India’s telecoms regulator initiated a public consultation to explore tariff revisions, seeking views on setting a price floor for voice and data in what would be the first move by the government to impose a minimum price in any industry.
The move by the Telecom Regulatory Authority of India (TRAI), which issued a consultation paper on the topic of tariffs, comes after the three major operators raised prices earlier this month following a Supreme Court ruling over the definition of adjusted gross revenue.
In a statement, TRAI said the Cellular Operators Association of India asked it to set a floor price in early December.
The regulator said it had given operators the “freedom and flexibility to design their tariff offerings”, explaining most economists advise against price controls “as it leads to economic inefficiencies, consumer harm, market distortions and reduced innovation”.
It noted, however, the fast pace of technological change requires huge capital investments: “The telecoms sector is the infrastructure provider for many other sectors of the economy. Thus, making sure that the telecoms sector remains healthy and its orderly growth are equally important.”
Given India’s digital ambitions, operators’ desire for what they see as more sustainable price levels will likely see strong opposition from the government due to concern hikes would hurt consumers.
Vodafone Idea and Bharti Airtel slammed a court decision taken in October, which burdens the industry with INR933 billion ($13.1 billion) in additional licence and spectrum usage fees.
In early December, Vodafone Idea chairman Kumar Mangalam Birla warned it would shut down if it doesn’t get government relief from large fees.
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