Covid effect: Trai shelves plan to define tariff floors

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Published: June 1, 2020 2:30 AM

Call it the pandemic effect or the tariff rise effect, but it seems the Telecom Regulatory Authority of India (Trai) has shelved the idea of putting in place floor prices for data and voice tariffs to help the industry tide over its financial crisis.

Sources said that even the government, which had last year in November in the aftermath of the Supreme Court's verdict on adjusted gross revenue dues pushed for the idea, is no more keen on it.Sources said that even the government, which had last year in November in the aftermath of the Supreme Court’s verdict on adjusted gross revenue dues pushed for the idea, is no more keen on it.

Call it the pandemic effect or the tariff rise effect, but it seems the Telecom Regulatory Authority of India (Trai) has shelved the idea of putting in place floor prices for data and voice tariffs to help the industry tide over its financial crisis.

Sources said that even the government, which had last year in November in the aftermath of the Supreme Court’s verdict on adjusted gross revenue dues pushed for the idea, is no more keen on it.

Trai, on its part, had issued a consultation paper on the subject and the three major telecom operators – Bharti Airtel, Reliance Jio, and Vodafone Idea – had submitted their proposal, outlining floor prices for data and voice services. As required under the Trai norms, the regulator was then supposed to conduct open house sessions at four major centres in the country and then issue the order setting the floor. Since tariff is Tria’s domain, it does not need to send any recommendation to the government for approval.

However, before the open house sessions could be conducted, the coronavirus outbreak led to lockdown. Operators have since written to the Trai to conduct the open house sessions online. But Trai has turned down the proposal. Trai chairman RS Sharma told Economic Times last week, “It may be a better option that any further discussion on the issue (floor tariff) is held after the lockdown is completely lifted and normalcy is restored.”

The change in stance, the government as well as industry executives point out, is because of the pandemic during which fixing any floor price for tariffs will be seen as anti-consumer as it will lead to rise in call and data rates.

Further, since all the operators had increased tariffs during December by up to 50%, which has seen a jump in their average realisation per user during the January-March quarter; Trai and government may be feeling that further hikes can be done by the operators at an opportune time without the need for any regulatory support framework.

During the January-March quarter, Bharti Airtel’s Arpu increased to Rs 154 against Rs 134 in the preceding quarter. Similarly, Reliance Jio’s Arpu rose to Rs 130 against Rs 128 in the preceding quarter. Vodafone Idea has still not reported its earnings for the quarter but estimates are that it would also report an increase.

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