Telcos torpedo Trai tariff talk

Telecom operators have shot down the sector regulator’s proposal to review the current tariff policy of forbearance even as consumer groups have given it a thumbs-up.

Responding to Telecom Regulatory Authority of India’s (Trai’s) consultation paper on reviewing tariff fixation policy, the telcos said there was no need for regulation in an environment where there was enough competition to keep prices in check.

“We find it extremely confusing that on the one hand there is talk of market-based spectrum pricing and on the other hand we are trying to fix tariffs,” GSM lobby Cellular Operators Association of India (COAI) said in a note to Trai.

It said any interference by the sector regulator would take away the flexibility of telcos in coming out with innovative consumer packages.

“Regulation of tariffs is required only when there is not enough competition in the market. On the contrary, the competition in the Indian telecom industry is the highest compared with other global markets and this is reflected by the fact that when globally benchmarked, India has the lowest revenue per minute,” said COAI.

CDMA lobby Association of Unified Telecom Service Providers of India (Auspi) also opposed the dismantling of the forbearance regime, which it believes is “working perfectly well.”
“The existing tariff regulatory framework is almost 13 years old and has been instrumental in ushering healthy competition,” it wrote to Trai.

Auspi refuted allegations of cartelisation in the sector, saying “a slight hike in tariffs, which itself has been a rare exception, was undertaken by different operators at different points of time.”
Telcos, in their comments sent individually, also rejected Trai’s plans to review the forbearance policy.

“No, we do not see any need for a change in present regulatory framework for telecom tariff fixation,” Bharti Airtel said in a response.

Citing the impact of inflation on other commodities, Bharti said telecom tariff should also be driven by market forces and that Trai should formulate policies which balance the financial health of companies along with consumer interests.

“Regulation of tariff will result in micro-management of the sector and will only put more pressure on operators’ profitability and block free flow of investment into the sector,” it said.

Meanwhile, consumers groups including Telecom Users Group of India and Consumer Protection Association have hailed the move saying the regulator has the liberty to regulate the tariff as and when it feels necessary.

“Effective regulation will definitely result in many benefits including consumer satisfaction,” said Consumer Protection Association.