NITI Aayog made conflicting filings to a TRAI consultation on setting a floor price on telecom data plans. One from CEO Amitabh Kant said that floor prices are “the need of the hour”; and another from Dr. Archana G. Gulati, the think tank’s Joint Secretary questioned the basis of floor pricing itself: “Setting a price floor now could prevent similar new entry riding on disruptive technology and deprive customers of benefits of competition,” Gulati said. She added that floor pricing would only benefit incumbents. Gulati added in the end that Kant had approved her filing.
The Competition Commission of India took its filing as an opportunity to deliver a brief lesson on basic competition principles, after which it said that floor pricing would be a barrier for new telecom companies to enter the market. The Asia Internet Coalition, which represents Google, Facebook, Twitter, Amazon and Apple, responded similarly, stating that “consumers who will be deprived of low-cost and affordable services.”
Jio supports floor pricing
In its filing, Reliance Jio supported a floor pricing on telecom tariffs of ₹15 per GB. They suggested that in a few months this be upped to ₹20 per GB. This comes three years after Jio was able to successfully enter the market and capture a dominant position by offering users free data, forcing other telcos to follow suit. As telecom companies struggle with paying tens of thousands of crores to the government in Adjusted Gross Revenue (AGR) dues (as well as much lower user revenue), Vodafone Idea and Airtel have called for regulatory intervention.
The consultation by TRAI comes at a time when the three leading telcos are anyway raising prices to a sustainable level, as the regulator’s paper itself pointed out. Airtel and Vodafone Idea agreed on floor pricing too, but they disagreed on allowing inter-network free calling, with Airtel opposing it.