If a 'minimum floor price' is set up for a service, it would mean that no company would be able to provide that service at a rate lower than the 'minimum floor price'.
Right now, there is no restriction on how tariffs are determined. In fact, all an operator has to do is inform TRAI within 7 days of the launch of a new plan.
TRAI has asked telcos to provide the grounds for the demand. They are supposed to deliver elaborate presentations to back up their assertions. They have also been asked to come up with a mathematical basis for establishing such prices. The regulator might also ask the operators why a maximum limit for tariffs shouldn't be fixed. Views against the imposition of 'minimum floor prices' will also be heard at the meeting.
To recall, the clamour for floor prices started only post the arrival of Reliance Jio. Since then, various incumbent players have constantly been complaining that Jio's predatory pricing techniques are making the telecom sector bleed. According to them, the only solution to the problems being faced by the industry is 'minimum floor prices'. They feel that competition must be based on quality and not price.
The telecom industry now has a debt of Rs. 4.6 lakh crore and this might force TRAI to agree to the floor price request. As far as consumers are concerned, this is not good news. Voice and data rates will go up if floor prices are introduced. The reason why rates are so low these days is that there is nothing prohibiting Reliance Jio from offering low tariffs and its competitors are forced to follow suit. In case TRAI decides to gauge public sentiment before reaching a conclusion on the issue, the people of India would undoubtedly be against 'minimum floor prices'. Therefore telcos ought to focus on their business plans instead of blaming Jio for their losses.
