Trai rejects proposal on floor price for voice, data services

 The Telecom Regulatory Authority of India (Trai) on Friday rejected the proposal of some of the telecom service providers, mostly incumbent players, to fix a floor price for both voice and data services, and said that tariff forbearance would continue.

“We had a detailed discussion (with industry stakeholders) for two hours. Fixing a floor price was not a workable idea. Prices will continue under the principles of forbearance like now,” Trai Chairman R S Sharma said.

“The consensus is that as of now, we don’t need to pursue the idea of a floor price. There will be no further discussion or consultation on the issue,” he added.

The Trai met operators after a section of incumbent telecom companies demanded fixation of a minimum floor price for data and voice calls. If a minimum floor price had been set, it could have meant an end to freebies in the market.

The telecom tariffs are currently under forbearance, meaning that operators are free to fix the rate and have to report their tariff plans to Trai within seven days of launching them. However, there is no upper or lower ceiling. The Trai has only fixed a ceiling for tariffs during roaming. 

During the meeting, Idea Cellular is learnt to have batted for fixation of a minimum floor price through a one-hour presentation, while newcomer Reliance Jio termed the proposal as a regressive and anti-competitive step.

Leading telecom firms, including Bharti Airtel and Idea wanted a floor price to put an end to the free services which were being offered by new entrant Reliance Jio, which had triggered an intense price war that hurt the revenues and profitability of the established carriers. Jio has opposed the suggestion and said that fixing the floor price is an anti-competitive step.