Trai issues consultation paper on telcos' predatory pricing, promotional offers

The Telecom Regulatory Authority of India (Trai) has issued a consultation paper on the tariff assessment process for telecom services in order to address the issues like predatory pricing and promotional offers by telcos,

The Trai move comes amidst an ongoing tariff war between new entrant Reliance Jio Infocomm and incumbent service providers such as Bharti Airtel, Vodafone and Idea Cellular, that also prompted moves for consolidation within the larger telecom cos themselves.

The paper aims to define promotional offers and also deals with the other important elements of tariff assessment. With the consultation paper, TRAI aims to bring more clarity in interpretation of its principles as the existing features are not well defined in the tariff order.

The telecom regulator has also sought views on non-discrimination and transparency in advertising tariffs and has invited comments from stakeholders by 17 March and counter-comments by 24 March.

Bharti Airtel, Vodafone and Idea Cellular have filed complaints against Reliance Jio promotional offers in Telecom Disputes Settlement and Appellate Tribunal (TDSAT).

''The Authority has issued several directions and guidelines in order to ensure transparency in tariff offers to protect the interests of the consumers of telecommunications services. However, despite various measures taken by the authority to ensure transparency in tariffs, the authority has been receiving complaints from consumers and consumer organizations highlighting, inter-alia, issues concerning transparency in the tariff offers of telecom service providers," Trai stated in its consultation paper.

Trai said there is a need to review potential anti-competitive practices that could possibly harm the sector and consumers; set out clearly defined standards of competitive conduct; and explore appropriate regulatory tools to address such concerns.

"Anti-competitive behaviour in context of tariff setting can be through predatory pricing by the dominant market player," it added.

"The concept of "promotional Offer" was first addressed by TRAI on 19th June 2002 through an advisory issued to all telecom service providers wherein TRAI advised service providers to restrict the validity of promotional packages and / or the benefits offered to customers under such packages on offer to a maximum of 90 days from the date of launch. This letter was issued in the context of telecom service provider offering promotional packages to their customers as a marketing strategy where the validity of such schemes ranged from 15 days," TRAI further added.

"Authority will continue to monitor the tariffs both with respect to predatory tariffs, as well as, unduly high tariffs because operators with dominant market presence and operations in more than one service sector will always have the capacity to do so," TRAI said.