TRAI sees end of tarrif war in 3 years

The cut-throat predatory pricing of mobile call rates, which has weighed on the profitability of telecom companies, may end in three to five years, the chairperson of the sector regulator Telecom Regulatory Authority of India (TRAI) has said.

‘Next three to five years, we are going to see industry margins are under pressure, companies going looking around for cash to tide them over liquidity crisis and three you are going to see consolidation,’ the TRAI chairperson Rahul Khullar said here.

‘As we start seeing consolidation, you will come to a stage when all these trends of predatory pricing will stop,’ he said.

Rather than cutting call charges, telecom operators are now wooing customers with freebies like same amount of talk time for a lower price or more talk time at same price.

The TRAI chairperson attributed predatory price as one of the key reason for deteriorating condition of telecom industry.

‘The other thing which has very adversely effected them is this predatory pricing. Normally predatory prices refers to increase of price that troubles customers but here it is opposite. If one reduced tariff to 10 paise other slashes it to five paise. Another will reduce it to one paisa,’ he said. 

He said that these practices are spoiling business in the industry. ‘When in competition you spoil whole business of the industry then it is not competition, it is competitive destruction,’ he said.