporate history and Airtel, bearing its highest quarterly loss in 14 years in the quarter ended 30 September, floor price is considered as a relief to them.

In view of this, on Tuesday, announced that telecom operators will continue to pay 6 paise per minute for every outgoing call made to their competitors' network till December 31, 2020. These charges are proposed to become zero from January 1, 2021.

Telecom industry body COAI sees it as a relief for the debt-ridden sector and asserts that continuing with six paise mobile call termination charge will not have any impact on consumers as operators have already absorbed these charges in their recently increased mobile call and data rates.

Within hours of Interconnect Usage Charge or IUC announcement, released a consultation paper to fix minimum rates for mobile services, a move that can effectively end the regime of free calling and dirt cheap data.

Undoubtedly, the outcome is likely to lead to further hike in mobile call and data cost as industry wants average revenue per user to reach Rs 300 per month from about Rs 125 at present over a period of two years - better revenue realisation per user will offer a much needed breather to stressed telecom industry where debt levels have soared to Rs 7.8 lakh crore.

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First Published: Wed, December 18 2019. 12:17 IST