TRAI to issue checklist on predatory pricing soon
The Telecom Regulatory Authority of India (Trai), which is facing criticism from a section of telecom operators for the Telecom Tariff Order issued last month pertaining to predatory tariffs, will soon come out with a checklist for service providers to ascertain whether their offerings are predatory in nature or not.
“We are preparing guidelines that will work as a checklist for operators to know if their tariffs are predatory or not. It will have points such as: Are you a significant market player? Are you offering tariffs below variable cost? If the answers to both these questions are in positive, then they’ll have to give the reason behind it, which could be to match their competitor’s tariff, or doing a promotional measure,” Trai Chairman RS Sharma told The Indian Express.
Sharma said that this was being done in accordance with the order of the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) that called upon the regulator to issue “clear guidelines and benchmarks” for performing self-checks by telecom companies for ascertaining consistency with the principles of IUC compliance and to work out quick collection and dissemination of relevant data in the context of predatory pricing.
Last month, Trai issued the tariff order, which prohibits significant market players – operators with over 30 per cent market share – from offering tariffs below their average variable cost with “a view to reduce competition or eliminate the competitors in the relevant market”. The sector watchdog also said that in case of tariff being found predatory, the service provider shall be liable to pay a penalty of Rs 50 lakh per tariff plan for each circle.
Following Trai’s order, Rajan Mathews, director general of the Cellular Operators Association of India, a body representing the top mobile companies of the country, had said: “All our member operators, with the exception of one, feel deeply victimised and let down…An environment of regulation and policy that is not based on an equal footing will further aggravate the deep financial stress and kill future investments, innovation in an industry that has put India on the global map”.
Sharma said that the operators were free to challenge the regulation in court. Bharti Airtel and Idea Cellular have already approached the TDSAT, which, last week, refused to grant an interim stay on the predatory pricing order but asked Trai to make its submissions as to why the order should not be stayed on April 17, when the case will be heard again.