Telcos’ proposal to fix ‘floor rate’ for voice, data services may spell the end of Reliance Jio freebies


In what could possibly spell the end of free voice calls, telecom operators have asked the Telecom Regulatory Authority of India (TRAI) to set a minimum ‘floor rate’ for voice and data services. This comes as a latest development in the on-going battle between incumbent operators and Reliance Jio which launched in September last year and since then, has been offering a range of affordable data plans with free voice calls at the core.

Telecom operators including Idea Cellular and Bharti Airtel have urged TRAI to fix the minimum rate on the services. The operators argue that owing to Jio’s free offering the telecom sector is reeling under heavy financial stress. “There is an interesting idea that was presented by some of the operators of creating a floor price for voice and data. It is an idea and we will deliberate on it,” TRAI Chairman RS Sharma said after a meeting with operators.

Sharma further said that fixing minimum charge will be contrary to the current practice of tariff forbearance which requires operators to report their plans to TRAI within seven days of launching them. If the TRAI agrees to the operators’ demand then it would essentially mean the current offerings by Jio will be nullified as operators will be required to abide by the prescribed charges. This comes amidst the critical financial conditions the telecom sector is dealing with. ALSO READ: Reliance Jio effect: BSNL launches Chaukka-444 plan, offers 4GB 3G data per day

Recently, Bharti Airtel MD and CEO (India and South Asia) Gopal Vittal stressed that the sector is ‘heavily taxed‘ and that levies like licence fee, spectrum usage charges and service taxes add up to a ‘very substantial number’. COAI reiterated and urged the government to address the issue of financial plight of the telecom sector with ‘utmost urgency‘ and made a renewed push for lower levies as mooted by the regulator.

Sharma further said that any decision on the proposed system will be followed through a democratic and consultative process. The floor price concept will further depend on multiple variables including technology, utilization of network and traffic volumes. While he did not disclose the operator names who were in favor of the concept, sources reveal that Idea Cellular first proposed the concept citing examples of other nations which follow such a system, and later on companies like Vodafone and Bharti Airtel backed the proposition. The operators also felt that owing to the ‘below cost services’ over a period of time, the telecom sector was further financially burdened. ALSO READ: 5G in India: Faster connectivity, IoT, Smart Cities, socio-economic impact and more

The new fixed floor rate concept is yet another attack by incumbent players in the Indian telecom industry who have been grappling with a surge in consumer demand for affordable 4G services following the launch of Reliance Jio. The Mukesh Ambani-led company launched its commercial services in September last year and irked rival companies over its free voice and data plans which extended beyond its promotional period and led to a major price-war.

Meanwhile, freebies offered by Jio are seen in a negative light at a time when the industry’s debt reportedly stands at Rs 4.6 crore. Adding to the woes, banks which have lent heavily to telecom companies feel that there may be defaults in the near future unless a solution is found.

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