Politics and businesses often work hand-in-glove. They need to as they feed off each other. It is some kind of symbiotic relationship. I think it is required as well. But at times, they forget the consumer or think that the end consumer is a gullible, non-suspecting and defenseless if the two join hands.
Something similar happened when A Raja, Minister of Information Technology and Communication, said that TRAI needs to put together a proposal to fix minimum tariffs. The statement goes on to say that it will benefit the end consumer to a great extent. I do not think anyone from the Ministry or TRAI (Telecom Regukatory Authority of India) would be able to articulate the ‘benefits’, since there aren’t any. This is clearly an in-your-face shameless PR job.
I do understand that the Indian Telecom scene is fiercely competitive. Most firms have been facing a falling ARPU (Avg. Revenue per User). Hence, such a proposal will help the telecom companies to cap their downside. In effect, the end consumer would become price neutral beyond a point as everyone might end-up offering the same rates. Telecom market might become less competitive and companies, to their immense relief, might see the end of the era of falling tariffs. Of course, this comes at the expense of the customers (you and me) who stand to gain from the competition!
This also comes at the expense of an operator(s) who is more efficient in running its business. Such an operator would not be able to pass on any cost benefits to the customer beyond a certain point as TRAI would have capped the minimum tariff. This would imply that an operator would have no incentive to makes operations more efficient or seek better technology to become more competitive.
In a time when we are trying to make businesses more open and competitive, government should avoid taking such retrospective steps. I hope sense prevails and TRAI comes up with a proposal to do away with such an idea. As with everything else, only time would tell!
Something similar happened when A Raja, Minister of Information Technology and Communication, said that TRAI needs to put together a proposal to fix minimum tariffs. The statement goes on to say that it will benefit the end consumer to a great extent. I do not think anyone from the Ministry or TRAI (Telecom Regukatory Authority of India) would be able to articulate the ‘benefits’, since there aren’t any. This is clearly an in-your-face shameless PR job.
I do understand that the Indian Telecom scene is fiercely competitive. Most firms have been facing a falling ARPU (Avg. Revenue per User). Hence, such a proposal will help the telecom companies to cap their downside. In effect, the end consumer would become price neutral beyond a point as everyone might end-up offering the same rates. Telecom market might become less competitive and companies, to their immense relief, might see the end of the era of falling tariffs. Of course, this comes at the expense of the customers (you and me) who stand to gain from the competition!
This also comes at the expense of an operator(s) who is more efficient in running its business. Such an operator would not be able to pass on any cost benefits to the customer beyond a certain point as TRAI would have capped the minimum tariff. This would imply that an operator would have no incentive to makes operations more efficient or seek better technology to become more competitive.
In a time when we are trying to make businesses more open and competitive, government should avoid taking such retrospective steps. I hope sense prevails and TRAI comes up with a proposal to do away with such an idea. As with everything else, only time would tell!
