This Is How Your Jio Freebies Come At A Cost Of Rs...

This Is How Your Jio Freebies Come At A Cost Of Rs 685 Crore To The Government

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A customer shakes hands with a store employee after purchasing a Reliance Jio Infocomm 4G mobile services connection in Mumbai on September 6, 2016 India's richest man Mukesh Ambani has announced that his Reliance Industries' long-awaited 4G mobile services would finally launch in September 2016, sending shares of rival Bharti Airtel plummeting almost seven percent. / AFP PHOTO / INDRANIL MUKHERJEE

Reliance Jio Infocomm’s free voice and data services have cost the government Rs 685 crore, prompting the Telecom Commission (TC) to consider pulling up the regulator for “jeopardising” the health of the sector by allowing the offers to continue beyond the stipulated time.

 This is the first time the highest decision-making body in the Department of Telecommunications has commented on the duration of Jio’s back-to-back promotional offers and their impact on government finances in the third quarter of this financial year.

 The commission will soon send a communiqué to Telecom Regulatory Authority of India (Trai), reminding the regulator that its inability to implement its own orders could jeopardise the banking sector, deferred spectrum payments to the government and orderly growth of the telecom sector.

 The commission earlier questioned Trai’s rationale in recommending penalties of Rs 3,050 crore each on operators for allegedly denying Jio adequate points of interconnection, which enable calls to be made from one network to another.

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Jio’s has offered free voice and data services ever since it started operating on September 5, forcing rivals Bharti Airtel, Vodafone India and Idea Cellular to slash their rates in a bid to retain customers, leading to a drop in their revenue.

 The government collects licence fees and spectrum usage charges from operators, which are calculated on the basis of their revenue.

 “It is expected the revenues will further decline by 8-10 per cent, as per market expectations,” the commission noted.

 Jio’s offers, the commission noted on Wednesday, have led to downward pressure on tariffs, further leading to “lower government revenues.”

 “The commission has expressed its deep concerns for the health of the sector and asked the Telecom Regulatory Authority of India to implement its decision of June 2002 and September 2008 regarding promotional tariffs,” a senior official with knowledge of the commission’s decision told ET.

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“The commission has expressed its deep concerns for the health of the sector and asked the Telecom Regulatory Authority of India to implement its decision of June 2002 and September 2008 regarding promotional tariffs,” a senior official with knowledge of the commission’s decision told ET.

 It had filed a petition with the Telecom Disputes Settlement Appellate Tribunal contending that the interconnection usage charge of 14 paise per minute was a floor price below which operators couldn’t provide voice calls. The charge is paid to networks that receive calls.The commission highlighted that with free services till December 31, Jio had effectively violated the 90-day cap on promotional offers.

 

 

FILE PHOTO - A Reliance employee demonstrates Jio LYF phone at their headquarters on the outskirts of Mumbai, India, June 1, 2016.   REUTERS/Clara Ferreira Marques/File Photo
FILE PHOTO – A Reliance employee demonstrates Jio LYF phone at their headquarters on the outskirts of Mumbai, India, June 1, 2016. REUTERS/Clara Ferreira Marques/File Photo

“Reliance Jio Infocomm commenced services from September 5, 2016, and offered a promotional tariff up to December 31, 2016, which was beyond 90 days,” it said. According to the note, lower revenue will affect telecom operators, which owe over Rs 1 lakh crore to the government as deferred payment for spectrum and close to Rs 4 lakh crore to banks.

 “If the falling trend continues, it will impact the payment and the investment capacity of the industry. In those circumstances, the possibility of defaulting on repayment of loan and instalment of deferred payment for the acquisition of spectrum in earlier auctions cannot be ruled out,” the note says.

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