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Much in line with the operators’ demand, the Digital Users Group (DUG) has sought setting up of a floor price for telecom services to help the sector tide over the financial stress.
“In the present form, the market forces are not conducive to telecom operators to recover costs from tariffs; customers may get some benefits in the short-term but ultimately the Quality of Service (QoS) and connectivity can only be ensured if the sector is sustainable,” the public policy think-tank said in a letter to the Telecom Regulatory Authority of India (TRAI).
“Thus, floor price is an important requisite for consumers, sector and the country, as revenue increase seem to be the only recourse left for the telcos to offer services with proper QoS parametres being followed,” the letter, addressed to TRAI Chairman PD Vaghela, said.
According to DUG, telecom is an essential service and steps need to be taken by the regulator to ensure a stress-free environment. Setting up a floor price will help the telecom companies to recover and improve the investment climate for the growth as the sector needs massive investments as mentioned in the National Digital Communications Policy–2018.
Fall in revenues
The stress in the telecom sector is due to fall in revenues which has resulted in losses for operators and negative returns on investments. While a number of operators have exited or have merged with others, further exits will be counterproductive for the sector and consumers because it will lead to a monopoly or duopoly.
“The price structure must be fair for all consumers, those consumers using premium network elements may be charged more accordingly to those subscribers who have low usage. TRAI should look at a combination of fixed fee and usage charge for floor price,” it said.
Earlier the Cellular Operators’ Association of India (COAI) has also sought setting up of a floor price, citing the financial conditions of the sector.
As per the existing regulatory framework, telecom tariffs are under forbearance except for rural fixed line services, national roaming services and leased circuits.
TRAI had earlier rolled out a consultancy paper on the floor price issue, but was not completed as its Chairman RS Sharma retired on September 30. With the new chairman assuming charge from October 1, the regulator is likely to revisit the issue.
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