This will benefit large and integrated telecom operators such as Reliance, Bharti, BSNL and Tatas which will be able to offer special packages to their subscribers for intra-network calls.

Earlier, the Telecom Regulatory Authority of India (Trai) disallowed Reliance to offer lower tariffs to its subscribers for making calls within its network.

The regulator had also directed BSNL to discontinue a scheme that envisaged lower tariffs for its fixed line subscribers making calls to its mobile subscribers.

This decision will certainly harm the interests of operators who are offering services in one or two circles.

BPL, Spice, Hutch and Shyam Telelink fall under this category. They have to depend on integrated players for transmitting long distance calls.
In the 33rd amendment to the Telecom Tariff Order notified today, Trai said service providers can offer differential tariffs for off-net (different networks) and on-net (own network) calls.

But cases where such differential tariffs are anti-competitive or predatory and are aimed at lessening competition, shall invite regulatory attention.

Trai has not allowed the operator with significant market controls (BSNL) to offer differential tariffs on leased lines (key inputs required by competitors in downstream markets) to its own customers and those outside the BSNL network.

Differential tariff structure, assuming the nature of anti-competitive conduct is an issue of regulatory concern.

"Vertical price squeeze is an anti-competitive conduct that may be indulged in by an operator with significant market power providing service in both upstream and downstream markets in any service area where the operator controls certain services that are key inputs for competitors in downstream markets and where those same key inputs are used by the operator to compete in the same downstream market," it said.
Giving an example, Trai said that in the telecom market, vertical price squeeze can occur in the provision of dedicated local circuits.

The operator with significant market power can increase the price to competitors for the upstream input-dedicated local circuit, while leaving the downstream prices the same for its dedicated Internet access services.

The effect would be to reduce or eliminate the profits or margins of competitors. Such "squeeze" on the margins of competitors imposed by pricing strategy of the operator with significant market power could materially affect competition, Trai said.