Telcos seek floor price for data, voice tariffs to be left to markets

Telecom service providers — Bharti Airtel, Vodafone Idea and Reliance Jio — have, in tandem, sought a minimum floor price for mobile data services and said that voice call tariffs be left to market forces.

They said that data prices should be regulated keeping in mind the financial health of the sector.

“We recommend that the floor price be set for mobile data services. It is critical that the floor price should be made applicable to all categories of tariff plans (i.e. retail consumer, corporate, tendered or other contracts, segmented and any other including one on one),” Airtel said.

Bharti Airtel recommends fixing a floor for data services for two years by three possible approaches.

First, the floor for Voice Unlimited bundle with 1 GB of data in a Month could be set at Rs. 165 (Rs. 75 – minimum subscription charge, Rs. 60 – unlimited voice and Rs. 30 for 1 GB of data). The method will lead to a full cost recovery and deliver a steady state return on capital employed (ROCE) of 15% for telcos.

In the second approach, first data block of 5GB data to be fixed at Rs 30 and subsequent blocks at Rs 20, Rs 10 and Rs 5. Price per GB in this approach is estimated to be Rs. 22 based on current consumption and ROCE of 10%.

The third approach suggests constructs of current daily GB packs go up for instance, the starting per day GB pack (1 GB per day) for a month moves up from 219 to 349. Price per GB is estimated to be Rs. 22 and ROCE of 10%.

Reliance Jio said that tariffs must not be hiked abruptly as it may dampen usage considerably. For now it can be raised to Rs 15 per GB and gradually to Rs 20 per GB after 6-9 months based on data consumption. Trai may review its tariff order after three years, Jio said.

While Vodafone Idea and Reliance Jio advocated for restriction on telecom service providers offering free off-net calls as long as interconnection usage charges are applicable, Bharti Airtel opposed it.

Telcos said voice used to be major source of telecom revenues in the past. However, today its contribution to total revenues has dropped sharply. Further, with the deployment of new technologies, voice is also being carried as data. With this convergence in place, data is already the mainstream revenue for telecom operators.

“We, therefore, do not propose any specific floor price for voice and voice price may be kept under forbearance,” Airtel said in its response.

Jio said that floor price should not be considered for voice as it is a basic essential service and any change in the pricing principles would impact telecom subscribers.

Industry body Cellular Operators’ Association of India (COAI) said that fixing the floor price for the data services will provide sustainability and recover costs; remove the financial stress and enable competition in market, help investments and industry will compete on quality of service.