AGR: NITI Aayog does a flip-flop on minimum floor price for telcos

Considerably less than a 7 days following NITI Aayog sent its opinions to the Telecom Regulatory Authority of India (Trai) opposing any type of ground rate for facts or voice tariffs, it has claimed in an additional letter that it stood “for” putting in spot a minimum ground rate.

In a letter dated February 28, Archana G Gulati, joint secretary at the federal government believe tank, claimed that the session paper by itself highlighted the point that industry interventions in the sort of rate controls, these types of as the proposed minimum ground rate, are likely to disincentivise level of competition, price tag efficiency, rate, and top quality parameters and also discourage new entries and innovation.

“In point, the finest disruption in recent years was the entry of a new participant with better engineering who made important inroads into the industry, thanks to really small tariffs. This brought extreme level of competition and growth to the industry,” the letter claimed.

The letter was in response to Trai in search of tips from stakeholders in tariff troubles, which include a minimum ground rate for voice and day tariffs.

Setting the ground rate now could reduce a very similar new entry using on disruptive engineering and depriving customers of the advantages of level of competition, claimed Gulati. The only cause a minimum ground rate was currently being considered was to address the prevailing money pressure in the sector, she included.

But in a independent March four letter to Trai, NITI Aayog CEO Amitabh Kant has expressed a diametrically opposed watch in which he ‘emphasised’ that ground price ranges are the ‘need of the hour’ to enable the continuation of a multiplicity of corporations that is critical for healthy level of competition.

“Given the heavy debt load currently being confronted by the sector and the recent drop in price ranges to unsustainable ranges, there is no option offered but to established ground price ranges,” he claimed in the letter.

In point, Kant went further indicating that the setting up of ground price ranges was in the ‘national interest’ and essential to assure that the sector obtained a great deal-necessary relief steps which would eventually benefit individuals and the overall economy.

Even so, in the direction of the conclude of the letter, Kant claimed that ground pricing was not a very long-phrase remedy. Telecom service companies — Bharti Airtel, Vodafone Strategy, and Reliance Jio — have all sought a minimum ground rate for cell facts companies, even though indicating that voice contact tariffs ought to be remaining to industry forces.

The companies consider that facts price ranges ought to be regulated, maintaining in thought the money overall health of the sector.

“We recommend that the ground rate be established for cell facts companies. It is critical that the ground rate ought to be made applicable to all classes of tariff programs, i.e., retail buyer, company, tendered or other contracts, segmented and any other, which include just one on just one,” Airtel claimed.

Reliance Jio claimed tariffs need to not be hiked abruptly as it may possibly dampen utilization considerably. For now, it thinks the tariffs can be raised to Rs fifteen for every gigabyte (GB) and slowly to Rs twenty for every GB following six to 9 months, based mostly on facts usage. Reliance Jio claimed Trai can critique its tariff buy following three years.

Though Vodafone Strategy and Reliance Jio advocate limits on telecom service companies giving free off-internet phone calls as very long as interconnection utilization rates are applicable, Bharti Airtel opposes it.