Tariff regulations, over the years, have seen a dramatic change—from completely-controlled tariff to forbearance.
Tariff regulations, over the years, have seen a dramatic change—from completely-controlled tariff to forbearance. It has gone through phases transitioning from an underdeveloped telecom market to developing, and now to a reasonably grown-up market in terms of teledensity. The operators as well as government policies need to be complemented for this.
With the change in market dynamics, tariff regulation needs to be looked at from a different mindset—not only from the consumer point of view, but also from the operators’ point of view. Its aim should be target reduction in tariff, as well as sustainability.
The preamble to the Trai Act provides for the following:
– To regulate telecommunication services;
– To protect the interest of service providers and consumers
– To promote and ensure orderly growth of the telecom sector
The concept of non-discrimination: The current concept is that service providers shall not, in the matter of application of tariffs, discriminate between subscribers of the same class, and such classification of subscribers shall not be arbitrary. This is to ensure equality and fair treatment and transparency. Trai has sought comments whether this requires any change?
It is necessary to understand that the real power of Trai to control this aspect is not through this definition, but through its ability to intervene. Howsoever elaborate the definition might be, the scope for interpretation will always remain and operators will interpret it in a manner best suitable to them. The issue of non-discrimination will have to be examined in a given situation and at a given point of time, depending on the circumstances prevailing in the market. Therefore, rather than amending the definition, the focus should be on its implementation.
Promotional offers: This concept shall be completely abolished. There is nothing called promotional offer. Any offer made to the customer should be compliant with all the regulatory principles. India is now a mature telecom market and it does not have the scope for loose terms like ‘promotional offers’.
Predatory pricing: The only concept that should be relevant as far as Trai is concerned should be anti-competitive pricing. The concept of ‘predatory’ should be left to legal authorities and bodies like the Competition Commission. From a pricing point of view, Trai should not look at pricing as predatory, but based on the underlying cost of providing the service. One may be providing the service free, but still may not fall under the ambit of predatory. Trai should provide a full-fledged mechanism to ensure that the tariffs which cover the underlying cost of providing the services are only allowed to operate.
Forbearance and power to intervene: Forbearance does not mean complete and uncontrolled freedom, but encourages self-regulation. This is the best thing to have happened to the sector. Forbearance should not be looked at in isolation, but in combination with the power of intervention. While freedom should be provided in tariff-setting, it is necessary that Trai exercises its power of intervention judiciously and expeditiously. There may be instances that the operators come out with plans that are harmful to the sector, and by the time Trai decides to intervene, damage has already been done. In most cases, Trai should exercise the power of intervention suo motu.
Cost & benefit analysis of a regulatory measure: While making regulation is important, the economic analysis of introducing any regulation on what is its cost of implementation vis-à-vis the benefit it is going to bring in is also crucial. It has been a practice with a large number of regulators that this analysis is part of their report whenever any regulation is announced. It will be a good idea if this practice is adopted by Trai. This will help curb micro-management.