Trai's consultation on floor price, decision on IUC extension spells relief for Airtel, Voda
The Telecom Regulatory Authority of India (Trai) on Tuesday deferred by one year the scrapping of the charge paid by mobile phone users for calls made to rival networks and initiated talks to prescribe minimum or floor price for call and data, effectively ending free call regime. The development comes as a big boost to Airtel and other old telcos.
Bharti Airtel and Vodafone Idea, which are staring at a liability of thousands of crore in unpaid past statutory dues following a Supreme Court ruling, had been through their association pitching with the government for fixing of a floor rate for calls and data.
Their association had also been lobbying for extending the 6 paise per minute interconnect usage charge (IUC).
On Tuesday, Trai announced that telecom operators will continue to pay 6 paise per minute for every outgoing call made to their competitors' network till December 31, 2020. These charges are proposed to become zero from January 1, 2021.
Telecom industry body COAI sees it as a relief for the debt-ridden sector and asserts that continuing with six paise mobile call termination charge will not have any impact on consumers as operators have already absorbed this charge in their recently increased mobile call and data rates.
"For wireless to wireless domestic calls, termination charge would continue to remain as Re 0.06 (paise six only) per minute up to December 31, 2020," Trai said.
Within hours of IUC announcement, TRAI released a consultation paper to fix minimum or floor rates for mobile phone calls and data, a move that will effectively end the regime of free calling and dirt cheap data.
The telecom call and data rates are at present under forbearance or not regulated.
However, private telecom operators unanimously approached the Telecom Regulatory Authority of India (Trai) to fix minimum price for mobile internet rates.
The outcome is likely to lead to further hike in mobile call and data cost as industry wants average revenue per user to reach Rs 300 per month from about Rs 125 at present over period of two years - better revenue realisation per user will offer a much needed breather to stressed telecom industry where debt levels have soared to Rs 7.8 lakh crore.
Trai in the "Consultation Paper on Tariff Issues of Telecom Services" said that there have been minor adjustments by the telecom service providers (TSPs) to their tariff offerings since the initial announcement.
"It is to be seen whether further readjustments in tariffs will be done in view of the high level of competition in the market. In such a scenario, where the TSPs have recently announced a substantial hike in tariffs, it needs to be discussed whether there is still a need for any regulatory intervention," Trai said.
The development comes following the three private telecom operators, which account for 90 per cent market share, raising mobile call and internet rates by up to 50 per cent from December 3 onwards.
This had effectively marked the first hike in the five years in the country's telecom sector that had been engaged in a brutal tariff war -- voice calls had become almost free in 2016 and a steep 95 per cent fall had been seen in data prices (to Rs 11.78 per GB at present from Rs 269 per GB in 2014).
While telecom operators requested for minimum price for mobile data only, the regulator has also sought public comments on fixing minimum price for phone calls by January 17 and counter comments by January 31.
Rajan S Mathews, Director General of COAI welcomed Trai's move to initiate a consultation on floor pricing and said it will ensure that the telecom industry remains healthy and robust. The move will also provide confidence to investors to make available needed resources, he said.
"In our previous submission to Trai, we have highlighted that tariff correction is necessary for improving the financial health of the industry.
The only option available is for the regulator to intervene and correct the anomalous pricing situation prevailing in the market place," Mathews said.
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