TRAI move to halt telecom tariff wars hurts consumer interest

“Should the TRAI intervene in the telecom sector against consumer interest based on the dubious complaint of a major telecom player about predatory pricing?” questioned a deeply concerned Rajeev Chandrasekhar, independent Member of Parliament and Member of the Standing Committee on Finance. Mr. Chandrasekhar’s apprehensions were sparked by a news report highlighting the current tarrif wars in the telecom sector.

With market forces finally working to peg prices at realistic levels - after years of voice and SMS charges that were way above actual costs - TRAI’s intervention would be ill-timed and questionable. Allegations of predatory pricing are false and misleading, insisted Mr Chandrasekhar, since this was not possible without a dominant operator, as the Indian telecom market has many players without anyone placed well enough to abuse their position and monopolize the sector. In fact, companies with the most aggressive pricing (Tatas, Reliance, Unitech Wireless, MNS and MTNL) lack a premier ranking.

The recent pay-per-second offers by some companies, further improved by several smaller operators and new entrants, clearly indicates a dynamic market. This wasn’t the case for years and by TRAI’s own admission in 1996, it had determined that the cost of terminating an SMS was a fraction of a single paisa! So TRAI should have intervened years ago to reduce and cap SMS tariffs - which it never did.

“The TRAI Act makes it clear its mandate is to ensure fair competition and protection of consumer interest. Ensuring Return on Investment or financial viability of operators is not TRAI’s mandate, nor is it qualified or equipped to do so. As long as a telecom operator’s actions are not anti-competitive, there is no case for TRAI to intervene simply to improve the viability of operators in the market,” Mr. Chandrasekhar emphasized.

“It’s surprising that predatory pricing charges were levelled by an incumbent operator with the largest market share. It would have been understandable if a new entrant had made such a charge,” quipped Mr. Chandrasekhar. Even if a new entrant offered its services virtually free, it could still not be accused of predatory pricing as it would lack the market power to execute this.

Besides, TRAI’s latest stance ran counter to what Telecom Minister A Raja has promised Parliament and reiterated in numerous press conferences - more competition was required to reduce tariffs. This was precisely the case for giving away an additional 120 licenses in January 2008. “Regrettably,” rued Mr. Chandrasekhar, “there’s now an attempt to cap the number of operators and halt further tariff reductions, which could benefit Indian consumers after years of high tariffs.”

The TRAI should review its stance carefully and not do anything contradicting the Government’s stated policy of increasing competition and ensuring sustainable consumer benefits. “The TRAI should act decisively to dispel public perceptions that its actions serve the interests of private operators and investors,” urged Mr. Chandrasekhar.

Tagged as: Consumer, SMS, telecom, trai

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