Airtel, Idea approach TDSAT against Trai's predatory pricing norms

New Delhi: The telecom tribunal on Monday gave three weeks to Trai to file its reply in a petition by Bharti Airtel and Idea Cellular challenging the regulator's latest order on predatory pricing but did not stay the contentious decision.

Trai's predatory pricing rules have sparked off a furore in the industry with the older and established telecom carriers as well as industry body COAI slamming the new norms.

The Cellular Operators' Association of India (COAI) has indicated that the regulation favours Reliance Jio, and that the order has distorted the market, placing all other operators at a "serious disadvantage".

Both Telecom Regulatory Authority of India (Trai) and Jio have dubbed the allegations as baseless.

In its petition to the Telecom Dispute Settlement and Appellate Tribunal (TDSAT), Bharti Airtel said that the tariff order "virtually permits a telecom service provider who is an effective significant market player (SMPs) to indulge in predatory pricing to the severe detriment of the appellants and the other operators".

"Thus, if the impugned tariff order is not stayed then it will cause severe detriment to the appellants as it will have no means to meet the predatory pricing and consequent loss of subscribers and business by another TSP (telecom service provider)," Airtel said seeking a stay on Trai's latest order.

Airtel further argued that not staying the order would also "hamper consumer interest as they will be deprived of discounts and offers".

Last month, Trai said it will impose financial disincentive of up to Rs 50 lakh per circle on operators if their service rates are found to be predatory in nature.

A tariff will be considered predatory if in a "relevant market",  a telecom operator with over 30 per cent market share offers services at a price which is below the average "variable cost", with a view to reduce competition or eliminate the competitors in the "relevant market".

Trai will arrive at "variable cost" after deducting fixed cost and share of fixed overheads borne by the company from total cost of incurred by it for running business during the period under review.

The regulator has also said that telecom operators will have to provide services to all subscribers availing the same tariff plan in a non-discriminatory manner.

The rules drew flak from the established operators. Industry body COAI has flagged the revised definition of Significant Market Power (SMP) that now excludes parameters like traffic volume and switching capacity, and said such changes will place older operators at a disadvantage and stop them from responding to "what may be actual predatory tariff plans".

It has also contended that the recent regulation has also taken away flexibility from the operators to offer benefits to customers.

Last week, Bharti Chairman, Sunil Mittal had said that the operators had no choice but to move court against the regulators order, which restrains them from retaining customers and conducting business.

During the hearing today, the TDSAT did not offer any immediate relief to the incumbent operators in the matter, but asked regulator to file its reply in three weeks. The next date of hearing is April 17.