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Idea Cellular writes to TRAI raising concern over transparent pricing and market power norms

February 13, 2018

In a letter written to Telecom Regulatory Authority of India (TRAI), Idea Cellular has expressed concern over the concept of significant market power (SMP) and how it will be assessed by the regulator as it readies to issue new guidelines on transparent pricing norms. TRAI’s pricing directive is likely to include market power as a key factor in tariff reporting modalities.

Idea Cellular, which is in the process of being merged with Vodafone India, has written to the regulator, seeking a change in the definition of SMP so that the threshold is set at 50 per cent or more. According to the current definition, a service provider holding a share of at least 30 per cent of the total activity in a licensed service area is termed significant market power. The total activity includes any one or more of factors, such as subscriber base, turnover, switching capacity and traffic volume. The market share of the Idea-Vodafone merged entity will far exceed the 30 per cent significant market power definition. While the two together could hold more than 37 per cent, Bharti Airtel’s market share is already at around 34 per cent.

Idea Cellular has argued that the definition of SMP needs to be changed given the changing dynamics of the telecom industry with four to five operators serving the market. The operator is of the view that with increasing use of bundled services, factors like number of broadband sites, technology used and available capacity, market share of data traffic, promotional benefits and spectrum holding should be used to determine SMP.

Moreover, the current SMP definition is also in conflict with the earlier TRAI recommendation pertaining to raising the overall spectrum cap from 25 to 35 per cent. Further, the regulator proposed to have a cap of 50 per cent on the combined spectrum holding in the sub-1 GHz bands (700, 800 and 900 MHz) in place of intra-band cap. According to Idea, TRAI has acknowledged that market is seeing some very significant consolidation in recent times and a spectrum cap set for a six to ten operators’ market cannot be applied in a four to five operator market.

Earlier, Bharti Airtel had also written to TRAI on the proposed pricing norms, though it focused on issues linked to predatory pricing. Bharti Airtel is of the view that the regulator should initiate a fresh consultation on transparent pricing norms such as the issue of performing self-checks for interconnection usage charges compliance and ascertaining the principle of non-predation. According to Airtel, these issues had neither been dealt within any consultation paper in the past nor had these been discussed in any open house.



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