R S Sharma, chairman of Telecom Regulatory Authority of India (TRAI), issued a statement that floor price for telecom services is not the need of the hour. After discussing the issue with the executives from all telecom service providers, he stated all parties came to an accord that floor pricing “is not a workable idea.”
He further said,
“The consensus is that as of now, we don’t need to pursue the idea of a floor price. We had detailed discussions for over two hours today. There will be no further discussion or consultation on the issue.”
The issue was brought to the fore by incumbent telecom operators who are bleeding revenue due to disruptive pricing strategy of Reliance Jio. They demanded implementation of floor pricing that would fix a minimum price for data and voice services. Thankfully, the idea was snubbed by TRAI. Otherwise, it would have dropped curtain on the freebies and ultra low cheap offers that we have been enjoying for a while now.
We have learned that Bharti Airtel and Idea Cellular underpinned the need for fixation of minimum pricing during the two-hour meeting. On the other hand, Reliance Jio has raised its voice against the proposal claiming it is a regressive and anti-competitive step.
It is no brainer to understand why Jio is opposing the move; it relies on aggressive pricing to lure customers. The effective zero cost JioPhone that comes with unlimited calling for lifetime is an example that demonstrates the business model of Jio.
“Consensus at the end of the meeting was that there is no need to pursue the idea and it has been collectively decided not to forego the principle of forbearance,” Mr. Sharma added.
