Telecom operators have rejected the proposal floated by the regulator that fares should be more transparent and a code of conduct towards this should be framed. In fact, operators are insisting that telecom fares in India now were the lowest in the world and there was not scope for overcharging in any segment because of the cut throat competition.
Earlier, the telecom regulatory authority of India (TRAI) had said that it might intervene to make fares more transparent in order to help customers make well informed decisions. It also wanted to cap peak charges in some of the services like premium SMSes and data usage in roaming etc. However, operators are strictly against any such move.
Operators are wary that their already thin margins will come under further pressure if the regulator intervenes. Also, they argue that when competition is so high in the industry, there was no need for the TRAI to intervene for managing tariffs. The Cellular Operators Association of India, the industry body representing the traditionally GSM operators has said in a communication to the regulator, “We are of the view that no further regulations or measures are required to enhance transparency.”
The main reasons why the operators want the TRAI to stay out of fares is the sharp plunge in profitability owing to competitive price discounts offered in a highly competitive industry. Even as the user base of operators has been increasing rapidly, the hyper-competition scenario has resulted in consistently declining tariffs that has led to continued drop in average revenue per user (ARPU). Although tariffs should decline when volume increases, the pace of decline has been too sharp in some of the segments and has hit the profitability of operators.
The regulator while agrees with the view that in a highly competitive regime no external force was required to cut tariffs, it has been contending that it did not want to cut the tariffs but only make them more transparent so that subscribers knew what they were paying for. What the TRAI has been asking is that consumers should be informed in a better way about what they would be charged for various services, as multiplicity of tariff plans and an uncountable number of value added services have made choice extremely difficult for subscribers.