Incumbent telecom operators can take satisfaction in the TDSAT asking Trai some uncomfortable questions on the methodology used by it to give RJio’s promotional and tariff offers a clean chit, but the long delay in the case means that, even if the final ruling is in the incumbents’ favour, it loses much of its relevance. Indeed, after hearing the case since December, TDSAT has posted the case to next month—by the time the case goes through the Supreme Court process, it is doubtful whether it will have anything more than academic value. At the time that RJio came out with its pricing policy and free offers last Septmber, the incumbents made two broad points—the free offers were stretching beyond the 90-day limit prescribed by Trai (this should have ended on December 3, 2016) and the overall pricing structure was predatory. In response, RJio had said the end date of the original offer was December 3—this allowed it to meet the 90-day criterion—but it also said “the benefits offered under the promotional offer will be available to consumers till 31.12.2016”; in addition, it also came up with a new offer that was valid till March 3, 2017.
Not surprisingly, TDSAT has expressed surprise over RJio calling its original offer a “promotional offer” and also calling it a “plan voucher” at the same time—it has said “both positions are not consistent” and asked Trai to examine this. Similarly, in another instance, TDSAT has said telcos are not allowed to increase tariffs in a plan for at least six months—so, when RJio said it was reducing the special benefits (this gave free data/voice till December 31, 2016) to December 3, did this not “amount to reducing the benefit?”, TDSAT has asked. Trai has been given two weeks to provide an answer.
The problem, however, is that in such a dynamic industry, RJio’s offer of free services for such a long period had to be matched by incumbents, and would most likely have played an important role in the pace of acquisition of customers by RJio. If, for the sake of argument, TDSAT rules RJio’s offer as illegal, how are incumbent telcos to be compensated for the slashing of their revenues and loss in market share? Worse, TDSAT has, so far, really dealt with the technicalities—even if important—in RJio’s offer and not addressed the larger issue of predatory pricing. Incumbents have argued that, once the interconnection-usage-charge (IUC) regime came into being—this specified the maximum tariff structure for different legs of a call—this became the rule for determining what predatory pricing is; by this argument, since RJio has to pay incumbents at least 14 paise per minute of a call to their networks right now, it has to charge its customers at least that much. None of the clarifications TDSAT has asked Trai for even deal with this critical issue. That is quite unfortunate. – Financial Express