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The Telecom Regulatory Authority of India on Monday said that it will review forbearance in telephone tariffs in a bid to check recent increase in prices by operators.
Under the existing policy, the telecom regulator has allowed operators to fix their own tariffs on grounds that there is enough competition in the market. But now with the Supreme Court cancelling 122 licences, the regulator wants to review whether it should continue with forbearance or start fixing ceiling rates.
Growing competition
After entry of new operators, in the year 2008, the market witnessed competition in the form of reduced tariff, including introduction of innovative tariff plans such as per second billing. However by the end of December 2011, it is seen that the subscriber base of new operators remains less than 7.5 per cent. “This indicates absence of effective competition despite presence of multiple operators in each service area,” TRAI said while issuing a consultation paper on this issue.
During the months of July and August, 2011, some of the telecom service providers hiked prepaid tariff in many service areas. “On examination of tariff revision, it was observed that the increase in tariff by six service providers has been more or less uniform and almost simultaneous for all the tariff elements, across the service providers. The level of tariff increase affected by the telecom access providers as well as the timing of such hike points towards the possible prevalence of coordinated price activity behind the increase in tariffs,” TRAI said.
Data services
The regulator also wants to review tariffs for data services. “It is observed that tariff for data service is very high. In almost all the cases, it is observed that the default tariff for data services post-free usage as high as Rs 10,485 per GB,” TRAI said.
Keeping in view the increasing usage of data services by the subscribers and also to protect the interest of subscribers against billing shocks, the authority seeks the views of stakeholders on desirability of regulating the tariff for data services, it said.
The TRAI's move is significant because operators are against such intervention. Operators are looking to further increase tariffs to improve their margins and if TRAI imposes a ceiling tariff then they will be forced to keep prices low.
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