TRAI smells pricing co-operation among GSM players

The telecom regulator will bark but not bite over the recent tariff hike. The Telecom Regulatory Authority of India, or TRAI Chairman Nripendra Misra said that regulatory intervention will set a bad precedent. Reports are that the regulator smells pricing co-operation between GSM players but no cartelisation.

Private GSM players like Bharti Airtel and Vodafone can breathe easy as the telecom regulator is not going to issue a diktat asking them to roll back the recent tariff hike. GSM players hiked local SMS charges, by a flat 20%, on Monday and STD tariffs by 20%, a fortnight ago, much to the dismay of consumers and even the telecom regulator.

A visibly miffed TRAI Chairman Nripendra Misra had earlier indicated that the regulator would explore all options in the interest of the consumer. But private GSM players met Misra on Thursday and explained the rationale behind the tariff hike. The regulator may not have bought the logic but said that intervention is best avoided.

“We have to understand that tariffs are under forbearance. They have been left to market forces and it is a result of that, that we have seen tariffs fall so much. Taking a hasty decision to intervene would set a wrong precedent and I do not want to do that,” said Nripendra Misra, Chairman, TRAI.

But the matter may not die down just yet. A Delhi-based NGO Telecom Watchdog has written to TRAI urging intervention. The NGO has alleged cartelisation by private GSM players and has threatened to take them to court. The regulator says there is no evidence of a cartel but there seems to be pricing cooperation.

"I can smell some kind of a pricing co-operation between the GSM players, but I do not think it is a cartel,” said Misra.

The recent tariff hike is not the only case in point. A couple of months ago all private GSM operators decided against a cut in roaming tariffs, despite all other operators slashing roaming rates. But GSM operators assert that there is only a "meeting of minds" and that no cartel could possibly operate in a market as competitive as this.