Amidst the ongoing tussle between incumbent operators and new en­trant Reliance Jio Infocomm Li­mi­ted over the latter’s promotional offers, the Telecom Regulatory Authority of India (TRAI) has issued a consultation paper to undertake a review of the tariff assessment process.

The paper, among other issues, seeks views on which tariff offers should qualify as promotional offers, what should their key features be, and whether there is a need to restrict the number of promotional offers that can be introduced by a telecom service provider (TSP).


A look at the key concerns raised in the paper and the issues for deliberation…

Transparency in tariff orders

In order to ensure transparency in tariff offers, TRAI has issued several directions and guidelines in the past. The regulator has capped the number of tariff plans that can be offered by an access provider in each licensed service area at any given point of time at 25. This includes both post-paid and prepaid tariff plans. The cap was prescribed on the premise that too many tariff plans on offer would confuse consumers and make it difficult for them to make an informed choice. Further, in order to prevent frequent changes in tariff plans and ensure tariff stability, TRAI has prescribed that a tariff plan once offered by an access provider must be available to a subscriber for a minimum period of six months from the date of enrolment of the subscriber to that plan. Furthermore, straight tariff reductions are to be passed on to consumers without any preconditions. In lifetime plans, recharge periods should not be less than six months.

TRAI has also limited the blackout days – the customary/festival days on which free/concessional calls/SMSs are not available – to a maximum of five days in a calendar year. Such days need to be notified in advance and no subsequent alteration or addition is permitted. More­over, TRAI has mandated all operators to provide tariff information in vernacular languages as well.

With a view to enhance transparency in the provision of services to prepaid subscribers, the regulator issued the Telecom Consumer Protection Regulations, in January 2012. The regulations prescribed the categorisation of vouchers as plan vouchers, top-up vouchers, special tariff vouchers and combo vouchers with colour bands for easy identification. Further, as per the regulations, operators need to provide information to prepaid subscribers on the activation of these vouchers and usage details after every call as well as data usage.

Despite these regulatory interventions, TRAI still receives a large number of complaints from customers regarding tariff plans. Sometimes, the operators offer either free/concessional SMS without explicitly informing the consumer that there is an associated fixed cost for availing of these offers. This practice has also been noticed in the case of free roaming offered by operators, when they do not disclose the time period for which it is being offered and also the associated fixed cost to avail of the free roaming facility. More­over, a few telecom operators offer free minutes or free SMSs without explicitly informing the consumer that these can be used only on their own network.

TRAI has also received complaints against the claims of “free” services made by operators. Most operators often do not notify the associated upfront/recurring charges to be incurred by consumers who avail of these services. Further, a number of complaints regarding excess data charges have been received. While conveying the data tariff plans, the underlying conditions like usage at night are either not revealed or given in fine print. The fair usage policy with regard to reduction of speed is also not disclosed to consumers in clear terms. While advertising data offers, operators claim to provide the latest technology. How­ever, in reality, the current networks are a combination of 2G, 3G and 4G technologies and consumers experience the benefit of the latest technology in patches only. This leads to consumer dissatisfaction. Therefore, operators need to clearly convey to consumers that the coverage will be subject to the availability of the network.

Issues related to promotional offers

Apart from the regular tariff offers, oper­ators give promotional offers to customers with a view to increase their subscriber base. These are different from tariff offers as they are available to customers for a limited period of time.

The issue of a promotional offer was first addressed by TRAI in 2002. The regulator had issued an advisory to all TSPs to restrict the validity of promotional packages and/or the benefits offered to customers under such packages to a maximum of 90 days from the date of launch. This advisory was issued in the context of some operators offering promotional packages to their customers as a marketing strategy, where the validity of such schemes ranged from 15 days to 11 months. After considering the implications for offering such concessions to customers, TRAI was of the view that a very long promotional period dilutes the promotional character of the tariff plan and in fact makes it a regular plan. The advisory, however, did not define the term “promotional package”.

The issue was further addressed by TRAI in its subsequent consultation pa­pers. However, till now, the features of a promotional offer have not been defined clearly. The prevalent guidelines on promotional offers are limited only to the eligibility conditions and the opening and closing dates of such offers. They are si­lent on issues such as the number of promotional offers that can run concurrently or that can be offered in a calendar year, the repetition of offers and the benefits on offer. As per TRAI, it could also be argued that there is no rationale for issuing a special definition for promotional offers and these packages could be offered as a standard discount rate on a regular plan without affecting the basic structure of the plan.

Anti-competitive behaviour in tariff orders

TRAI is of the view that there is a need to undertake a comprehensive review of the potential anti-competitive practices that could harm the sector and its consumers, explore appropriate regulatory tools to curb such practices and set out clearly defined standards of competitive conduct. The anti-competitive behaviour in the context of tariff determination is reflected through predatory pricing by the domin­ant market player.

While the term “non-predation” has not been defined in the telecommunication tariff order, it finds reference in many documents issued by TRAI from time to time. In these documents, it is used in its generally understood meaning of abuse of the dominant position by an enterprise through predatory pricing. For instance, in its consultation paper on tariff plans with lifetime validity issued in January 2006, TRAI noted that predatory pricing generally refers to a situation where a dominant firm (with significant market power) charges low prices over a long period, so as to drive competitors out of market or deter new entrants, and then raises the prices to recoup its losses.

The authority defined significant market power in the Interconnection Usage Charges Regulations, 2003 as a service provider holding a share of at least 30 per cent of total activity in a licensed telecommunication service area. The services include basic services, cellular mobile services, and national long distance and international long distance services. Mean­while, the term “activity” includes subscriber base, turnover, switching capacity and traffic volume.

Further, in 2007, the regulator in its recommendation on the review of licence terms and conditions and capping of number of access providers dealt with the concept of market definition in the context of mergers, acquisitions and transfers. In this context, it had concluded that the services market may be defined as wireline and wireless. The wireless service market includes fixed wireless as well. With regard to the relevant geographic market, the regulator had recommended that the market can be defined as the respective licensed service areas.

Issues for deliberation

In view of the above-mentioned topics, TRAI’s consultation paper seeks stakeholder views on the following questions:

  • Are the currently prescribed measures adequate to ensure transparency in the tariff plans offered by TSPs? If not, then what additional measures should be prescribed by TRAI in this regard?
  • Is the current definition relating to non-discrimination adequate? What can be the additional measures to ensure non-discrimination?
  • Which tariff offers should qualify as promotional offers?
  • What should be the features of a promotional offer? Is there a need to restrict the number of promotional offers that can be launched by a TSP, in a calendar year in succession and/or concurrently?
  • What should be the different relevant markets – relevant product market and relevant geographic market – in telecom services?
  • How can dominance be defined in these relevant markets? What could be the criteria for the determination of dom­inance?
  • How can the significant market power in each relevant market be assessed? What are the relevant factors that should be taken into consideration?
  • What methods/processes should be applied by the regulator to assess predatory pricing by a TSP in the relevant market?