The Indian telecom industry is witnessing an unprecedented tariff war. First, Reliance Jio, the newcomer, extended its free voice and data services offer, which was to expire on December 31, by three months. In retaliation, incumbents Bharti Airtel, Idea Cellular and Vodafone too slashed tariffs, in the hope that once Reliance Jio ended the free offer they would be able to stem the tide. The challenge from Reliance Jio is indeed formidable. According to the latest numbers put out by the Telecom Regulatory Authority of India (Trai), Reliance Jio added 16 million subscribers in September compared to market leader Bharti Airtel’s 2.4 million. This has taken its subscriber base to 52 million, in spite of the massive inter-connectivity issues it faced initially. Meanwhile, there is speculation that Reliance Jio might extend the free offer beyond March 31 — it would like to bulk up to the maximum because it could lose some subscribers once it starts billing them. Predictably, the smaller players in the market, which do not have the financial wherewithal to drop tariffs, have begun to feel the heat and have started to lose subscribers. Not only does this introduce a lot of uncertainty in the market but also reflects poorly on the policy framework.
Under the rules, a telecom operator is allowed an inaugural offer for the first 90 days. While Reliance Jio’s first offer was called the Welcome Offer, the new one, which will extend up to March 31, has been named the Happy New Year Offer. This has allowed it to extend its offer. The situation does need correction. But for that, it is important that all policy loopholes be plugged by the government. Trai’s job is to see that the policy is followed by all the players. But if there is a problem with the policy, the blame cannot be laid at the regulator’s doorstep. This is not the first time that a controversy has arisen in the sector because of a policy haze. In August, the Cellular Operators’ Association of India (COAI) said the department of telecommunications must deactivate all connections provided by Reliance Jio to its 1.5 million customers, as it was allegedly bypassing regulations by offering full-fledged services under the guise of test connections. Before that, COAI had charged Trai with bias in three instances.
The first was the controversy around call drops, which culminated in the Trai imposing a penalty on dropped calls, which was struck down by the Supreme Court. The second instance was when Trai — after it had banned differential pricing of data by telecom networks, as it violated the principle of net neutrality — decided to allow differential tariffs so long as the service was offered in a “closed electronics communications network”. The third instance of alleged bias happened when Trai suggested doing away with interconnection usage charges, or IUC, of 14 paise per minute. The IUC is what a network pays to that network where the call terminates. Doing away with such charges, COAI argued, would burn a huge hole in the pocket of the incumbents, and, in the process, render them uncompetitive. The charge of bias was rebutted by Trai. But there is no denying the fact that these controversies arose because the policy was fuzzy. The government must ensure that all the loopholes are plugged.