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Reliance Jio (RJio) launched its free services in India from September 2016 and since then, there have been controversies and conflicts between other telecom operators and RJio. On February 27, 2017, Vodafone Mobile Services Ltd. told the Delhi High Court that Reliance Jio Infocomm Ltd. (RJIL) had failed to comply with the regulatory framework by offering promotional tariffs beyond the stipulated 90 days period, thus violating inter-connection usage charges (IUC) norms and the Telecom Regulatory Authority of India’s (TRAI) tariff orders and regulations.

Vodafone deposed before Justice Sanjeev Sachdeva that IUC form the floor price as per tariff orders of the TRAI and “one cannot go below that”. The submission was made after RJio contended before Justice Sachdeva that Vodafone had not challenged the October 20, 2016 and February 2, 2017 decisions of TRAI by which it was held that RJio’s free offers did not violate any tariff norm. RJio said that if Vodafone was aggrieved by TRAI’s decision of giving a clean chit to RJio, then it should be challenged before the Telecom Disputes Settlement Appellate Tribunal (TDSAT) as done by Bharti Airtel and Idea Cellular.

RJio had launched its services in September, offering free voice and data services for three months under a welcome offer. In December, the company launched another scheme called Happy New Year offer, allowing its existing as well as new users to continue to get voice and data services for free. It, however, limited the free data usage to 1 GB per day. Telecom operators opposed it and said that both offers were identical and hence the 90-day cap had been violated. Although TRAI officials said that the examination of RJio’s schemes showed that the welcome offer was different from the Happy New Year offer. One ended in December and the other is ending in March. So, there is no violation.

Last year, the telecom regulator slapped a `3050 crore fine on Bharti Airtel, Vodafone, and Idea Cellular accusing them of stifling competition and engaging in anti-consumer behaviour by deliberately blocking calls made from Jio’s network. It recommended to the Department of Telecommunications (DoT) that a `50 crore penalty would be levied in each of Vodafone’s 21 circles, Airtel’s 21 circles and Idea’s 19 circles – where “points of interconnect (PoI) congestion exceeded the permissible limit of 0.5%”.

TRAI had also asked for the Attorney General’s views on RJio’s free voice and data offering till March that rivals termed “predatory”. Sources at TRAI say that the Attorney General supposedly has communicated to TRAI that RJio’s tariff plans do not violate any existing regulation or order issued by the regulator and therefore, it should not intervene in the matter.

Government revenue declined

There has been an “alarming decline” in government revenue due to TRAI’s recent tariff orders. Reliance Jio’s promotional offers seem to have robbed the government of almost `800 crore in revenue. It was decided in a meeting held last month of the full Telecom Commission, the highest decision making body in the telecom sector, that the growth of the industry will have a negative impact due to TRAI’s recent orders. The Telecom Commission didn’t name any company, but it was clear that it was indicating towards TRAI approval of Jio plans.

Telecom Secretary JS Deepak wrote to TRAI asking it to restrict the period of ‘promotional tariffs’ offered by  telecom companies. He wrote to TRAI chairman RS Sharma on February 23. He explains how the government revenues from just the licence fee have fallen from ` 3,975 crore in the June quarter to ` 3186 crore in the December quarter of the current financial year.

RJio offered free voice and data services since September 5, 2016 till March 31, 2017. This forced its competitors to reduce tariff and overall revenue of the industry declined. Telcos pay a percentage of revenue as Spectrum Usage charge to the government. Consequently, the government revenue has also d clined. The Commission has also noted that the overall debt of the industry is up to `5 lakh crore.  If Telcos’ revenue decline sharply, it will be difficult for Telcos to pay Spectrum charges and instalments.

Dominance of RJio

RJio had crossed 50 million subscribers in 83 days of its launch, adding at an average, six lakh subscribers per day and surpassing the subscriber addition rates of global giants like Facebook, WhatsApp, and Skype. Announcing its third quarter results, Reliance Industries had said that Jio has garnered 72.4 million subscribers as of December 31, 2016. Now there are almost 100 million subscribers of RJio in just 170 days.

India tops the world in mobile internet usage. RJio carries 5.5 crore hours of video daily on its network. The effect of RJio is such that India’s largest telecom operator Bharti Airtel announced that it had entered into a “definitive agreement” to acquire Telenor India assets. Bharti Airtel announced that it would provide free national roaming from April 1. Also Vodafone Plc has announced that it is in tentative talks with the Aditya Birla Group’s telecom arm, Idea Cellular, for a merger.

In terms of market dominance, RJio accounts for 6% market share in the country whereas the Competition Commission of India (CCI) norms specify 30% threshold to prevent the misuse of market dominance clause.