IHS Global Insight Perspective | |
Significance | Indian telecoms operators have opposed stricter intervention by the industry regulator on service tariffs. |
Implications | The regulator has called for more transparency in tariff plans to enable consumers to make better choices. |
Outlook | With the roll-out of new 3G services, competition will further intensify as operators launch new tariff plans. |
Mobile phone companies have rejected a proposal from the Telecom Regulatory Authority of India (TRAI) to frame new guidelines to make mobile service tariffs more transparent, the Economic Times reports.
The operators have asked the regulator not to intervene on tariffs, saying that this should be left to market forces. They have also opposed the proposal to have at least one standard tariff plan across all operators. Service providers added that the regulator should not intervene in fixing a cap for premium SMS. "We are of the view that no further regulations or measures are required to enhance transparency," the Cellular Operators Association of India (COAI), the industry association representing GSM operators, said in its communication to TRAI.
The Association of Unified Telecom Service Providers of India (AUTSPI), representing CDMA players and dual-technology operators, stated: "The policy of tariff forbearance has worked well for the telecoms market in India. It is suggested that regulated tariffs should be resorted to neither in case of value-added services or any other product category and no limit should be imposed on any premium-rate SMS services."
Outlook and Implications
- TRAI Calls for Increased Transparency in Service Tariffs: In October this year, the TRAI had called for increased transparency in tariffs. It said it planned to intervene to help customers make informed choices about their mobile service plans. The regulator added it was examining a plan to impose a cap on the upper tariff limit for premium SMS, to ensure that operators, broadcasters and other players do not overcharge customers for this facility.
Currently, a mobile phone company can offer up to 25 different tariff plans in a circle. The TRAI had said it was contemplating a reduction in the upper limit—a move that the industry has opposed. The TRAI's reasoning is that that too many tariff plans confuse customers and make it difficult for them to make an informed choice.
It has pointed out that despite the availability of a large number of tariff plans, the “life” plans—which are simple and easy to understand—continue to attract the largest number of subscribers. Some operators, however, want this number to be revised upwards, as new tariff plans are slated to be launched with the introduction of 3G services. The industry's views are in contrast to those expressed by many consumer groups, which have been seeking active intervention by TRAI.
- Intense Price Competition: The intense competition in the Indian mobile market has resulted in operators engaging in a fierce price war and launching competing service tariffs to attract operators. Competition was particularly intensified by the expansion of several small operators and the entry of a number of new operators. Tata DoCoMo, a new GSM service jointly offered by Tata Teleservices and Japan’s NTT DoCoMo, and Telenor-backed Unitech Wireless are among the fastest-expanding operators.
However, the Indian government has started taking action to clean up the controversies surrounding the 2G licence issuance in 2008. A number of telecoms companies face the possibility of losing the 2G licences they were granted, as well as penalties for failing to meet roll-out deadlines (see India: 30 November 2010: New 2G Licensees in India Face Possibility of Losing Licences). On the other hand, as established operators have started rolling out new 3G services, competition will further heat up, with operators launching new 3G tariff plans to attract users to the advanced services.