Lifetime validity plans under lens

The fate of the recently-launched lifetime validity schemes by all telecom operators hangs in the balance.

The Telecom Regulatory Authority of India (Trai) today initiated a consultation process on the viability and sustainability of all such offers.

"The issues to be addressed include the long-term viability and sustainability of such schemes and the precautions required to protect the interests of consumers who make upfront payment for certain promised features to be availed for life," Trai Chairman Pradip Baijal said.

While acknowledging that the provision of lifetime validity would result in a sharp rise in the number of subscribers and would be advantageous to consumers in rural areas, Trai added that this could have other implications on the sector.

These include the rise in in-coming calls to the total minutes of usage, a sharp rise in the generation of out-going calls from fixed line networks to be terminated on mobile networks, spectrum constraints and service providers using these schemes to block the introduction of number portability, the regulator said.

Importantly, Trai asked operators to explain what would happen if the tariff patterns and interconnect usage charges (IUC) regime were to change substantially.

Operators have also been asked to spell out the penalty if they were to renege on the contract of lifetime offers. Moreover, they have been asked to clarify if there was any need to spell out exit options in case of lifelong tariff schemes.

Another key issue in this context related to whether "lifetime offers" amounted to "lock in" of customers and whether they amount to anti-competitive conduct, the regulator said.

It also posed the question whether lifetime validity should be defined to mean the validity of the current licence of the service provider.

Besides, as the subscriber is getting locked in a plan for a long time, the regulator has raised questions on protecting customers from hikes in tariffs.

As no approval of the regulator was needed before the schemes were launched, Trai has said that it had no opportunity to examine the viability and consumer protection measures relating to them.

It has therefore sought the views of all stakeholders on whether the country should revert to ex-ante tariff regulation or follow an asymmetric regulation.

Grey areas

Spectrum constraints

Service providers may use these schemes to block number portability

Substantial change in tariff patterns and interconnect charges

Exit options on the life time contract for both operators and users