1. Reliance Jio vs Bharti Airtel, Vodafone, Idea: Incumbents clash with new telco at TRAI meet

Reliance Jio vs Bharti Airtel, Vodafone, Idea: Incumbents clash with new telco at TRAI meet

Incumbent operators like Bharti Airtel, Vodafone and Idea Cellular on Thursday once again clashed with new entrant Reliance Jio when the former suggested at an industry meeting with the Telecom Regulatory Authority of India that a separate floor price should be fixed for voice and data tariffs.

By: | New Delhi | Updated: June 16, 2017 6:35 AM
Reliance Jio, Bharti Airtel, Vodafone, Idea, TRAI, TRAI news Trai chairman RS Sharma said Trai has not formed any view on the issue of floor price for tariffs but would examine it as part of the consultative process the regulator would have on the consultation paper it has floated on tariffs. (Reuters)

Incumbent operators like Bharti Airtel, Vodafone and Idea Cellular on Thursday once again clashed with new entrant Reliance Jio when the former suggested at an industry meeting with the Telecom Regulatory Authority of India that a separate floor price should be fixed for voice and data tariffs. Jio, which started services by offering free voice and data services but has moved to charging for data from April but is committed to offering voice for free for life, opposed any such move stating that tariffs are under forbearance and any such move would mean moving backwards in regulation at a time technology is marching ahead. Jio, on its part, suggested that incumbents instead of talking about such measures should expeditiously move towards LTE networks which would enable them to offer free voice services.

Trai chairman RS Sharma said Trai has not formed any view on the issue of floor price for tariffs but would examine it as part of the consultative process the regulator would have on the consultation paper it has floated on tariffs. However, he admitted that a floor price may be contrary to Trai’s stance of forbearance on tariffs.

It is not the first time that the legacy operators have raised the issue of floor price for tariffs. Last year in September, when Jio rolled out its services, the incumbent operators had moved Trai highlighting that regulatory norms prescribe that the termination rate of 14 paise per minute is also the floor price for voice calls and therefore Jio cannot be allowed to provide free voice services. Their contention was that the 14 paise floor rate is to ensure that tariffs are non-discriminatory and non-predatory. However, Trai, after examining the various tariff orders, had rejected their contention. Still, Bharti and Idea have taken the matter to the Telecom Disputes Settlement and Appellate Tribunal, where the matter is sub judice.

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Ever since Jio rolled out its free offers, rivals have been coming out with offers to match it, which has seen data prices being cut by 46-47%. In fact, during Thursday’s meeting, Idea Cellular pointed out that industry revenue in the last six months has declined by 1.6% and in the next one year can go down by 8% if no such measures (read floor price) is introduced.

The incumbents and Jio also clashed on interconnect usage charge and deferred payment for spectrum auctions. While incumbents wanted termination rates to be increased from 14 paise a minute to reflect the true cost, Jio wanted this to be made free under what is called bill and keep. While incumbents want that deferred payments tenure be extended from 10 years to 20 and moratorium from current two years to 10, Jio said that deferred payment should be done away with as it leads to irrational bidding.

The points on which the industry presented a united picture was on licence fee and spectrum usage charge, where the unanimous view was that these need to be brought down — licence fee to be brought down between 3-1% of AGR against 8% now and SUC to 1% against 3-5% currently.

  1. A
    Apte
    Jun 16, 2017 at 9:04 am
    1. Top three telecom companies, Airtel Vodafone Idea, are under pressure after entry of R-Jio (Reliance Infocom) but they should now be ready to give a tough fight to R-Jio. They have to reduce cost of their products and services and increase customers through innovative ways of doing business. That is what they did when in the past they wrested market share from the government owned BSNL MTNL. 3. Instead of facing compe ion head-on, these three companies are trying to save their skins by making anti-customer demands. Obviously, all compe ors of R-Jio have to reassess their strengths through SWOT analysis. 4. It is just not possible for any telecom company to survive by offering services at a loss. Therefore, quality of service (of broadband, voice call etc.) and its price- both are important for all telecom companies. Of course, products and services of R-Jio will have an impact for some months but for long term survival even R-Jio will have to think of costs and quality.
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