NEW DELHI: The Telecom Commission’s contention that free promotional offers are responsible for the industry’s falling financial health and lower licence fee payments to the government has been rejected by the regulator Telecom Regulatory Authority of India.

TRAI’s response is expected to be sent to the Commission next week.

The response to the Commission’s letter dated 23 February 2017 on the lines that tariff and tariff orders, solely under the regulator’s purview, need to be seen in the broader context of consumer interest.

TRAI feels it is responsible for tariffs and anyone having an objection is free to approach the telecom tribunal TDSAT, TRAI sources said.

In any event, TRAI feels that the government’s objective cannot be revenue maximisation. Higher tariffs can lead to greater accruals for the government from licence fee, but there is social obligation. So, revenue reduction should not been seen with a myopic view, but in the context of larger policy objectives and long—term interest of consumers, the sources said.

Stressing that competition in the telecom sector had resulted in better tariffs and services for consumers, the source said, “competition may be disruptive, but it also leads to cheaper tariffs for consumers“.

Defending its stance on allowing Reliance Jio to extend the promotional offers, the source said, “TRAI had sought the Attorney General’s opinion on the matter, and the latter has also opined that TRAI was correct in not blocking the offers“.

Last month, the inter—ministerial body Telecom Commission in a letter to TRAI had warned of a loan default by operators and asked the regulator to revisit its tariff orders and free promotional offers of firms like Reliance Jio.

The then Telecom Secretary J S Deepak, who headed the Telecom Commission, had written to Telecom Regulatory Authority of India Chairman R S Sharma about the “serious impact” of promotional offers on the financial health of the sector and the capability of the companies to meet their contractual commitments, including payment of instalments for spectrum purchased, and repayment of loans.

Reliance Jio rolled out free voice and data under two promotional offers — Jio Welcome Offer and the Happy New Year offer.

The Telecom Commission’s letter had noted that licence fee collections for the current fiscal have been showing “alarming” downward trend on a quarter—to—quarter basis.

“These collections have fallen from Rs 39.75 billion in Q1 to Rs 35.84 billion in Q2 to Rs Rs 31.86 billion in Q3. It is expected that this revenue will further decline in Q4 by about 8 to10 per cent. The annual spectrum usage charge revenues are also likely to face a similar decline,” the TC letter had said.