Controversial calls on predatory pricing: Telecom industry awaits clarity

As fiercely competitive telcos trade charges again, the industry awaits clarity on the regulatory domain for the sector

The narrative around predatory pricing is not new to telecom watchers. Even so, every time telcos raise their pitch against their rivals, calling their actions predatory, they make news, prompting regulators to take notice. That’s what happened this time too, but with a variation.

Telcos took turns in calling out the “predator” in a curious series of events. It began last month with Bharti Airtel alleging that Reliance Jio was indulging in predatory pricing. Airtel alleged that Jio was offering live TV channels as part of its bundled broadband plan. Jio said no and in a complaint to the Telecom Regulatory Authority of India (Trai) called Airtel’s complaint baseless. According to Reliance, JioTV plus app is an aggregator for TV channels and an interface for OTT (over-the-top) content.  

While the top two telcos were fighting it out, Tata Play — a direct-to-home satellite broadcast player — levelled charges against both Airtel and Jio for predatory tariff in their broadband plans offering live TV channels. That’s not all. Soon after, Vodafone Idea joined the fray in accusing both Reliance Jio and Bharti Airtel of predatory pricing in their 5G data offering. Never mind that Vodafone Idea has not launched 5G services yet but it has argued that Airtel and Jio are significant market players and therefore cannot offer unlimited 5G data for free. Both Airtel and Jio have denied the allegation and have told Trai that there’s nothing predatory about their pricing as the 5G user base is very small at present and that 5G offering is part of their 4G packs. Whether it’s 4G or 5G, the charges are also similar till now.

Meanwhile, Trai, which has its hands full, is reportedly getting deeper into the current trend of telcos offering unlimited 5G data. It may lay down some rules on unlimited data but indications are that the regulator will not do anything to upset India’s growth in 5G, which was launched with much fanfare by Prime Minister Narendra Modi last year. 5G is a showpiece that is unlikely to be disturbed ahead of so many state elections, the General Election in 2024 and, of course, the G-20 summit under India’s presidency later this year.

Predatory pricing was a live issue some seven years ago when Reliance Jio entered with its disruptive tariff plans, resulting in a dramatic change in the pecking order of the telecom sector and huge losses by incumbent telcos. Vodafone Idea, which was the worst hit, ended up at the bottom among the private telcos with its mobile subscriber base down to 239.96 million as of January 31, 2023, against 426.17 million for Jio and 368.89 million of Bharti Airtel, according to the latest numbers given out by Trai.

In 2016, ahead of Jio launching its services, Bharti Airtel was on top with a mobile subscriber market share of 24.22 per cent among a total of 12 players. Vodafone (at that point on its own) was a close second with 19.16 per cent share and Idea in third position at 17.01 per cent. Others were Reliance Communications (Anil Ambani Group), Aircel, BSNL, Tata Docomo, Telenor, Sistema, Videocon, MTNL and Quadrant. Reliance Jio launched its commercial operations, with free voice and data, in September 2016 and had over 72 million subscribers, translating into 6.4 per cent market share, by the end of the year. Seven years later, Jio is on top with 37.28 per cent subscriber market share among a total of five telcos, followed by Bharti Airtel at 32.27 per cent, Vodafone Idea at a distant third with 20.99 per cent, BSNL at 9.2 per cent and MTNL at 0.24 per cent.

Back then, incumbents’ allegations against Reliance Jio over predatory pricing were heard at different forums — from Trai to Telecom Disputes Settlement and Appellate Tribunal (TDSAT), Competition Commission of India (CCI) to the Bombay High Court and Supreme Court. The predatory pricing charge didn’t hold as Reliance Jio was a beginner and not a dominant player at that point. In its June 2017 order, CCI had rejected Bharti Airtel’s allegations and had said that in the absence of any dominant position enjoyed by Jio in the relevant market, the question of alleged abuse does not rise.

What now in the current case since both Jio and Airtel are dominant players? An analyst who did not wish to be named said that this is not a case of predatory pricing as it’s at the same level as 4G services. Offering extras such as live TV, more data or “unlimited data” cannot be categorised under predatory pricing, he said.

Dhanendra Kumar, former CCI chairman, told Business Standard that at this point things are in a flux with respect to the regulatory domain for predatory pricing issues in the telecom sector. The Telecom Bill, which is expected soon, should bring greater clarity on the matter, he said. Until then, Trai would be the go-to regulator to settle any case on predatory pricing in telecom, based on the 2018 Supreme Court judgement in the Bharti Airtel vs CCI case in a related matter. Kumar, who was a bureaucrat in the Department of Telecommunications (DoT) among other ministries before taking over as CCI chairman, pointed out that Trai would have the first right to step in when it’s about predatory pricing in telecom. Any party can go to CCI for a follow-up after that. Even as the proposed Telecom Bill is expected to offer this clarity, an expert panel recommendation of 2012 on competition issues could be of help for any future reference. The panel had suggested mandatory consultation between CCI and the regulator concerned to arrive at a “harmonious” solution. The recently amended Competition Bill didn’t refer to this point but there’s a need for harmonious construct in the telecom sector, according to a member of that expert committee.

Predatory pricing is defined by an intent of a dominant player to drive out competition by offering goods or services at a price lower than the cost. In the backdrop of a without-quorum CCI, all eyes are on the new Telecom Bill to enable Trai to step in where it must.