Trai may drop plan to fix floor prices for both data and voice tariffs

With a new chairman assuming office from October 1, sources said the Telecom Regulatory Authority of India (Trai) is likely to drop the proposal of putting in place floor prices for both data and voice tariffs as it is felt there’s no need for such a measure now.

There is a view in the government that the health of the telecom operators has improved substantially since December 2019, when they all raised tariffs by up to 50%. Further, the Supreme Court has allowed them to pay their adjusted gross revenue (AGR) dues in instalments over a 10-year period.

Since tariffs are under forbearance, the operators are free to raise tariffs whenever they want so that the government or the regulator are not seen to be party to fixing any kind of floor price as it may be seen as anti-consumer.

The floor price was the only major issue on which the consultation process was started by former Trai chairman RS Sharma, but it was not completed. Before open-house sessions could take place, the Covid-19 pandemic struck and Sharma, who superannuated on September 30, refused to hold open-house sessions online as the industry demanded.

Though there’s no laid-down process, sources said going by convention, a new chairman is free to examine the issue afresh – he can begin a new consultative process, take forward the process initiated by Sharma, or drop the matter altogether.

In the past, ex-chairman Rahul Khullar had initiated a consultation paper on net neutrality but the process could not be completed as his tenure came to an end. Sharma, who succeeded Khullar, issued a fresh consultation process and then issued not one but a set of recommendations which were quite different from the way Khullar had planned the exercise.

Sources said new Trai chairman PD Vagehla is likely to first examine whether the issue needs to be taken forward as much time has elapsed since the consultation paper was floated. It is likely that the new chairman may approach the issue quite differently and may have different priorities.

Though the telecom operators such as Bharti Airtel and Vodafone Idea still feel that a floor price is needed as the pricing power of the operators needs to strengthen to restore the financial health of the sector, the government now feels otherwise. The latter feels that with the pandemic and the work-from-home trend, telcos have seen a jump in data usage, and it makes no sense to put in place a floor price for tariffs as it would be seen to be anti-consumer.

The government had last year in November in the aftermath of the Supreme Court’s verdict on AGR dues pushed for the idea, though tariff is a domain of the regulator. After that, in December all the operators had increased tariffs by up to 50%, which has seen a jump in their average realisation per user.