Internet body against Trai fixing tariff floor price

As the telecom regulator gears up to prescribe a floor price for mobile tariffs, the Internet and Mobile Association of India (IAMAI) has suggested there should not be any kind of intervention and present policy of forbearance should continue.

IAMAI highlighted that India currently has approximately 500 million internet users driven mainly via mobile internet services. “Despite the high numbers of users, internet penetration is barely 36% in the country with rural India still having a low 22% internet penetration. In order to empower the marginalised section of the country, there is a need to provide affordable internet connectivity to rural India,” the association said.

It further stressed that this section of the Indian market is extremely price sensitive and therefore, any policy affecting tariff rates will impact on boarding of new subscribers to internet services.

The association said the concept of having a floor price for telecom services is fraught with complications. The floor price will need to be based on the cost of the provision of service. As different service providers have different cost structures and different cost of delivery of services, the selection of a representative cost is problematic. “Contrary to certain suggestions, it would be impractical to choose the highest or second-highest cost in a market with barely three service providers of consequence,” IAMAI said in response to Trai’s consultation.

IAMAI highlighted that currently voice services are the more predominant service and mobile internet services have restricted the market, which is far more price sensitive is given the target of onboarding new users.

Moreover, fixation of floor pricing will not address the key issues plaguing the telecom sector which is under huge financial burden severely affecting future investments.