Floor price for telecom, a boon for ailing telcos, could disrupt Digital India

The telecom regulator’s consultation paper on the need for a floor price for mobile services has come as welcome news for ailing telcos who see this as key to restoring the financial health of the sector. However, with half of the country still on 2G networks, a floor price will create new barriers for those without access to data from reaping the digital dividend at a time when India dreams of a $5-trillion economy by 2024.

“Setting a floor price for mobile services is a retrograde step. It is a bad idea despite all telcos being unanimous in their demand. No mature regulatory regime has prescribed price floors. They ultimately reward inefficiency. Setting a floor price will raise the price barrier for new subscribers putting digital services even more out of reach for half of the country which is still not connected to the internet. This can hardly help realize the Digital India dream,” Mahesh Uppal, director at communications consulting firm ComFirst India said.