Telcos ask Trai to fix floor price for voice call, data

The onslaught of free services and low tariffs by Reliance Jio has forced some of the old operators to ask the Telecom Regulatory Authority of India (Trai) to fix a floor or minimum price for voice call and data. The demand, however, impugns the principle of forbearance, which has been in place for the past 14 years.

During a meeting between top executives of telecom companies and Trai Chairman R S Sharma on Thursday, some of the telcos raised the issue of operators offering below-cost tariffs to consumers, and said it could hurt the financials of the industry.

Sources said the issue of floor price was raised by Idea Cellular and BSNL but, as it was being discussed, others also agreed to it. Jio, however, was against any such move. Idea is believed to have said there should be one floor price for voice and one for data, and lowest cost operator data should be taken to work out the floor price. 

Trai, the sector regulator, has the right to fix tariffs under the Act, but it decided to do away with the practice of setting tariffs 14 years ago, giving autonomy to firms to set their own prices for various services. Ever since, the practice of forbearance has been in place.

Before the entry of Jio, all the telecom operators were in favour of forbearance and any move to regulate tariffs was strongly opposed.

Reacting to the demand, the Trai chairman said this was a new idea that had come from some operators, and would be examined by the regulator. “We have not formed any view of this. We are open and consultative,” he added.

The entry of Jio has stepped up competition in the sector, which is facing a debt of Rs 4.5 lakh crore and is also witnessing profit erosion due to low-priced tariffs offered by the newcomer.

Incumbent operators also took up with Trai the issue of interconnect usage charges (IUC), which has been a bone of contention. The incumbents sought early closure of the issue. Airtel is believed to have suggested that IUC should be raised as the current regime was not able to recover costs.

Interconnect charges are paid by a telecom operator to another when its call terminates on the latter’s network. 

Currently, the charges are 14 paise per minute for wireless calls, but Trai has sought comments from stakeholders on reviewing these charges. Most telcos are in favour of increasing the IUC, but Jio and Reliance Communications have suggested that the charges should be brought down to zero.    

Sources said Sharma asked the operators to come for a one-day workshop on IUC to discuss all issues. The workshop could be held in the first week of July 2017. They were also asked to present their views and assessments on the floor price.

The operators also suggested rationalisation of the goods and services tax (GST), reduction in licence fee and spectrum usage charges, and extension of deferred spectrum payment liabilities over a longer period.  The deferred payment option, however, was opposed by Jio, which said the option gave easy money to the operators and pushed up the pricing in auction.