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The Telecom Regulatory Authority of India’s (TRAI) consultation paper on ‘tariff issues’, might be the first regulatory consultation upon which the views of Reliance Jio Infocomm are broadly in sync with that of Bharti Airtel and Vodafone Idea Ltd (VIL).
Each of the three operators have pressed for regulatory intervention on pricing even as the reasons offered and the sense of urgency indicated, differ a tad bit. RJio, Bharti and VIL have demanded the floor price for data to be ₹20, ₹30, and ₹35 per GB, respectively, according to a report by Kotak.
The need for higher pricing, VIL established the case by highlighting the ‘deep financial stress’ in the sector. Airtel did so on the same grounds but with lower intensity. Meanwhile, RJio argues that pricing needs to go up to revitalise and sustain necessary investments in the sector.
Operators’ responses on this aspect reflect the current state of financials of the three, it said.
On the need for regulatory intervention to ensure pricing goes up, none of the operators seem to be confident about rising of tariffs - if left to market forces. Each of them are placing the blame on others. It is baffling that this is the case that has brought operators to be in sync.
Nonetheless, state of deep trust deficit is what it is, even as game theory would suggest co-opetition should emerge and sustain.
On specifics on floor pricing regime/architecture should look like, Bharti and VIL’s responses are far more detailed than RJio.
RJio has kept its suggestion on the floor price limited to ₹20 per GB for data, while arguing for voice and SMS to remain under forbearance. Bharti and VIL have both argued for a minimum fixed subscription charge per month, a fixed charge per month for unlimited voice with pricing non-UL metered voice calls under forbearance, and a floor price for data on a per GB basis (Bharti- ₹30/GB and VIL- ₹35/GB) over and above the fixed charges.
All the three operators have suggested that floor tariffs be a time-bound intervention with a return to the forbearance policy in a couple of years.
RJio differs
RJio differs from Bharti and VIL on floor tariff computation methodology and floor pricing for voice. RJio believes that floor tariff workings should not be based on a ‘cost recovery+ reasonable returns’ approach, but an approach that only considers the future investment needs of the sector.
Bharti and VIL, on the other hand, have argued strongly for a ‘cost recovery+reasonable returns’ approach. Both of them have suggested using costs basis latest reported results and not basis accounting separation reports submitted by the operators to DoT, and a 15 per cent return on capital employed target.
Another area where RJio’s views differ is on the need for a floor price for voice services. While Bharti and VIL have suggested a floor price for unlimited voice, RJio has argued that mobile termination rates of ₹0.06 per minute serve as a natural floor and hence, there is no need for a regulatory intervention.
While also arguing for a need for a floor pricing, BSNL and MTNL have suggested that the floor pricing regulation should apply only to operators with less than 15 per cent visitor location registry (VLR) subscribers market share in a circle.
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