Floor Rates Needed For Mobile Data Services, Current Scenario Justifies TRAI’s Intervention: COAI
The COAI has said that fixation of a floor price is the way forward to guarantee minimum revenue.
Batting for fixation of minimum rates for mobile data services, industry body Cellular Operators' Association of India has told the telecom regulator that floor price should be applied uniformly to all categories of subscribers and for all type of tariff plan offerings.
The association said while there is an urgent requirement of a floor price for data services, it does not see any such need for voice calls and voice tariffs should remain under forbearance. The COAI has said that fixation of a floor price, despite the recent hike in tariffs, is the way forward to guarantee minimum revenue for the telecom companies to ensure the viability and orderly growth of the sector.
"There is a need to fix the floor price for mobile data services...At this stage, we also submit that floor price structure must have a subscription/connectivity charge irrespective of use even for voice," Cellular Operators' Association of India said in its latest submission to telecom regulator Telecom Regulatory Authority of India on Tariff Issues of Telecom Services'.
With regard to data services, the COAI said it is of the view that floor price should be applied uniformly to all categories of subscribers and for all type of tariff plan offerings. However, the COAI has not given its own estimates on what the ideal floor price should be, leaving it to operators to give their individual calculations and suggestions.
The association has highlighted the need for TRAI to intervene with the regulation of prices citing the existing "challenging circumstances". "We are of the view that the current pricing scenario in the telecom sector qualifies on all criteria for TRAI intervention," it said.
Whenever there has been excessive competition, globally, the concept of floor prices has been used as a tool to regulate the market, it said. The COAI said that its member operators are committed to meeting the ambitious targets set for the telecom sector by the government, but added that it would require substantial investments for spectrum, technology, equipment, and fibre backbone, to meet the service quality requirements.
"The telecom industry is currently under financial stress and will not able to generate funds for making such investments as all sources of investments namely equity infusion, loans and surplus of the operators have dried up," it rued. Fixing floor prices for the data services will have a positive impact on the sector as it would provide sustainability and recover costs, remove the financial stress and enable competition in market, and moreover help in investments.
"...it is recommended that the floor price should be fixed only for an interim period, say period of two years, after which the regulator may review the tariff regime. The floor price will help the sector to stabilise in terms of business viability and the regulator may review the floor tariff regime post that," COAI said adding that TRAI can always choose to review it before the said period, if the need arises.