IAMAI opposes fixing of floor price for telecom services
The industry body said that recent hike of rates by all three service providers prove that telecom service providers (TSPs) are responsive to market realities and there exists no evidence of market failure based on which any tariff regulation by way of floor price may be justified.
"The concept of having a floor price for telecom services is fraught with complications. The floor price will need to be based on the cost of the provision of service," the IAMAI said in a statement.
It further said that as different TSPs have different cost structures and different cost of delivery of services, the selection of a representative cost is problematic.
"Contrary to certain suggestions, it would be impractical to choose the highest or second-highest cost in a market with barely 3 service providers of consequence," IAMAI said.
At present, telecom companies are free to decide on call and data rates but due to stiff competition they have sought regulatory intervention.
Mobile subscribers get access to 4G data at a price as low as Rs 3.5 per GB but if the floor price is fixed as demanded by telecom operators, the mobile internet prices will rise 5-10 times from the current level.
Debt-ridden Vodafone Idea has proposed that the minimum price of data should be fixed at Rs 35 per GB, Bharti Airtel has proposed minimum price of Rs 30 per GB for low data users and Reliance Jio wants it to be priced gradually to Rs 20 per GB.
IAMAI said that the Telecom Regulatory Authority of India (Trai) should continue its present position of forbearance by not actively intervening in tariff fixation and let the market forces determine future pricing.
"Moreover, fixation of floor pricing will not address the key issues plaguing the telecom sector which is under huge financial burden severely affecting future investments. In order to correct this, regulators must identify and remove unfair cost advantages in the forms of spectrum fees, interconnection charges, etc," IAMAI said. PRS MRMR