Airtel, Vodafone move to deregulate mobile tariffs


12 Jan 2012
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Bharti Airtel, Vodafone suggest Trai to deregulate mobile tariffs

NEW DELHI: Bharti Airtel and Vodafone India have suggested the Telecom Regulatory Authority of India (Trai) deregulate mobile tariffs or continue with its policy to allow telecom operators to fix calling rates, the companies said in separate letters.

Airtel, the world's fifth largest and India's largest operator by subscribers, has asked to remove the cap on roaming tariffs. The company which is also a market leader by revenues and subscribers, warned against any kind of regulatory intervention as it may "prove to be catastrophic for the very sustenance of the industry".

Vodafone, that follows Airtel in ranking of GSM operators, said tariff regulation would create uncertainty, reduce investment in the sector and lead to higher tariffs in a letter to Trai, seen by ET.

The telecom regulator had sought responses from the industry on reviewing the policy of forbearance in telecom tariffs earlier this month. Trai had issued a consultation paper after the recent 20% increase in call rates by various operators.

Vodafone has consulted experts who say regulating retail tariffs are not justified on any economic grounds and, if attempted, regulation would be against the framework recommended by the World Bank and the principles of competition laws. "Trai should contemplate full and official deregulation of mobile retail rate," Vodafone said in the letter.

Capping tariffs will also limit the ability of telecom companies to offer innovative tariff plans, like per-second billing that emerged in India as a result of free market competition, Vodafone said. India already has among the lowest telecom tariffs in the world.

Bharti said regulation will result in micro-management of the sector and will only put more pressure on operators' profitability besides blocking free flow of investment.

"After cancellation of 122 licences by the Supreme Court, there will be sufficient competition with 7-8 operators per circle as compared to an international benchmark of maximum of 3-6 players." Both Bharti and Vodafone are also opposed to the regulator fixing data tariffs or a placing a ceiling on tariff for data plans. They said the regulator should facilitate competition such that consumers can get affordable Internet.

This is a bad move by the the hell can thy curb innovative ideas and profit of the already bleeding market ?
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