Government says lost revenue on Reliance Jio’s free offers; asks TRAI to review sector impact

By: | Updated: February 22, 2017 8:34 PM

The government has asked the telecommunication sector regulator TRAI to review the impact of Reliance Jio’s free voice and data services upon the industry, which it said has led to the exchequer losing potential revenue.

This is for the first time the government has stepped in the tussle between the telecom industry and TRAI over the regulator allowing Reliance Jio with its predatory offers. (Image: Reuters)

The government has reportedly requested the telecommunication sector regulator TRAI to review the impact of Reliance Jio’s free voice and data services upon the industry, which it said has led to the exchequer losing potential revenue.

This is for the first time the government has stepped in the tussle between the telecom industry and TRAI (Telecom Regulatory Authority of India) over the regulator allowing Reliance Jio with its predatory offers to grab market share, leading them into heavy financial losses.

However, TRAI is the nodal authority with legal backing on the telecom tariffs in the country, and the government’s requests in the matter are not binding on it.

Lost income

Telecom Commission, the government’s policy decision making body, has asked TRAI to implement its own tariff orders of June 2002 and September 2008, which mandate that the telecom service operators must not offer the services below the interconnect usage charges, which is fixed by the government.

The Telecom Commission, which met today to take stock of Reliance Jio’s impact on the sector, feels that the government lost revenue due to the free services. The government earns money from the telecom operators through various fees and levies, and their falling revenues has led to an impact on the earnings of the government.

Further, the Telecom Commission has also asked TRAI to review its rules regarding the promotional offers from service providers in order to ensure not only the financial growth, but also the health of the telecom industry, which is under the combined debt of Rs 500,000 crore.

Operators hit hard

India’s leading telecom service providers Airtel and Vodafone had earlier moved TDSAT (Telecom Disputes Settlement and Appellate Tribunal) complaining against TRAI for giving a clean chit to Reliance Jio’s free services offers and violating its own tariff orders. Vodafone has also moved the Delhi High Court against TRAI with the same complaint of allowing a violation of tariff orders.

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Reliance Jio’s entry into the telecom space has forced the incumbent players to drastically cut tariffs – as much as by 66% – in order to retain their customer base, and has put the entire sector under tremendous pressure of choosing between protecting margins and user base.

Reliance Jio extended its inaugural free voice and data plan till March 31 drawing complaints and criticisms from its biggest rivals Airtel and Vodafone, who assert that its anti-competitive practices and freebies are hurting the industry.

Airtel had also, in barely contained words, criticised TRAI for letting Reliance Jio create a situation forcing its rivals Idea Cellular and Vodafone India to consider merging their operations to build enough scale that could withstand the competition.

 

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