Jio to gain from Trai’s non- predatory rules
The non-predatory tariff rules announced by sectoral regulator Telecom Regulatory Authority of India (Trai) could adversely affect operators such as Bharti Airtel, Vodafone, and Idea Cellular, as these restrict their pricing flexibility. However, Reliance Jio will be left untouched until it achieves a 30 per cent market share.
According to the Trai order, a tariff can be considered predatory if a significant market player offers services at a price, which is below the average variable cost in a “relevant market” with a view to reduce competition or eliminate competitors.
“The tariff order restricts predatory pricing by players with more than 30 per cent subscriber/revenue market share and puts no restrictions on promotions from Jio, which is the dominant player in data with 4x more volumes than Airtel or Idea+Vodafone,” a BNP Paribas report said.
Also, Trai has disallowed the operators from sending special offers through SMSs to select customers. This is likely to impact the old operators as they have historically been making segmented offers, which at times are used to prevent customers from porting.
The regulator has directed the operators to disclose all tariff plans to the customers.
Currently, Jio has a single transparent pricing for its customers. The Mukesh Ambani-owned company had also complained to the Trai about incumbents offering segmented offers to different customers.
The regulator has said whenever differential tariffs are offered, the operators shall be responsible to define transparent and unambiguous manner the eligibility criteria for availing such differential tariff.
Analysts said this change could potentially reduce the flexibility in pricing for the incumbents.