With competing claims for funds, DoT not in favour of tariff subsidy

“Multiple suggestions were floated. One was to provide some support from the USOF (universal service obligation fund) while other was to provide some subsidy to telcos whose ARPU (average revenue per user) has remained between $2-3 range for quite some time now,” an official said.

All the three private telecom players as well as industry body Cellular Operators Association of India (COAI) have repeatedly raised the demand for a floor price on telecom tariff which would help them improve their average revenue per user. The latest such demand was made after the telecom package of September 2021, when the industry players urged the government to think about introducing a floor price in the second leg of the reforms. In a recent letter to the DoT, COAI had said that the demand for a floor price on both data and voice services was “a legitimate demand” given the financial health of the telecom players.

“Given the financial pressure on the sector and the fact that ARPU (average revenue per user) and tariffs of the Indian telecom sector are the lowest in the world, floor pricing is imperative to ensure that the sector is sustainable,” COAI had said in its letter.

Even state-run telecom company Mahanagar Telephone Nigam Limited had in its response to the Trai consultations, had said given the health of the sector, there was an urgent need of “regulatory intervention” for “tariff fixation”.