The Telecom Regulatory Authority of India (Trai) seems to have dialled trouble, once again, for itself. Around three months after it gave a clean chit to Reliance Jio’s promotional tariff as being non-discriminatory and non-predatory, it wants to define these terms. Further, within a fortnight of reiterating that Jio has not violated the promotional offer regulation by extending the free service offer beyond December 2016, it has acknowledged in a consultation paper floated on Friday that it has so far never defined what promotional and predatory means and would now want to do so and has, therefore, sought stakeholders’ responses by March 17.
The situation is quite similar to what happened to its call drop regulation where it had prescribed in October 2015 that operators need to reimburse consumers R1 for every call drop with a maximum of three call drops a day. In doing so it had blamed the operators for call drops, but a month later came out with a study paper that apportioned blame for call drops on a host of other factors — lack of spectrum available with the operators in proportion to their subscriber base; change in their frequency band as a result of the government’s re-farming policy, etc. The regulation was struck down by the Supreme Court in May 2016 as it found it “arbitrary, unreasonable and non-transparent,” — it was meant to ensure quality of service to consumers but it did not lay down any quality of service, the court said.
Currently too, operators like Bharti Airtel and Idea Cellular have dragged Trai to the Telecom Disputes Settlement Appellate Tribunal alleging that it erred while giving a clean chit to Jio on its promotional tariffs. The next hearing on the matter is on February 20.
Analysts feel that by bringing out a consultation paper at this state to define tariffs in the context of promotional, predatory etc, the regulator seems to have weakened its case. “If Trai itself has acknowledged that it has never defined the term ‘promotional’ or ‘predatory’, how did it give a clean chit to Jio on these counts, is a thing which would surely be highlighted by the petitioners,” said a telecom observer.
This is what Trai has said about promotional offer in its consultation paper: “The concept of ‘promotional offer’ was first addressed by Trai on 19th June 2002 through an advisory issued to all telecom service providers wherein Trai advised service providers to restrict the validity of promotional packages and/or the benefits offered to customers under such packages on offer to a maximum of 90 days from the date of launch… The letter, however, did not spell out the meaning of the term ‘promotional package’… The Authority subsequently referred to this issue in its Consultation paper on limiting the number of tariff plans offered by the access providers (March 8, 2004) but did not clarify the meaning of the term promotional offers.”
It has then asked the stakeholders: “Which tariff offers should qualify as promotional offers? What should be the features of a promotional offer? Is there a need to restrict the number of promotional offers that can be launched by a TSP, in a calendar year one after another and/or concurrently?”
Similarly, this is what Trai has said with regard to predatory pricing: “The anti-competitive behaviour in the context of tariff setting can be through predatory pricing by the dominant market player… While the term ‘non-predation’ has not been specifically defined in the TTO (Telecom Tariff Order), it finds reference in many documents issued by Trai from time to time, which indicates its usage in the context of its generally understood meaning of abuse of dominant position by an enterprise through predatory pricing.”
After going at length on the general definition of the terms, its scope and practises, it has sought stakeholders’ response to the following question: “What methods/processes should be applied by the Regulator to assess predatory pricing by a service provider in the relevant market?”
Analysts FE spoke to said that it is strange that the Trai is acknowledging in its consultation paper that it does not have a clear definition of either promotional offer or predatory pricing, but when incumbents complained that Jio’s tariffs were against the norms of promotional and were predatory, it gave a clean chit as late as January 31, stating: “Your allegations that the Happy New Year offer (Jio’s extended promotional offer) is violative of the principles of non-discrimination, IUC compliance and non-predation have been examined with reference to extant TTO provisions/IUC regulations on the subject and no violation has been found.”