India’s telecom regulator is examining a request by operators to create a minimum price for voice and data to prevent companies offering tariffs which are lower than the cost of services – a move apparently aimed at deterring Reliance Jio.
If the Telecom Regulatory Authority of India (TRAI) approves the plan, it could mean the end of free services for mobile phone users, The Economic Times (ET) reported.
Jio, which opposed the suggestion, caused a stir after launching its operations in September 2016, igniting a price war with rivals with a series of free data offers.
The industry faced intensified competition ever since. In February, Jio said it had signed up 100 million subscribers in its first five months of operation.
TRAI chairman Ram Sewak Sharma said the idea was interesting, but: “the floor price of a commodity will depend on multiple variables, technology, utilisation of network, volumes, etc. So, it’s a complex issue of operationalising this principle.”
“This is a new idea, we will have to deliberate on it,” he added.
Sharma said the suggestion could form a part of a current consultation process on tariff principles.
But any such move will face resistance from Jio, which said it won’t charge for voice service for life and only started charging for data in April.
TRAI previously cleared Jio’s free voice and data offers, claiming they don’t violate pricing norms.
The ET report said operators are also in talks with the government regarding issues including spectrum usage charges.
Most operators want the ten years currently allowed for airwave payments to be extended to 20 years or the life of the spectrum. However, Jio said this causes incumbents to bid aggressively at auctions and increases their liabilities.
In May, Reliance Communications said the industry for the first time in 20 years is suffering declining revenue, which led to lower contributions to the government.
Gurdeep Singh, RCom co-CEO, suggested the regulator change the method for calculating adjusted gross revenues in order to lower licence fees and spectrum usage charges. He also called for the abolition of interconnect usage charges, as the industry is moving away from per-minute and per-gigabyte billing.
The operator posted a net loss of INR9.66 billion ($149.9 million) in its fiscal Q4 (calendar Q1), compared with a profit of INR900 million a year earlier. It attributed the decline to Jio’s free offers and disruptive pricing model.
Bharti Airtel, Idea Cellular and Vodafone India also face a probe over allegations they formed a cartel to deny Jio adequate Points of Interconnection (PoI), which led to a loss of service.