Trai tariff regulations prescribe up to Rs50 lakh fine for predatory pricing

The Telecom Regulatory Authority of India (Trai) on Friday issued mobile phone tariff regulations that prescribe a penalty of up to Rs50 lakh per circle on mobile operators found to be indulging in predatory pricing.

The new regulations, however, will not affect existing tariffs or mobile phone service providers although the regulator is defining predatory pricing for the first time.

According to Trai, a tariff will be considered predatory if a mobile phone service provider with over 30 per cent market share offers services at a price that is below the average variable cost, with a view to reduce competition or eliminate the competitors in the relevant market.

The 30-per cent market share clause eliminates any scope for a new player to be penalised if it disrupts the market by below-market tariffs because its market share will be way below the 30 per cent mark.

To ensure transparency, the regulator has imposed a fine of Rs5,000 for every day of delay subject to a maximum of Rs2 lakh on operators who fail to comply with the requirement of intimating Trai within seven working days of coming out with a tariff plan.

On ''promotional offers'', by new entrants, Trai said such offers are beneficial for consumers as they not only provide additional benefits to subscribers, such as free SMS, free / reduced / local STD / ISD rates, gifts, FMCG products / schemes / vouchers for other products and services etc, but also forces other operators to follow suit, thereby benefiting all subscribers.

On the timeline and number of promotional offers, the regulator said that if such a plan has been offered as a regular plan then it will be counted as tariff plans under the cap of 25 plans and will have to comply with minimum 180 days of benefits to consumers, but such offers cannot remain open for subscription for more than 90 days.

Stating that there is no need to reduce the mandated 90-day period for promotional offers, the authority said, ''Currently, while the offer period is restricted to 90 days, there is no restriction on the period of benefit to consumers. Regulatory principles applicable for regular tariff offers are equally applicable to promotional offers as well.''

It has also not put any restrictions on the number of promotional tariffs that an operator can launch, subject to meeting the regulatory requirements under Telecommunications Tariff Orders and Telecom Consumer Protection Regulations

The Telecommunication Tariff (63rd Amendment) Order, 2018 on 'Regulatory Principles of Tariff Assessment' aims at ensuring transparency, non-discrimination and non-predation in telecommunication services.

Trai said the amendments have been issued after detailed public consultation, beginning with the consultation paper on 'Regulatory Principles of Tariff Assessment' issued on 17 February 2017, followed by an open house discussion in New Delhi on 30 May 2017 and extensive research and inter alia based on the international best practices.

Trai held a meeting with CEOs of telecom companies on 15 June 2017 on the issue, inter alia, of setting some form of floor price for retail tariff. This was followed by another meeting with the telecom service providers on 21 July 2017 on the same issue, wherein the majority view was that as of now, Trai should not undertake fixation of floor price and the IUC should not be taken as floor for retail tariff.

The amendments further clarify and bolster the provisions relating to the regulatory principles of tariff transparency, non-discrimination and non-predation. Amendments reporting deal with requirements, guiding principles for checking transparency in tariff offers, definition of non-discrimination, adherence to the principle of non-predatory pricing, definition of predatory pricing, relevant market, assessment of significant market power (SMP)and other related provisions.

Trai said these amendments will be beneficial for the consumers, telecom service providers and the regulator. As such, the transparency in tariff offers will be objectively observed by the telecom service providers vis-a-vis the guiding principles of transparency.

Similarly, Trai will also examine the tariffs of telecom service providers on the touchstone of accessibility accuracy comparability and completeness. It will also take into account whether tariffs are distinct and identifiable, explicit and non-misleading, simple and unambiguous etc. This would ensure transparent offering of telecom tariffs to consumers.

Further, the definition of non-discrimination provides clear benchmark to telecom service providers to bring tariff offers to consumers on non-discriminatory basis.

The amendments relating to the definitions of SMP, predatory pricing etc would ensure fair play and healthy competition amongst the telecom service providers. This in turn would result in more value for money for consumers.

The amendments provide greater clarity on the regulatory principles of enabling telecom service providers for designing their tariff in more innovative manner and also smoothly complete the regulatory principles, Trai added.