Commission to Pull Up Trai for Letting Jio Offers Run too Long Criticises the regulator for ‘jeopardising’ the health of the sector, saying Jio’s promotional offers cost the govt 685 crore
New Delhi: Reliance Jio Infocomm’s free voice and data services have cost the government ₹ 685 crore, prompting the Telecom Commission to consider pulling up the regulator for “jeopardising” the health of the sector by allowing the offers to continue beyond the stipulated time.
This is the first time that the highest decision-making body in the Department of Telecommunications (DoT) has commented on the duration of Jio’s back-to-back promotional offers and their impact on the government’s finances in the third quarter of this financial year.
Jio’s has offered free voice and data services ever since it started operating on September 5, forcing rivals Bharti Airtel, Vodafone India and Idea Cellular to slash their rates in a bid to retain customers, leading to a drop in their revenue. The government collects licence fees and spectrum usage charges from mobile phone operators, which are calculated on the basis of their revenue. “It is expected the revenues will further decline by 8-10%, as per market expectations,” the commission noted, according to a document reviewed by ET. A strong communique will be framed against the Telecom Regulatory Authority of India (TRAI), which will come on the heels of the commission questioning the regulator’s rationale for recommending penalties of ₹ 3,050 crore each on operators for allegedly denying Jio adequate points of interconnection, which enable calls to be made from one network to another. Jio’s free offers, the commission noted on Wednesday, have led to downward pressure on tariffs, further leading to “lower government revenues”.
“The commission has expressed its deep concerns for the health of the sector and asked the Telecom Regulatory Authority of India to implement its decision of June 2002 and September 2008 regarding promotional tariffs,” a senior official with knowledge of the commission’s decision told ET.
The Trai’s June 2002 decision restricts the validity of promotional offers by telecom operators to 90 days. The September 2008 order specifies that telcos must disclose details of promotional offers, which in any case shouldn’t exceed 90 days.
Bharti Airtel had also challenged the legality of Jio’s free calls. It had filed a petition with the Telecom Disputes Settlement Appellate Tribunal contending that the inter- connection usage charge of 14 paise per minute was a floor price below which operators couldn’t provide voice calls. The charge is paid to networks that receive calls.
The commission highlighted that by offering free services till December 31, Jio had effectively violated the 90-day cap on promotional offers. “Reliance Jio commenced its services from September 5, 2016, and offered a promotional tariff up to 31December 2016, which was beyond a period of 90 days,” it said.
According to the note, lower revenue will affect telcos, which owe over .₹ 1 lakh crore to the government as deferred payment for spectrum and close to ₹ 4 lakh crore to banks.
“If the falling trend continues, it will im- pact the payment and the investment capacity of the industry. In those circumstances, the possibility of defaulting on repayment of loan and instalment of deferred payment for acquisition of spectrum in earlier auctions cannot be ruled out,” the note says.
The commission is an inter-ministerial committee with secretaries from the departments of industrial policy & promotion, IT and economic affairs as members and the secretary in the telecom department, JS Deepak, as its chairman.
Telecom operators have cried foul over Jio’s promotional services, terming the ‘Happy New Year’ offer as nothing more than an illegal extension of the inaugural ‘Welcome’ offer.
Trai gave Jio’s promotional offers a clean chit, saying there is nothing to stop a telecom operator from launching a second one after the first ends. The regulator floated a consultation paper last week aimed at clearing the confusion over grey areas such as promotional offers.
Operators have been facing the heat of Jio’s free services. While Bharti Airtel reported a fall of 55% in net profit in the quarter ended December, Idea Cellular posted its first loss since listing on the stock exchange. The commission said the regulator must be reminded that its inability to implement its own orders could jeopardise the banking sector, deferred spectrum payments to the government and orderly growth of the sector.
Airtel, Idea and Vodafone’s Indian unit have complained of the regulator’s unfair treatment towards them vis-à-vis Reliance Jio, which maintains it hasn’t violated any rules. It said the Happy New Year offer continues to provide free voice and data services, although there is a cap on daily data consumption.