India’s big three operators— Bharti Airtel, Vodafone Idea and Reliance Jio – have, according to recent Indian news reports, asked the sector regulator to set up floor pricing for data services. The three carriers on the fierce rivalry that has recently brought price-cutting competition that has contributed to lowered ARPU for all the main operators blame this rather unusual proposal.
The argument behind the proposal seems to be that none of the three carriers can voluntarily carry out tariff correction. The answer, it would seem, is floor pricing – a fixed lower limit on the price of a service. The letter came from the Cellular Operators Association of India (COAI), which represents all of India’s telecom service providers and network vendors except the two state-run enterprises Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL).
It’s a decidedly unusual step, especially from Reliance, which has been a strong driver of price cutting in the market. However, given recent reversals in the Supreme Court, where operators were told to pay vast dues outstanding to government, not to mention the burden of massive existing debts, perhaps it should not be too surprising. All three operators have already increased voice tariffs. It’s not clear that the telecom regulator is in a mood to take this request on board at the moment. Last week, the secretary in the Department of Telecommunications (DoT), Anshu Prakash, said that no reference has been made to the sector regulator on setting a floor price on tariffs.