Mind Your Own Business, MP Tells Trai

by CXOtoday Staff    Dec 18, 2009

Should the Trai intervene in the telecom sector against consumer interest based on the complaint of a major telecom player about predatory pricing, questioned Rajeev Chandrasekhar, Independent MP and member of the standing committee on finance.

Chandrasekhar’s apprehensions were sparked by a news report highlighting the current tariff war in the telecom sector.

With market forces finally working to peg prices at realistic levels - after years of voice and SMS charges that were way above actual costs - the Telecom Regulatory Authority of India’s (TRAI) intervention would be ill-timed. Allegations of predatory pricing are false and misleading, insisted Chandrasekhar, since this was not possible without a dominant operator.

The Indian telecom market has many players without anyone placed well enough to abuse their position and monopolize the sector. In fact, companies with the most aggressive pricing (Tatas, Reliance, Unitech Wireless, MNS and MTNL) lack a premier ranking.

"The Trai Act makes it clear its mandate is to ensure fair competition and protection of consumer interest. Ensuring RoI or financial viability of operators is not Trai’s mandate, nor is it qualified or equipped to do so. As long as a telecom operator’s actions are not anti-competitive, there is no case for Trai to intervene simply to improve the viability of operators in the market," said Chandrasekhar.

"It’s surprising that predatory pricing charges were leveled by an incumbent operator with the largest market share. It would have been understandable if a new entrant had made such a charge," he said. Even if a new entrant offered its services virtually free, it could still not be accused of predatory pricing as it would lack the market power to execute this.

Besides, Trai’s latest stance ran counter to what Telecom Minister A Raja has promised parliament and reiterated in numerous press conferences - more competition was required to reduce tariffs. This was precisely the case for giving away an additional 120 licenses in January 2008. "Regrettably," said Chandrasekhar, "there’s now an attempt to cap the number of operators and halt further tariff reductions, which could benefit Indian consumers after years of high tariffs."

The Trai should review its stance carefully and not do anything contradicting the government’s stated policy of increasing competition and ensuring sustainable consumer benefits. "The Trai should act decisively to dispel public perceptions that its actions serve the interests of private operators and investors," urged he.