The telecom industry is set to lose revenues of around R5,000 crore per year with the Telecom Regulatory Authority of India planning to come out with a new regulation from next month that would curb the freedom of the mobile operators in offering value-added services (VAS).
The regulation, basically a consumer-friendly one, would make it mandatory for operators to seek double confirmation from users, both prepaid and postpaid, before activating any VAS services on their cellphones. Currently, there are broad guidelines on the subject, which the operators follow. However, a set of mandatory guidelines would make it very difficult for them to offer such services, the majority of the operators told FE.
If operators have something to lose, though, they can hope to make up for it from another area. Trai is reviewing the ban on selling combo-packs and is likely to lift it. Combo-packs mean that operators are free to sell voice and data packages together in their prepaid vouchers. This was discontinued a couple of months ago because the regulator felt that there were a lot of users who only needed voice services, or some who prefer discount vouchers that offers lower rates at night, for instance. Generally, operators bundle the offers and sell the vouchers and make up for the discounts. With unbundling the economics went haywire.
Trai sources said the new regulation would entail that all value-added services like caller tunes, ring-back tones, music on demand, GPRS, etc, be provided or renewed only after the consent of the subscriber is obtained either through an SMS, calls to any toll-free number, fax or email. Further, if subscribers by mistake press any key that activates such services, there should be an immediate process in place to get such services deactivated. Officials said that currently there are a lot of complaints received by the regulator from prepaid customers, who comprise more than 85% of the overall subscriber base, that they are wrongly being billed by service providers.
The operators contested these claims and said that with a Trai advisory on the issue earlier this year, they have moved all their VAS activities in-house, having invested crores. Earlier, a lot of VAS activities were outsourced. ?No system is foolproof but currently we do activate VAS after seeking customer consent,? an official of a mobile firm told FE.
?However, if any such measure is made mandatory, it would create huge problems for us, affect our revenues and that also at a time when the industry is not passing through a good time,? the mobile firm official said.
The official said that as per internal studies by some of the operators, around 60% of the people because of reasons of age or illiteracy are averse to SMSes and faxes, so any such regulation becoming mandatory would sound the death knell for the VAS segment.
Trai officials, however, point out that operators are generally callous in handling consumer grievances, particularly in the prepaid segment. ?It is like a one-way street. You can enter it by mistake but for getting out of it you have to run from pillar to post. This cannot be allowed to continue,? said an official.
The industry today derives around 12% of its revenues through VAS and fears that the new regulation would hit this. It feels that VAS usage, which is anyway low in India compared with the global average, would fall further because of this measure.
It points to the country’s largest operator Bharti Airtel’s case to highlight how price-sensitive the Indian telecom industry is. During the April-June period, Airtel said that its revenues took a Rs 250-300 crore hit because of the ban on sale of combo-packs.
Trai officials say that regulatory measures have to be equitable for both operators and consumers.
