Post Jio Launch – Demands of Incumbents with TRAI

The TRAI of India met the captains of the Indian Telecommunication companies on the pricing issue post the Jio launch which has disrupted the Voice & Data market completely.

Demands of Leading Telcos in meeting with the TRAI officials are as follows.

Airtel CEO Shri Gopal Vittal and Shri Ravi Gandhi pointed out
a). IUC should go up as it is currently below cost.
b). LF to be reduced to 3%, remove USOF levy.
c). SUC to be 1% of AGR and also remove the SUC floor mandated last year.
d). Dispute resolution should accelerated.
e). Fast track approval for mergers and simply Spectrum sharing rules.
f). Resolve issues like property tax on towers and industrial tariff being charged for power.
g). GST to be 12%
h). Have a right to protect our customers.

Vodafone representatives Shri Sunil Sood and Shri Balaji asked for
a). NTP 99 allowed fro 10 yr. growth period, similar initiative is required for taking the Industry forward.
b). Spectrum auction started but we are still paying SUC and LF along with auction price which is a double whammy.
c). USOF levy should be removed.
d). Lowering IUC will impact rural area and MTC is not Zero in any CPP regime worldwide. IUC should be on FAC basis.
e). License fee should be subsumed into GST.
f). Auction process design is flawed, creates a DO or DIE situation for operators whose spectrum comes for renewal. Should be a straight forward auction.

Idea Cellular represented by Shri Himanshu Kapania , Shri Rajat Mukherjee and Shri Rahul Vats put forth the following demands,
a). There should be a floor price- One for Voice and One for Data. Lowest cost operator data would be taken to work out the floor price.
b). IUC to be based on FAC. IDEA has lost Rs. 2500 crores on IUC itself.
c). SUC to be 1% for auctioned / liberalized spectrum.
d). Discontinue USOF levy for operators who have met Roll out obligations.
e). No microwave charges for operators who have acquired spectrum in auction or have liberalized their spectrum.
f). Level playing field with OTT players.

Reliance Jio representatives Shri Sanjay Mashruwala and Shri Anshuman Thakur countered the incumbents with the following thoughts,

a). Telecom requires high investment, hence operators to bring in equity. Operators need to invest in new technologies.
b). Deferred payment gave easy money to the operators and pushed up the pricing in auction.
c). Stress is only being talked about now because competition is hurting the TOP three operators.
d). IUC is a subsidy to the existing operator and we should move to BAK regime. No cost for carrying voice in their network.
e). LF to be subsumed into GST.
f). No SUC on spectrum acquired in auction or it should be 1% only.
g). Taxation in India is the highest and should be reduced.

Telecom is a lobby intensive business. It remains to be seen how the Narendra Modi led Govt will handle the massive Telecom Tariff War between A-Vo-Id Operators Vs Jio. If his actions cause any loss to the Govt exchequer, then the opposition political parties will likely label it as a Telecom Scam 🙂

Leave a Reply

Your email address will not be published. Required fields are marked *