Telecom Comm to TRAI: Review existing tariff rules for industry

The Telecom Commission has asked the Telecom Regulatory Authority of India (TRAI) to review its existing rules to ensure financial stability in the telecom industry. The sector has seen a decline in revenue in second and third quarters led by freebies offered by Reliance Jio.The Telecom Commission has raised concerns over the promotional offers and also its impact on industry’s revenue, according to sources privy to the details. The body has also raised cautious over the telecom stress on banks and government revenue. Telecom sector currently has debt of 4.5-5 lakh crore and also owns Rs 1.5 lakh crore to Department of Telecommunication as spectrum auction installment. The Commission has also asked the regulatory body to implement its own tariff order direction of June 2002 and September 2008. In the 2002 order, the regulator has said that interconnect charges, which currently stands at 14 paisa, is the point below which the tariff should not go. This was to ensure that cross subsidisation and predatory pricing did not happen, said Director-General COAI, Rajan Matthews. The request now to TRAI is to clarify whether the orders have been implemented. Also, the question is what those orders were intended to achieve as far as financial health of the industry is concerned, according to Matthews. On the issue of freebies offered by telcos, Matthews said a recent discussion paper by TRAI itself said there has been ambiguity around the definition of tertiary pricing and what constitutes dominant market and had asked inputs for this. TRAI, however, had ruled that Jio’s freebies and pricing were non-predatory. Disclosure: Network 18, which publishes moneycontrol.com, is a part of the Reliance Group.Watch video for more...