COAI raises concerns on TRAI’s new Tariff Order

The Cellular Operators Association of India (COAI) has expressed its deep disappointment and alarming concern regarding TRAI’s Tariff Order (TTO) amendment.

For some reason these orders seem to be strengthening the ambitions of one particular operator with deep pockets and monopolistic designs at the expense of other operators says COAI.

Speaking about the TTO amendment Rajan Mathews, Director General, COAI said, “All our member operators, with the exception of one, feel deeply victimized and let down. We request the government to intervene and look into these concerns on an urgent basis and ensure a financially healthy and vibrant telecom industry that is able to support Digital India and serve customers. An environment of regulation and policy that is not based on an equal footing will further aggravate the deep financial stress and kill future investments, innovation in an industry that has put India on the global map.”

The industry, which was already reeling from regressive regulations such as a cut in Mobile Termination Charge and International Termination Charge, has now been dealt a near fatal body blow with the recent amendment to Telecom Tariff Order (TTO).

The amended TTO has modified the definition of Significant Market Power (SMP) to exclude relevant parameters like traffic volume and switching capacity for determining SMP. These parameters were a part of TRAI’s own criteria in the past. As a result, victims have now been made the perpetrators.

In a cruel twist of fate, one operator who by its own admission is the world’s largest data network may be free to offer any sort of predatory tariffs while older operators are now subject to regulation and cannot compete without falling foul of a new definition of what constitutes predatory pricing.

Rajan Mathews added, “Something that is a standard marketing practice across multiple industries – airlines, insurance, banking etc. – and has been was working well since the inception of tariff forbearance, has been done away with. While competition is an absolute necessity in any industry and in the interest of customers, it must also be fair. TRAI is legally bound to ensure orderly growth of telecom sector and also ensure level playing field for all participants. COAI welcomes any number of new operators but at the same time existing operators must also be given an equal opportunity to compete and safeguard their investments.”

The industry is dismayed with a succession of regulatory decisions and recommendations made in recent months that clearly appear to be to advantage of one operator at the cost of other players. While reducing the mobile termination charge the regulator ignored the adverse impact on the same on rural coverage and on investments made in those areas. This alone lost incumbent operators over Rs. 15,000 crore rupees per annum and benefited a new operator by nearly Rs. 10,000 crore.

The International termination charge recently reduced from 53 paise per minute to 30 paise per minute is a complete U-turn from the earlier decisions for increasing the same. This impacts Indian consumers and lower forex revenues to the Government to the tune of Rs. 2,000 crore rupees and has again been supported only by one operator.

 

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