By mandating the availability of at least one tariff with a one second pulse (both for prepaid as well as postpaid subscribers), the TRAI has effectively signalled an end to its policy of tariff forbearance which it adopted nearly 10 years ago.

Short of actually fixing the rates, the 51st amendment to the telecom tariff Bible – Telecom Tariff Order (TTO) 1999 – amounts to reintroducing a reference / standard tariff package (RTP/STP) with a mandatory pulse rate. Though technically the RTP/STP regulation has not been withdrawn, it has served no purpose over the years as there were always better choices in the market for customers.

The new amendment announced on April 20 is all the more baffling considering that the final outcome of TRAI's consultation paper on the need to review the policy of forbearance (Review of Policy of Forbearance of 6th February 2012) is still pending. A need has not been established despite the emphasis on the Regulator's discretionary powers.

The one-second plan was pioneered by the industry. As soon as operators started losing customers to the pioneer they were quick to adopt the per-second plan to stop their customers from moving out. In fact, this amendment would discourage mobile number portability.

Why does the TRAI feel the need to force a standard ‘Thali' lunch on all operators? If every service provider is forced to offer the same platter , subscribers would have very little to look forward to. At the same time the absence of this ‘thali' means loss of business they will willingly offer it with extra sambhar on the side.

In September 2002 - when the total number of mobile subscribers in the country stood at roughly 85,31,991 – TRAI decided it was time to allow market forces to take over. It relaxed restrictions on new tariffs including the stifling requirement to report tariffs before introducing them. TRAI prudently decided to allow market forces to determine tariffs instead of fixing the rates. While recording its logic for this in the 23rd amendment, TRAI said,”….there has been considerable increase in the level of competition ..with the entry of the incumbent (BSNL) as the third operator and a private operator as the fourth.…… the Authority is of the view that a stage has been reached, when market forces can effectively regulate cellular tariff and the Regulator has to step aside….”

Just a few months after the above order, the “Monsoon Hungama” spark in July 2003 infused a new paradigm, propelled subscriber uptake and drove tariff down to unheard of levels. Regulation was not the trigger for this, withdrawal from regulating was. Ten years gone, over 8 million mobile connections were added in the month of February 2012 and the total number of mobile connections reached 911 million. There are at least 8 active operators in each circle and TRAI still “feels” the need to prescribe a mandatory tariff plan. TRAI does not provide any proof of a market failure to justify this feeling. Mandating material regulatory changes in a $ 40 billion industry should not be by gut feel alone. Empirical evidence, backed by substantial facts, data and information should be the basis for such regulations.

For all the flaws that the sector may still have affordable call rates and choice are certainly not among them today. In fact TRAI's own data would clearly indicate that such interventions at this stage are superfluous. Between 1999 (when there were roughly 1.6 million customers in total) and 2011 (when this number was closers to 900 million), the average per minute outgo, has declined from Rs 16.93 per minute to just Rs 0.50 per minute. It is thus perplexing to see TRAI's concern. To believe that regulatory intervention could bring better benefits is misplaced. It is like mandating the contents of a pack of biscuits in the FMCG sector where every biscuit manufacturer has to provide at least one pack with minimum 10 biscuits.

>tkt@thehindu.co.in

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