Telcos to be fined up to Rs 50 lakh per circle for predatory tariff

Telecom regulator Trai today said it will impose financial disincentive of up to Rs 50 lakh per circle on operators if their service rates are found to be predatory in nature.

"In case of tariff being found predatory, the service provider shall, without prejudice to the terms and conditions of its licence...or directions issued, thereunder, be liable to pay by way of financial disincentive an amount not exceeding Rs 50 lakh per tariff plan for each service area as the Authority may by order direct," Trai said.

There are 22 telecom circles in the country. Leading telecom operators Bharti Airtel, Vodafone, Idea Cellular and Reliance Jio have operations in all the circles. State-run telecom firm BSNL operates in 20 circles and MTNL in two. Aircel operates in select circles.
 

The new rules from the Telecom Regulatory Authority of India (Trai) come following allegations by established players like Bharti Airtel, Vodafone and Idea Cellular that Reliance Jio is offering predatory pricing.

A tariff will be considered predatory if in a "relevant market", a telecom 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 "relevant market", as per an amendment made by Trai in the Telecommunication Tariff order.

The regulator will determine "relevant market" based on relevant product against which it receives a complaint. It will arrive at "variable cost" after deducting fixed cost and share of fixed overheads borne by the company from total cost of incurred by it for running business during the period under review.

The regulator also said that telecom operators will have to provide services to all subscribers availing the same tariff plan in a non-discriminatory manner.

"No service provider shall, in any manner, discriminate between subscribers of the same class and such classification of the subscribers shall not be arbitrary," Trai said.

Reliance Jio Infocomm had filed a complaint with Trai against Bharti Airtel in April saying the telecom major violated tariff rules by issuing misleading offers and arbitrarily discriminating among its own customers subscribing to the same plan.