Reliance Jio new offers do not sit well with Trai’s norms

By: | Updated: March 9, 2017 12:17 PM

Jio achieved the landmark of acquiring 100 million customers in less than six months and used this opportunity to announce plans effective April 1, 2017.

While the intention of RJio to reward its customers is well understood, what needs to be seen is whether the offer is not discriminatory as the TTO-99 requires that the tariff offers should be non-discriminatory . (Reuters)

Jio achieved the landmark of acquiring 100 million customers in less than six months and used this opportunity to announce plans effective April 1, 2017. It announced a prime membership programme for current customers, and also those who join on or before March 31. These prime members can continue enjoying the unlimited benefits that they have got used to during the “New Year Offer” along with other exclusive extreme-value plans.

This offer is like a loyalty programme, which is quite prevalent in many sectors such as airlines,credit card and banking. While the intention of RJio to reward its customers is well understood, what needs to be seen is whether the offer is not discriminatory as the TTO-99 requires that the tariff offers should be non-discriminatory .

So, when we look at the above offer, the following points clearly emerge :

Jio considers the subscriber acquired or to be acquired till March 31, as a special category, and hence wants to treat them differently. But is such a classification of subscribers valid and non-discriminatory?

The benefit that it offers to its loyal class, i.e, prime members are not one- time; it rather commits to offer a tariff plan valid for one year and wishes to provide special terms going forward. The question again is whether continuously creating a distinction between prime class and other category of customers on an on-going tariff plan is discriminatory?

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How do you decide the loyalty of a customer? As per Jio, any customer who enrols on or before March 31, is considered as loyal, and is hence eligible for registration as prime member. But is this a fair and reasonable classification and can this be considered as non-discriminatory?

It seems the intention is to treat 100 million customers as eligible for prime membership. If the criteria to create a classification of customers is first 100 million customers and that number is already achieved, then why extend it to customers who are going to be acquired?

As per TTO-99, non-discrimination means that service providers shall not, in the matter of application of tariffs, discriminate between subscribers of the same class and such classification shall not be arbitrary.

This definition does not make any distinction between customers of data/content or voice. Trai, when it came out with new regulation on (prohibition of differential data pricing), virtually moved the goal post on criteria for ascertaining discrimination, in case of data, from “same class of subscribers” to “all subscribers”. So, the benefit of prime membership should be available to all the customers who are willing to pay R99 as one time charge and R303 per month during the validity period of the plan, i.e, till March 31, 2018. Since this plan is available till March 31, 2018, depriving its benefit, to all the customers may be discriminatory.

Second, Trai has recently issued a consultation paper undertaking review of matters relating to tariff orders and as a part of that exercise has raised a question on “non-discrimination”. The telecom regulator, in the paper, has mentioned, “This is an obligation cast on a TSP that while offering retail tariffs to the consumers; it shall ensure that they are not discriminatory.” However, the issue which arises in the examination of non-discrimination is: what is fair and non-arbitrary classification? For example, a number of tariff plans are issued where the TSP provides special rates/facilities to new subscribers. One can argue that new subscriber is a valid classification. However, since these special rates are not available to the existing subscribers, it can also be termed as discriminatory. “It goes in to raise the question whether current definition relating to non- discrimination is adequate? If no, then please suggest additional measures/features to ensure non-discrimination.”

Thus, it has acknowledged and expressed concerns on whether a classification of subscriber created on the basis of old and new customers is non-discriminatory? RJio’s prime offer is exactly the same and is classifying the subscriber for availing the offer on the basis of old customers (acquired till March 31, 2017) and new customers acquired after this date.

Further, Trai in its recent consultation paper has indicated that it raised the following issues in the past. “There are generally two kinds of promotional tariffs

(i) Where both the offer as well as the promotional benefit so available for the customer is valid for a limited period.

(ii) Where the offer may be valid for a period limited to 90 days but the benefits available to the customers may exceed 90 days and can even be indefinite, just like a regular tariff offer. For example a full fledged tariff plan offered for subscription for a few days.”

The prime membership falls clearly in the second category, as the offer is being made for a limited period and the benefits of this offer will be available for the whole year. Here again it appears that this new plan is nothing but allowing third round of “consecutive promotional offer” as even this tariff offer again is not recovering the underlying cost of providing the service, an issue raised in the new consultation paper while discussing predatory pricing.

Trai should examine the new tariff from the following angles: Is the new tariff plan another consecutive promotional offer? Is the classification of customers on the basis of old and new customers discriminatory? Is the new tariff cover the underlying cost of providing the service to ascertain that the practice adopted is not anti competition and unfair?

Is the tariff plan is in the interest of long term growth of the telecom sector and ensures balance between the interest of both, i.e, telecom service providers and customers? Does the tariff plan entail loss to exchequer in the form of licence fee & spectrum charges,service tax and several other taxes and levies?

Lastly, is a continuous disregard of regulatory principles good for the image and reputation of the regulator? Trai may consider to examine this tariff offer once it has taken a clear call on the issues raised in the consultation paper such as promotional offer and predatory pricing.

The author is founder and CEO, Tathya Consulting. Views are personal ‘

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