Lok Sabha Question No. 3857 (UNSTARRED), answered on 2017-08-09
Subject: Predatory Pricing and Tariffs
Ministry: COMMUNICATIONS
Asked by: KOTHA PRABHAKAR REDDY, CH. MALLA REDDY, R. VANAROJA

## GOVERNMENT OF INDIA MINISTRY OF COMMUNICATIONS DEPARTMENT OF TELECOMMUNICATIONS

## LOK SABHA UNSTARRED QUESTION NO.3857 TO BE ANSWERED ON 9 TH   AUGUST, 2017

## PREDATORY PRICING AND TARIFFS

3857.  SHRI PRABHAKAR REDDY KOTHA: SHRI CH. MALLA REDDY: SHRIMATI VANAROJA R.:

Will the Minister of COMMUNICATIONS be pleased to state:

- (a) whether  many  Telecom  Service  Providers  (TSPs)  are  luring  customers  by resorting to predatory pricing and illegal tariffs and restricting customers from shifting from  one  TSP  to  another  and  if  so,  the  details  thereof  and  the  steps  taken  by  the Government in this regard;
- (b) whether the Government proposes to lay down any predatory pricing and tariff rules to bring transparency in tariff assessment of these TSPs and if so, the details thereof and if not, the reasons therefor;
- (c) whether  the  revenues  of  these  TSPs  are  reportedly  declining  leading  to  the accumulated debt of around Rs. 4,60,000 crore on account of such predatory pricing and if so, the details thereof along with the likely impacts thereof; and
- (d) the steps taken by the Government in this regard?

## ANSWER

## THE MINISTER OF STATE (IC) OF THE MINISTRY OF COMMUNICATIONS & MINISTER OF STATE IN THE MINISTRY OF RAILWAYS (SHRI MANOJ SINHA)

- (a) Section 11(2) of the Telecom Regulatory Authority of India (TRAI) Act, 1997 provides  that  ' the  Authority  may,  from  time  to  time,  by  order,  notify  in  the  Official Gazette the rates at which the telecommunication services within India and outside India shall be provided under this Act including the rates at which messages shall be transmitted to any country outside India '.  In accordance with the said powers, TRAI has issued tariff orders from time to time. As per the existing tariff framework, tariff for telecommunication access service is under forbearance except for National Roaming and Rural Fixed Line Services. TSPs have flexibility to design their products to suit consumer  demand  and  fix  tariffs  for  these  products.  There  is  no  bar  on  Telecom Service  Providers  in  offering  special  tariff  for  valid  class  of  subscribers  as  part  of Loyalty/Customer retention schemes. Luring the customers by adopting illegal offers has  not  been  noticed  by  Telecom  Regulatory  Authority  of  India  (TRAI).  The allegations of predatory pricing were investigated by TRAI and it was found no merit in any of the allegations.

(b) In order to identify and address the various emergent issues and challenges, inter-alia,  related  to  regulatory  principles  of  tariff  assessment  e.g.  transparency, promotional offers, disclosures and non-discrimination, adherence to the principle of non-predatory pricing, meaning of predatory pricing, relevant market, assessment of dominant position etc., Telecom Regulatory Authority of India (TRAI) has initiated a consultation process  by releasing a consultation paper on 'Regulatory Principles of Tariff  Assessment'  on  17 th February,  2017.  The  consultation  process  in  TRAI, typically, takes about 6 to 8 months to conclude and TRAI issues its order/ direction/ regulation after conclusion of the consultation process.

(c) to (d) The details of quarter-wise revenue figures for the financial year 201617 is as below:

| First Quarter (April - June 2016)       | : Rupees 60838.9 Crore   |
|-----------------------------------------|--------------------------|
| Second Quarter (July - September 2016)  | : Rupees 60862.2 Crore   |
| Third Quarter (October - December 2016) | : Rupees 53998.4 Crore   |
| Fourth Quarter (January - March 2017)   | : Rupees 35926.6 Crore   |

From  the  above,  it  is  seen  that  the  revenues  have  declined  from  Rupees 60838.9 crore in first quarter to Rupees 35926.6 crore in fourth quarter.

Further, as per information from State Bank of India, Telecom industry owes about Rupees 6.10475 lakh crore to various financial institutions and  banks,  which includes Rupees 5.87663 lakh crore debt liabilities of Telecom Service Providers and Rupees 0.22812 lakh crore debt liabilities of Telecom Tower Companies. However, the linkage of predatory pricing with the above debt has not been established so far.

In order to examine systemic issues affecting viability and repayment capacity in  telecom  sector  and furnish  recommendations for resolution of stressed assets at the earliest as well as for policy reforms and strategic interventions for telecom sector, an Inter-Ministerial Group (IMG) has been constituted on 16 th May, 2017. The IMG is seized of the matter.

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