Goodbye forbearance: COAI asks Trai to fix floor price for data

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Published: December 4, 2019 1:30:41 AM

Since the 6 paise per minute is the termination rate, which operators need to pay to the network on which calls are made, in a way this is acting as a floor price.

Prior to September 2016 (before the launch of Reliance Jio) data rates were roughly Rs 50 per GB and consumption was 153 MB per month per consumer.

Despite the three telecom operators having just announced tariff hikes ranging between 15-50%, industry association Cellular Operators Association of India (COAI) on Tuesday wrote to the Telecom Regulatory Authority of India (Trai) to set a floor price for data services. It has said that its members, Bharti Airtel, Vodafone Idea, and Reliance Jio, are in agreement with this demand.

Current data rates in the country are, perhaps, the lowest in the world at Rs 7.77 per GB per month. Approximately, a consumer uses 10 GB data per month. Prior to September 2016 (before the launch of Reliance Jio) data rates were roughly Rs 50 per GB and consumption was 153 MB per month per consumer.

For 4G services, operators do not charge for voice services and offer voice and data combo packs where only data is charged, so effectively data tariffs are the only tariffs which subscribers pay.

For instance, a Rs 249 pack offers free domestic voice calls and 1 or 2 GB data per day. In its communication
to Trai chairman RS Sharma, COAI has written that in today’s fierce competition voluntary tariff hike by operators will not suffice and a regulation of tariff is required for which floor price for data services is required.

“We further submit that the tariff correction in the current level of fierce competition is not possible by any service provider voluntarily and thus the only option available is prescription of a minimum tariff for mobile data service by the Authority. At the same time, the Authority would be aware that unlike mobile data, voice services are considered as essential services especially by the subscribers at bottom of the pyramid and, therefore, would need to be continued under the present forbearance regime,” Rajan Mathews, director general, COAI has written.

“We expect tariffs regulated and decided by Trai will ensure that the telecom industry remains healthy and robust, there is orderly competition and above all, resources are available with telecom service providers to enhance quality of service and expansion of networks to achieve the vision of Digital India,” Mathews has added.

Currently, tariffs are under forbearance, which means that operators are free to fix and implement them without any prior approval from the regulator. However, they have to file details of new tariffs with the Trai within a week of implementation and if the latter finds any anomalies it asks them for rectification.

If a formal floor price is fixed then such forbearance will get diluted. In the recent price hike operators while providing free calls have brought in a concept of fair usage policy, which means after say 1,000 minutes of calls made to rival networks a charge of 6 paise per minute will be levied. Since the 6 paise per minute is the termination rate, which operators need to pay to the network on which calls are made, in a way this is acting as a floor price.

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