The Telecom Regulatory Authority of India (TRAI) has floated a new consultation paper that seeks to regulate tariffs for telecom operators. Currently, telecom operators have the freedom to set tariffs as they please but the intense competition doesn’t allow them to do so. However, the consultation paper titled "Tariff Issues of Telecom Services" explores suggestions on setting a floor price telcos’ services, which means that all telcos will have to adhere to it and price their plans starting at the floor price, if it is set. If TRAI decides to set floor prices for telecom operators, companies like Bharti Airtel and Vodafone-Idea will benefit the most from it since they are struggling to generate revenues with low tarriff prices.
Since Reliance Jio stepped into the telecom sector, it has been forcing rival telcos to lower prices to stay in the compeition. In case a floor price is set, the telco Reliance Jio might be hit the hardest since it won’t be able to reduce tariff prices below a certain point. This move will definitely benefit all the telecom operators irrespectively and the sector’s health might improve, but consumers may end up paying more. TRAI says it received representations from telecom operators about their woes, along with a plea seeking floor tariff fixation by the regulatory authority.
“The Authority (TRAI) has decided to float a consultation paper on the issue so that all the stakeholders in the value chain can get an opportunity to fully participate in the deliberations and give their views on such crucial issues affecting consumer interest,” TRAI mentions in a media release. While the consultation paper has just been introduced, TRAI is inviting written comments from stakeholders on the issue by January 17, 2020 and counter-comments by January 31, 2020. So, at tariff prices can’t be expected to increase due to new floor pricing before February 2020.
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