TRAI’s new tariff order favours RJio, says COAI

Our Bureau | | Updated on: Dec 06, 2021

NEW DELHI, 22/06/2012: Telecom towers over a building in the capital, even as state-owned Power Grid Corp. of India Ltd (PGCIL) has put its plan to lease 200,000 of its transmission towers to the telecom sector on hold, reflecting the Indian telecom sector losing its sheen. In the initial phase, the public sector unit (PSU) had plans to expand its telecom business by leasing out 15,000 transmission towers to firms such as Bharti Airtel Ltd, Vodafone India Ltd and Bharat Sanchar Nigam Ltd. However, it has only leased out 800 towers in states such as Punjab, Himachal Pradesh and Jammu and Kashmir. Photo: V.V. Krishnan

Criticising the Telecom Regulatory Authority of India’s (TRAI) latest regulations on predatory pricing, significant market power (SMP) and many other decisions, the Cellular Operators Association of India (COAI) on Tuesday said the regulator has ‘deeply victimised’ the industry.

“For some reason these orders seem to be strengthening the ambitions of one particular operator with deep pockets and monopolistic designs at the expense of other operators,” COAI said on the recent amendment to TRAI’s Telecom Tariff Order.

Hinting it’s Reliance Jio, the industry body said that over the past 12-18 months, regulation after regulation put out by TRAI “has ended up in distorting the competitive landscape in favour of one operator”, while putting all other operators at a serious disadvantage.

“This has destroyed the financials of an industry which was the poster child of India’s reform, with tens of thousands of jobs and tens of billions of dollars of investment at stake,” it said.

Predatory pricing

TRAI on Friday had issued regulations on predatory pricing, imposing a penalty of up to ₹50 lakh per circle on mobile operators if they are found to indulge in such practices. In the order, it had also said a tariff will be considered predatory if, in a relevant market, an operator with over 30 per cent market share offers services at a price which is below the average variable cost, with a view to reduce competition or eliminate the competitors in the market.

“All our member operators, with the exception of one, feel deeply victimised and let down. We request the government to intervene and look into these concerns on an urgent basis and ensure a financially healthy and vibrant telecom industry that is able to support Digital India and serve customers,” said Rajan Mathews, Director General, COAI.

An environment of regulation and policy that is not based on an equal footing will further aggravate the deep financial stress and kill future investments, innovation in an industry that has put India on the global map, he said.

According to a Credit Suisse report also, the TRAI’s decision is not clear if the other operators (who are large in many circles) would be allowed to match Jio, if the latter does price below cost in future. These new rules are incrementally negative for the incumbent telcos, it said.

“Restricting market share definition to mobile revenue and subscriber shares, and avoiding sub-market (voice, data) and other metrics of the market share (capacity, traffic carried) imply Jio will have reasonable flexibility on pricing till it crosses 30 per cent share at the circle level. We see Jio hitting these limits in a few quarters,” the research firm said in its latest report.

Separately, TRAI also disallows operators from sending special offers to select customers (through SMS, etc). This is a formalisation of a directive that was sent to operators last year, it added.

Published on February 20, 2018
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