Updated: December 26, 2020 5:55:39 am
The Department of Telecommunications (DoT) is not in favour of allowing or fixing a floor price for voice or data services offered by telcos as there has been substantial hike in tariffs by the operators in recent months without any corresponding drop in user numbers, senior government officials told The Indian Express.
A final decision on the issue is likely to be taken after the spectrum auction in March. The DoT, however, does not want to be seen taking an anti-consumer stance and therefore may avoid the floor pricing altogether, officials said.
“We have a forbearance model. In the past few months, the data consumption for all players has been very high…pattern is likely to continue now. They (telcos) have raised tariffs also in recent months,” an official said.
Apart from the DoT, the Telecom Regulatory Authority of India (Trai) is also learnt to have supported the idea of not fixing a floor price for the services, sources said.
Though Trai had started consultations on the issue of floor pricing in December last year, a nationwide lockdown in March this year, put in place to prevent the spread of Covid-19, brought these open-house debates to a halt.
Long-term productivity is key
Demand for floor pricing for data and voice services has been unanimously supported by telecom operators, and industry representatives too have asked expedition of the process. However, authorities have pointed out that data consumption has been quite high and telcos have raised tariffs in recent months. While the industry has pressed for the need for a floor price, doing so may not be as productive until it is for the long run, policy experts said.
Former Trai Chairperson RS Sharma, who had kick-started discussions, however, retired in September this year, without having achieved the finality on this issue.
It is now likely, officials said, that the new chairperson P D Vaghela may either start a fresh consultation process or drop the matter altogether based on his meetings with DoT officials.
The issue of floor pricing for data as well as voice services has been unanimously supported by the three big private telcos, Reliance Jio Infocomm, Bharti Airtel and Vi (Vodafone Idea). Industry body Cellular Operators Association of India (COAI), which represents the three telcos, has also in recent months written to the Trai to expedite the process of fixing a floor price for both data and call services, but without any success.
In its letter to the DoT, the industry body had said that the demand for a floor price on both data and voice services was a “legitimate” demand given the financial health of the telecom players.
“Given the financial pressure on the sector and the fact that ARPU (average revenue per user) and tariffs of the Indian telecom sector are the lowest in the world, floor pricing is imperative to ensure that the sector is sustainable,” COAI had said in its letter.
Of the three, both Bharti Airtel and Vi are under pressure following the Supreme Court’s October 2019 ruling on adjusted gross revenue (AGR).
The court had ruled that Bharti Airtel and Vi must pay long-pending AGR dues, the penalty for non-payment over the past years, and the interest on penalty for non-payment.
Bharti Airtel owes DoT more than Rs 43,000 crore, of which it has paid close to Rs 18,000 crore until now, while Vi owes more than Rs 58,000 crore, of which it has paid nearly Rs 6,900 crore.
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