Replying to Telecom Commission’s request to review the tariff regulations to arrest declining government revenues due to promotional offers by operators, sectoral regulator Telecom Regulatory Authority of India has said that consumer interest should be at the centre of public policy and not revenue maximization for the government.
“The authority would like to inform you that the tariff regulatory regime established by TRAI since 1999 has promoted competition in the sector and has facilitated all TSPs, including new entrants in the sector to offer competitive tariff to the consumers,” TRAI said in the letter dated March 29, accessed by The Hindu .
TRAI’s argument
It added that the commission concluded that such a regime needs revisiting solely base on the revenue numbers of a few recent quarters. “This has been argued to be the in the larger interest of the government revenues without dwelling into the benefits accruing to the customers on account of low tariffs and its positive impact on the overall economy,” TRAI said.
The Telecom Commission, which is the highest decision making body in the Department of Telecommunications, had in February written to TRAI asking it to review existing tariff rules to ensure financial growth of the sector.
The commission had reasoned that promotional offers by a new player is leading into fall in revenues of other telcos, and hence resulting in fall in government’s earning.
The regulator, in the letter, argued that it is a well known fact that low tariff help in penetration of telecom services in the rural and remote areas of the country where the teledensity still stands at 53.27% as compared to urban teledensity of 170.15%.
It further stated that affordable telecom service and consumer interest are some of the key elements of National Telecom Policy, 2012, “which surprisingly appear to have been overlooked and the maximization of government revenue, which is not one of the objectives of the NTP, has been given the center-stage by the Telecom Commission.
“This is surprising since it is widely accepted that the consumer interest is critical to good regulation and the same cannot be substituted by revenue maximization,” TRAI said.
‘Harm investors’
The Telecom Commission’s letter, TRAI said, is premised on the contention that reduced tariffs by telcos is leading to reduced revenues for the government and poor financial health of the sector which may harm the interests of investors and financial institutions.
“However, this approach is inconsistent with principles of public policy and canons of public economics. The economic purpose of telecom regulation is aimed to maximize the overall economic growth of the sector and increase productivity.”
TRAI stressed that the objectives of the telecom policy should not be viewed only through the lens of maximization of government revenue from the telecom service sector.
“The Authority completely disagrees with the Commission’s suggestion that the Authority has not implemented its decision/directions on promotional offers, either in letter or in spirit,” TRAI said, adding that it has also sought Attorney General’s view on the subject.
