Reliance Jio locks horns with COAI after new Trai tariff rules

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New Delhi: The battle in the telecom sector has taken another ugly turn with Reliance Jio Infocomm Ltd asking industry body Cellular Operators Association of India (COAI) to immediately cease and desist from publishing false and defamatory imputations against Reliance Jio and issue a public apology.

This comes after COAI, in a press statement dated 20 February, said that the Telecom Regulatory Authority of India’s (Trai’s) recent orders, including the latest tariff order amendment, “seem to be strengthening the ambitions of one particular operator with deep pockets and monopolistic designs at the expense of other operators”.

In a letter dated 22 February and addressed to COAI director general Rajan S. Mathews, Reliance Jio had said that the press statement by COAI is ex facie defamatory under the garb of criticizing orders of Trai. “Reliance Jio reserves its rights to initiate criminal and civil defamation proceedings, including for damages, against both COAI and incumbent dominant operators, jointly and/or severally,” the letter said.

Reliance Jio also claimed that COAI did not reach out to it for its views on the statement, despite it being a core member, and said “a body which had once emerged as the official voice of the Indian telecom industry, is now reduced to becoming an instrument and mouthpiece of Bharti Airtel, Vodafone and Idea”.

In the letter, Reliance Jio asked COAI and Mathews to issue a public apology and appropriate clarification through a separate press statement within 48 hours of receipt of the letter.

Mathews could not be immediately reached for comment.

Since the entry of Reliance Jio, the telecom sector has been beset with controversy—from operators sparring over network testing norms to provision of points of interconnection (PoIs) and, more recently, the cut in interconnection usage charges (IUC).

The latest war of words erupted after Trai issued new norms on tariffs on 16 February under which the regulator can examine the tariffs of a significant market player, which is an operator holding a share of at least 30% of total activity in a relevant market, to determine the existence of predatory pricing. If the relevant tariff is found predatory, an operator will be liable to pay a penalty of up to Rs50 lakh per tariff plan per licensed service area.

Incumbent operators claim that the change in Trai’s definition of a significant market player will result in an unfair advantage to Reliance Jio. The new definition of “total activity” is based on any of two parameters—subscriber base and gross revenue—while the earlier definition included subscriber base, turnover, switching capacity and volume of traffic.

“These parameters were a part of Trai’s own criteria in the past. As a result, victims have now been made the perpetrators. In a cruel twist of fate, one operator who by its own admission is the world’s largest data network may be free to offer any sort of predatory tariffs while older operators are now subject to regulation and cannot compete without falling foul of a new definition of what constitutes predatory pricing,” the statement by COAI said.

According to data from Trai, as of 31 December 2017, Airtel had 24.85% of subscriber market share, Vodafone had 18.2%, Idea Cellular 16.83% and Reliance Jio 13.71%.

As far as revenue market share is concerned, as of 31 December, Airtel had 27.96% of revenue market share, followed by Vodafone India (20.65%), Reliance Jio (19.74%), and Idea Cellular (17.33%), data compiled by BloombergQuint showed.

Under the new Trai rules, the proposed merged entity of Vodafone India and Idea Cellular may result in accounting for more than 30% of the total activity and hence could potentially become a significant market player in a particular relevant market. Reliance Jio, at 13.71% subscriber market share and 19.74% revenue market share is far from the significant market player definition.

“Trai has effectively snatched the operators’ right to compete in the market. In effect, older operators will now be challenged on the basis of revised definition of significant market player so as to be prevented from responding to what may be actual predatory tariff plans,” COAI said in the letter.livemint