NEW DELHI: The telecom regular has cited lack of reforms, and not promotional offers as suggested by the Department of Telecommunications, for the weakening health of the industry, triggering a blame game between the two sides on the state of affairs at what was once the showpiece sector of the Indian economy.
“The regulator has, over a period of time, written several recommendations to the Department of Telecom, suggesting reforms such as reduction in licence fee and the universal services obligation fund (payment), relaxing payment for auctions, so on and so forth,” a senior official at the Telecom Regulatory Authority of India (Trai) said.
The Telecom Commission, the highest decision-making body in DoT, last week wrote to the regulator saying that its decision to allow Reliance Jio Infocomm to offer free services beyond the 90-day period permitted for promotional tariff plans had affected the sector’s revenue. This in turn could jeopardise banks that have lent to telecom companies, payments to the government for spectrum and orderly growth of the telecom sector, the commission had warned.
Trai, however, believes it is non-implementation of its suggestions such as making spectrum usage charge uniform at 3% of annual revenue and reducing it gradually to 1%, lowering licence fee to 6% from 8% and limiting mandatory contribution from telecom operators to the Universal Services Obligation Fund to 1% from the current 5% are among the chief reasons for the flagging health of the industry, which sits on debt totaling more than Rs4 lakh crore.
“The Trai had also suggested that given the condition of the industry, the government should relax the deferred payment terms for spectrum with a 20-year timeframe instead of the current 10-year regime,” the official added. These recommendations, made over the past three years, haven’t been accepted by DoT.
“Trai’s response to the TC letter will follow in a few days and could well note these points,” another person familiar with the matter said.
The blame game between the telecom watchdog and the government department comes at a time when the industry is embroiled in a tariff war, triggered by Jio’s free voice and data services which led the industry’s revenue plummet for the first time since 1999.
While Jio on its part has explained that it didn’t violate any rules by offering two successive but different promotional offers Trai has expressed its inability to take action against the new telco on grounds that there was no clause specifically prohibiting a company from offering promotional tariffs consecutively.