Niti Aayog and the Competition Commission of India (CCI) have opposed any move to fix floor tariffs for voice and data services and said that such a shift would disincentivise competition, deter innovation and deprive consumer benefits, and the regulator must continue with forbearance policy.
The Centre’s policy think-tank further suggested that setting a floor price now could prevent a new entry riding on disruptive technology and “deprive customers of benefits” of competition.
In December 2019, the sector watchdog has come out with a consultation paper to set up a minimum floor price for voice and data services after pressure from the telecom carriers, following critical financial stress on the back of top court’s direction to pay up Adjusted Gross Revenue (AGR)-related dues.
The policy think-tank said that the increase in data tariffs in a price-sensitive market would most likely reduce subscription and consumption which would have a negative cascading effect on the economy.
The Amitabh Kant-headed body said that a tariff floor would only be a short term intervention, and the present crisis presents an opportunity to urgently carry out radical reforms in the regulatory regime.
“With a less than 50% broadband penetration and rural Internet penetration at 27%, India has a long way to go in digital transformation underlining the ambition of $5 trillion worth economy,” Niti Aayog added.
A free market works on the interplay of demand and supply, it said, and added that a price determined by market forces of demand and supply encourages players to innovate and provide better services to their customers in order to retain their existing customers and add new ones.
The telecom regulator in its paper had sought a price ceiling to safeguard consumer interest if a floor price is considered.