India’s older carriers have slammed the telecom regulator for a series of regulations over the last 12-18 months which favour only new entrant Reliance Jio at the cost of the existing ones and said the latest tariff order on predatory pricing violated the ‘fundamental right’ of incumbents to carry out business.
In a statement Tuesday, the Cellular Operators Association of India (COAI) called on the government to urgently intervene, saying that regulations and policies that were not based on fair play would further aggravate the financial stress in the industry, kill future investments and leave thousands of jobs at stake, reported ET.
“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…regulation after regulation put out by TRAI has ended up in distorting the competitive landscape in favour of one operator, while putting all other operators at a serious disadvantage,” COAI said.
The body, which represents all major operators in India including Bharti Airtel, Vodafone India, Idea Cellular and Jio, said the Mukesh Ambani-owned new telco – which started operations in September 2016 and triggered a price war which had hurt the revenue and profitability of India’s existing telcos – didn’t subscribe to these views.
Rajan told ET that COAI members, except for Jio, will decide over the next few days whether to move court against Trai’s amendment to the Telecom Tariff Order (TTO). The regulator couldn’t be reached for comment while Jio didn’t respond to ET’s emailed queries.
Friday, Trai amended its tariff order, saying predatory pricing henceforth will be determined on the basis of average variable cost and whether there is specific intention on the part of a carrier to reduce or kill competition. It also changed the definition of significant market power (SMP), which a telco needs to have for any of its plans to be deemed predatory, to an operator with more than a 30% share by either subscriber base or gross revenue. Earlier, the SMP parameters included volume of traffic, including data, and switching capacity.
COAI’s Rajan said after the changed SMP parameters, “victims have now been made the perpetrators…one operator (read: Jio) 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.”
It also noted that Trai’s latest tariff order that mandated telcos to do away with segregated offers or those provided to retain subscribers “in the garb of transparency and non-discrimination”, took away to a large extent the older operators’ flexibility to counter any subscriber poaching attempt.
COAI said that the industry, which was already reeling from the “regressive regulations” such as cuts in Mobile Termination Rates – which cost incumbent operators over Rs15000 crore a year and benefited Jio by nearly Rs10,000 crore rupees – and in International termination charge, which lowered forex revenue to the government by Rs2000 crore rupees, has now been dealt a “near fatal body blow with the recent amendment to Telecom Tariff Order (TTO).”
