Indian regulator TRAI is attempting to curb the country’s tariff wars that are threatening to seriously damage operator profitability, according to a report in The Financial Express. The publication notes that operators may have to present a business case each time they propose a new tariff package. Only once the regulator is convinced the new tariffs are profitable would they be approved. Since 2004 operators have only had to file their tariffs with the regulator within a week of implementing them, with little followup intervention from TRAI.
The new measures have been deemed necessary after mobile tariffs in the country hit an all-time low. Last week state-run MTNL offered customers calls for as little as half a paisa (100 paisa are in a rupee) a second, or just over one hundredth of a US cent a second. Already the cheapest telecoms market in the world, India is now at risk of damaging the prospects of future investment. “For the long-term health of the telecom sector and to ensure that it remains attractive to investors, we have decided to intervene in matters relating to tariffs,” confirmed a TRAI official, according to The Financial Express report. “If we need to add another 500 million subscribers by 2012, the sector needs to be attractive for investors so that companies can raise money to fund network expansion. There should be a balance between the interests of stakeholders – consumers, industry and government – for the sector to remain healthy.” According to the Financial Times, plunging call rates have led to telecoms becoming the worst performing sector in India’s stock market, down 27 percent this year compared with double- and triple-digit rises in other industries. TRAI’s moves are also deemed critical by many in light of the country’s imminent introduction of mobile number portability and 3G license auctions.