Floor prices for telecom services, need of the hour: NITI Aayog

Rajesh Kurup Mumbai | Updated on March 09, 2020 Published on March 09, 2020

Think-tank responds to TRAI’s paper, adds it’s not a long-term solution

Government think-tank NITI Aayog has “strongly emphasised” that floor prices for telecom voice and data services are the need of the hour, due to the heavy burden on the sector, even though it’s not a long-term solution.

Earlier, the NITI Aayog and the Competition Commission of India had opposed the move to fix floor pricing, stating that it would disincentivise competition, deter innovation and deprive consumers of benefits.

“We would like to strongly emphasise that floor prices are the need of the hour to enable continuation of a multiplicity of firms that is critical for healthy competition,” NITI Aayog said in its comments on Telecom Regulatory Authority of India’s (TRAI) consultancy paper.

TRAI, the telecom licensor, had floated the consultancy paper on ‘Tariff Issues of Telecom Services’ on December 17, 2019.

“Given the heavy debt burden being faced by the sector and the recent fall in prices to unsustainable levels, there is no option but to set floor prices. As we had mentioned in our comments, this may be reviewed for its impact on the market and a view may be taken on bringing back forbearance, once the sector fully revives,” it said in a letter dated March 4, 2020.

“However, in the extraordinary circumstances that the sector is going through at present, we believe that the floor prices are absolutely necessary to avert the lasting damage to India’s digital agenda and economic growth. TRAI has rightly pointed out that the sector’s revenues had not kept pace with the increasing need for investment, especially in the 5G,” it added.

The letter, signed by NITI Aayog CEO Amitabh Kant, also agrees with TRAI that the floor pricing is not a long-term solution.

There is also an inherent opportunity to seize the present situation to bring in far-reaching reforms, which will provide lasting relief and create a dynamic telecom sector. The regulator should look into these issues, it added.

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Published on March 09, 2020
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