“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 a floor price for data services,” the Cellular Operators Association of India (COAI) director general Rajan S Mathews in a letter dated December 3, 2019, to the Telecom Regulatory Authority of India (TRAI) chairman Ram Sewak Sharma said.
Delhi-based COAI represents India’s telecom service providers and network vendors excluding state-run Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL).
Mathews added that floor pricing should be determined as soon as possible.
“Necessary orders as per the statutory provisions of the TRAI Act be issued urgently. We expect tariffs to be regulated and decided by TRAI will ensure that the telecom industry remains healthy and robust,” the letter seen by ETT said.
A floor price is a limit on how low the price of a service can be offered.
The group also said that the tariff correction in the current level of fierce competition would not possible by any service provider voluntarily, and the only option available is prescription of a minimum tariff for mobile data service by the regulator.
In order to maintain sustainability and overcome price fluctuations, it is important to have floor mechanism,” Mathews told ETT, and added that the regulator should look at floor price mechanism to give predictability and clarity so that telcos could invest further with a clear understanding.
The financially-strained telecom sector, sitting on a debt of more than Rs 7.5 lakh crore, is further stressed following the recent adverse Supreme Court verdict asking telecom companies to pay due to the government settling a decade-and-a-half dispute on the interpretation of Adjusted Gross Revenue (AGR).
“The AGR imposed by the Supreme Court and the debt issue is going to take several years for telecom service providers to overcome,” he added.
In September quarter, Bharti Airtel and Vodafone Idea together posted the highest loss of more than Rs 75,000 crore.
On the back of falling average revenue, the service providers starting this month have already increased voice tariffs with Fair Usage Policy (FUP) limits which is expected to give some boost to their revenues.
Following the price hike, the telecom watchdog has apparently put the discussion on the back burner. Last week, telecom secretary Anshu Prakash had said that no reference has been made to the sector regulator on setting floor price on tariffs.
The telecom body, citing Trai data said that overall average revenue per user (APRU) has come down from Rs 141 in 2010, to Rs 118 in 2017, and to Rs 80 a month.
The group has also sought the regulator to revise the Telecom Tariff Order (TTO).
“TRAI must fix an effective date by an amendment to existing TTO, from which all existing plans for mobile telephone services of all operators shall stand withdrawn,” COAI in the letter added.
COAI also said that the watchdog should consider setting the floor price with a gradual increase, and to avoid any ambiguity, the floor price of data should be determined on headline tariffs
The telecom body also said that since operators comply with a six-month protection requirement for tariff change and such protection should be dispensed with for all existing plans.