What Is Tariff Floor Pricing And Why Telcos Want TRAI To Fix It Soon?

Fixing tariff floor pricing has become the major issue in the telecom sector as TRAI still hasn't taken any decision on the same. This means Reliance Jio, Airtel, Vodafone-Idea, BSNL, and MTNL are free to fix the prices of their prepaid and postpaid plans.

TRAI has already indicated that it will not take any decision as the regulator has declined the pleas of Airtel and Vodafone-Idea.

What Is Floor Pricing?

Floor pricing means that the TRAI or the Department of Telecommunication (DoT) will fix a price for calling and data services so that no telecom operator can offer its services at a lesser price to gain new users. However, analysts accept that this is a complicated decision and could be anti-consumer.

TRAI rejected the idea of setting up floor pricing for tariffs and said that the Government should give some support or relief to telecom operators. This statement comes soon after Airtel and Vodafone-Idea raised tariffs of postpaid plans and aims to do the same with prepaid packs.

Why Is Reliance Jio Against Tariff Floor Pricing?

On the other hand, Reliance Jio does not want TRAI to fix floor pricing and said that this proposal is anti-competitive. This is not the first time TRAI refused to accept telcos requests for setting up floor pricing for plans.

Last year, the telecom regulator did the same with Vodafone-Idea despite the industry believes that people are paying Rs. 8 for 1GB of data, which is the lowest.

Reliance Jio has disrupted the telecom sector with the free offers announced in 2016. Besides, the telecom operator has forced Vodafone and Idea to merge their operations, but still, it is not performing well in the country.

In fact, Kumar Mangalam Birla wants to sell his share to the Government as Vodafone-Idea is under a deep debt of about Rs. 1.8 lakh crore; but without Government support, its survival seems very difficult.

However, the Department of Telecommunication has insured that it does not want two telecom operators in the country, which clearly shows that soon it will come up with some reforms in the sector.

But in case, the Government delays the reform procedure, then we believe that Reliance Jio and Airtel will remain in the industry and the former might continue to attract more market share along with subscribers.