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Airtel, Vodafone Idea and Jio Tariff May Get Costlier Over TRAI Floor Pricing

Airtel, Vodafone Idea and Jio Tariff May Get Costlier Over TRAI Floor Pricing
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Highlights

  • Trai has come up with a new consultation paper to set floor pricing in the Indian telecom industry.
  • Floor pricing will surely help the telcos gain back their ARPU and gain subscribers.

Trai has finally come up with a new consultation paper to set floor pricing in the Indian telecom industry, which is suffering badly. Trai's latest "Tariff Issues of Telecom Services," consultation paper seeks the stakeholder and public views on setting a minimum price for data and voice calls.

Trai never interfered in the tariff department, but as the telecom sector now heading towards monopoly, top telcos have approached Trai to introduce floor pricing.

Trai also had a meeting with telecom operators and sought their views even before issuing the consultation paper. With this, we may assume that the tariff plans of Reliance Jio, Vodafone Idea, Bharti Airtel, BSNL and MTNL will get even costlier, but for sure, the tariff plans of all the telcos will start at the same price.

Understand What is Floor Pricing

Over the last few years, the Indian telecom industry witnessed several changes, mainly in the tariff department. Now India has the cheapest 4G data plans in the world. But the telecom operators are facing the heat, and the industry is said to be leading towards monopoly.

In the consultation paper, Trai said, the telecom operators approached DoT for setting a minimum price for data and voice services, and the same has been forwarded to Trai now.

"Department of Telecommunications has recently forwarded representations received by it from the telecom service providers regarding various issues, inter alia, including a plea from some of the Telecom Service Providers (TSPs) seeking floor tariff fixation by the regulator/Government," said Trai in the paper.

Trai will have complete control over tariffs, and there will be a minimum price for data and voice calling services. Once the floor pricing comes into effect, the operators will not have a say in the tariffs department, and the subscribers can choose the operator based on the Quality of Service.

"Accordingly, the Authority has decided to float a consultation paper on the issue so that all the stakeholders in the value chain can get an opportunity to fully participate in the deliberations and give their views on such crucial issues affecting consumer interest," further added Trai.

Is Floor Pricing Needed Telecom Industry?

Currently, if there's no relief from the government, Vodafone is on the edge of exiting the Indian market. Floor pricing is a facet that will help the telcos continue generating revenues. Over the last two decades, we have never seen the Indian telecom sector is such a condition. In 2016 each operator had excellent revenues, and ARPU used to be more than Rs 200.

But Reliance Jio's aggressive entry everything has changed in the telecom sector, and it has turned the industry upside down. Floor pricing will surely help the telcos gain back their ARPU and also gain subscribers by providing better services to the customers.

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