There is no need to further restrict the time period of the promotional offer: TRAI

Clearing its stand on free offers, telecom regulator TRAI has said that there is no need to imposed restrictions on the number of promotional offers.

"The Authority after considering all factors, including, inter alia, consumer interests, maturity of the telecom sector, competition, tariff forbearance and the fact that even promotional tariffs have to satisfy the Tariff principles of transparency, non-discrimination and non-predation opines there is no further need to alter the current minimal definition of the promotional offer as contained in Direction dated 1st September 2008, " Telecom Regulatory Authority of India (TRAI) said.

The regulator said that there is no need to further restrict the time period of the promotional offer from existing stipulation of 90 days. Currently, while the offer period is restricted to 90 days, there is no restriction on the period of benefit to consumers. Regulatory Principles applicable to regular tariff offers are equally applicable to promotional offers as well. Adding that restriction may not be in the interest of consumers apart from possibly hindering competition. Promotional offers are the reflection of the maturity of competition at most of the times and restricting them would amount to interference with market forces.

The regulator has also come up with a penalty clause in which it will impose financial disincentive of up to Rs 50 lakh per circle on operators if their service rates are found to be predatory in nature.

In case of tariff being found predatory, the service provider shall, without prejudice to the terms and conditions of its licence...or directions issued, thereunder, be liable to pay by way of financial disincentive an amount not exceeding Rs 50 lakh per tariff plan for each service area as the Authority may by order direct," TRAI said.

A tariff will be considered predatory if in a "relevant market", a telecom operator with over 30 percent 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", as per an amendment made by TRAI in the Telecommunication Tariff order.

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The new amendments by the TRAI came after telcos like Airtel, Vodafone and Idea made allegations against Reliance Jio for predatory pricing.