Mobile Operators may reduce the charges further

Consumers can look forward to further slashing of mobile tariffs, especially SMS, with the Trai opting against any tariff regulation.

Last year, the offer of a pay-per-second plan by a new operator triggered off a price war, leading to charges of predatory pricing by some telecom operators. Around the same time, SMS costs are a fraction of a paise while consumers are charged between 50 paise to Rs 1.50 to send SMSes. Both these developments invited the attention of the regulator.



Trai’s chairman J S Sarma responded by stating that the pay-per-second plans could be predatory and that Trai would seek cost data from operators and intervene if necessary. However, the attack that followed from consumer organizations, parliamentarians and media has led to the Trai backing off, at least, for now.

Consumer organizations and media had argued that no operator, especially new entrants — including Tatas and Reliance in their GSM foray — could be accused of practicing predatory pricing. Predatory pricing requires abuse of market power, which is virtually impossible in India since even market leader Bharti Airtel has less than a quarter of the market.

On the other hand, neither the Trai nor any other government authority has any business intervening with aggressive tariff offers by operators. Consumer organizations argued that given the similarity in product offering, the only way for new entrants to capture the market would be to offer price discounts. Further, even if these prices were lower than cost, it could not be considered predatory as service providers did not have the power to practice anti-competitive strategies in a market which has 12 operators and no concentration of market power.

Telecom minister A Raja confirmed in Parliament last week that Trai had “at present no proposal for intervention in the tariffs offered by telecom operators”. He further went on to explain that “as per Trai, operators have submitted that it may be too early to make any realistic assessment of the sustainability of these tariff offers or the actual impact on overall revenues since the tariff plans have been in the market only for a few months”.