Predatory pricing: TDSAT stays TRAI order on segmented offers, SMP meaning
Now the TDSAT has said that Trai can only ask incumbents details of segmented offers for purposes of analysis and if the operators do not disclose the same, they cannot be penalised. Now the TDSAT has said that Trai can only ask incumbents details of segmented offers for purposes of analysis and if the operators do not disclose the same, they cannot be penalised.
The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) on Tuesday provided incumbent telecom operators a relief by putting an interim stay on the Telecom Regulatory Authority of India’s (Trai) new regulation that defined predatory pricing by giving a new definition of significant market power (SMP) and sought to end segmented offers to consumers.
This means telcos like Airtel, Vodafone and Idea Cellular can bring out any tariff scheme irrespective of their revenue and subscriber market share without being penalised as predatory. They can also go ahead with providing segmented offers to their high Arpu (average revenue per user) customers without violating any regulation.
The TDSAT in its interim order on Tuesday said that the new regulation on the definition of significant market power and bar on segmented offers will be kept in abeyance and operators will not be penalised for not following them till it completes a detailed hearing on the matter. Providing relief to the incumbents, the tribunal noted that the regulation with regard to SMP has undergone major changes compared with what was in place since 2003.
Earlier, for checking predatory pricing, an operator was considered dominant if it crossed the 30 per cent threshold by number of subscribers, revenue market share, volume of traffic and network capacity in circles. However, in its new regulation that came in February, Trai removed the network capacity and volume of traffic and kept only the subscriber and revenue market share as determinants. This affected incumbents because in most circles either they have a 30 per cent market share or close to it while new entrant Reliance Jio is only around 13-15 per cent. This meant that incumbents could not come with any innovative tariff package but could only be reactive by matching Jio’s tariffs.
Further, they got hit because to retain their high Arpu customers they were barred from providing segmented offers, which means discounts that are not part of the regulator tariffs. Trai termed it discriminatory and said that every scheme needs to be reported to it. With a cap of 25 tariff packages, the incumbents felt constrained if they reported segmented offers and the fear of losing valued customers was high and real.
Now the TDSAT has said that Trai can only ask incumbents details of segmented offers for purposes of analysis and if the operators do not disclose the same, they cannot be penalised. The TDSAT order has come on the petition of Bharti and Idea Cellular. FE
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