Relief for old telcos: TDSAT stays Trai move on SMP, special offers

The tribunal did not, however, grant a stay on the whole regulation on predatory pricing.

In its interim order, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) said Trai will be entitled to ask for details of segmented discounts or concessions "for analysis" but that "no penalty shall be imposed on that basis" till further orders in the matter.

Airtel and Idea Cellular had alleged that the order issued by India Trai was biased against them and put new entrant Reliance Jio at an advantage.

Segmented offers refer to plans that operators offer individual customers as part of the strategy to retain them or counter the promotion effort of rivals. The clauses in the impugned order related to the reporting requirements and definition of SMP are stayed, TDSAT said.

Airtel and Idea had moved the TDSAT against Trai's order on predatory pricing issued on 16 February this year that changed the definition of significant market player (SMP). The regulator had also said that operators will have to provide services to all subscribers availing the same tariff plan in a non-discriminatory manner.

The old operators had flagged the revised definition of SMP that now excludes parameters like traffic volume and switching capacity. This exempted Reliance Jio from being considered an SMP, giving it the freedom to offer discounts which the established players could not.

TDSAT in its order observed that the appellants have expressed deep apprehension that if the reporting requires disclosure of names, etc of their customers, or other sensitive commercial information, this may adversely impact their business interests and the rival service providers may gain if they have access to such information.

TDSAT further stated that it would not be necessary for operators to disclose the details of their customers or any business-sensitive information, and that they can withhold such information provided they offer a written explanation for the same to TRAI. 

If Trai feels that relevant and necessary information is being withheld without just and good reasons, the matter may be bought to the notice of the tribunal for appropriate directions, the order stated.

“The clauses in the impugned order related to the reporting requirements and definition of SMP are stayed," a three-member TDSAT bench chaired by Justice Shiva Kirti Singh said in an order granting interim relief to the two telcos.

Under the new rules, Trai had said it will impose financial disincentive of up to Rs50 lakh per circle on operators if their service rates are found to be predatory in nature.

The regulator had said a tariff will be considered predatory if in a "relevant market", a telecom operator with over 30 per cent market share offers services at a price which is below the average "variable cost", with a view to reduce competition or eliminate the competitors in the "relevant market".

Trai said that the relevant market should be defined based on any of two parameters namely subscriber base and gross revenue, and excluded network capacity and volume of traffic in the criteria.

"The TDSAT order supports the prayer made by incumbent telecom operators. The whole issue of definition of SMP was vitiated by removing two criteria - network capacity and volume of traffic, in amendment of Telecom Tariff Order by Trai. These changes skewed level playing field for most of the incumbent telecom operators," Cellular Operators’ Association of India director general Rajan S Mathews said.