Telecom regulator TRAI has announced that they will study a suggestion of having a mandated floor price for voice and data services. The announcement was the consequence of suggestion made by Idea, Vodafone, and BSNL. These companies are bearing heavy losses after the launch of free services by Reliance Jio.
While confirming this news TRAI chairman said, “It is a new concept … we have agreed for more deliberations on this”. This new concept was raised after two and a half hours of meeting with various telecom companies. During this meeting, the company stated their financial conditions as well as suggests to improve the health of the sector.
Airtel was not involved in the discussions with the TRAI while Jio did not support the proposal and rather spoke about the need for having open-market competition. Earlier, telecom companies are free to decide their tariffs according to the customer’s offerings. If this new concept was approved, then companies would need to get their tariffs cleared by TRAI for various plans.
Airtel, Vodafone, and Idea Cellular were generating 70% of their revenue through voice tariffs. But after the announcement of Jio’s free voice calls the companies have suffered declination in their financial models.
Jio plans were also challenged before by the rivals companies in front of TRAI and fair-play regulator Competition Commission of India (CCI) but Jio was allowed to provide free voice offering to their customers.
Apart from this floor price issue, the companies included reduction of license fees and lowering of spectrum usage charges (SUC) in front of the commission while asked for the removal of payments towards Universal Service Obligation Fund (USOF).
On the heated issue of interconnect usage charge (IUC), that a company pays to the other for call connection, Jio urged that it needs to be removed. Airtel Vodafone and Idea, however, suggested that IUC must be higher against the current rate of 14 paise per minute.
Apart from TRAI, the telecom companies have also been presenting their case before an inter-ministerial panel consisting of officials from the telecom and finance ministries.