Wide-Ranging Measures from TRAI to Improve Transparency in Tariff and for Protection of Consumers

The TRAI today issued a Tariff Order and a Direction mandating several regulatory measures to improve transparency in tariff offers in access service and other consumer protection measures.

HIGHLIGTHTS

• Subscribers to get full talk time on talk time recharges, barring an administrative fee which shall not exceed Rs.2 per recharge and applicable taxes.

• Subscribers to automatically get the benefit of straight tariff reductions without any preconditions of any explicit action by the subscriber, for example, sending SMS etc.

• Customers in existing lifetime plans can migrate to new lifetime plans with lower entry fee without having to make additional payment or recharges.

• Lifetime customers need not recharge more than once in 6 months for remaining connected

• Customers to get key tariff information in vernacular language also at all the retail outlets of the service providers and their franchisees

• No change in mobile number when subscriber change tariff plans or move from prepaid to postpaid or vice versa.

• Blackout days (customary/festival days on which free/concessional calls/SMS are not available) limited to a maximum of 5 days in a calendar year. Such days to be pre-specified and no subsequent alteration or addition permitted.

• Promotional offers to be streamlined.

• The new measures effective from 15th September 2008 and applicable for all subscribers, new and existing.

BACKGROUND

The Authority in the past had issued several other regulatory mandates in the interest of consumers. The Authority noted that despite several such measures there is a feeling among consumers that various offers being made by the access service providers are not transparent and consumer friendly. The Authority has been receiving complaints from consumers and consumer organizations which inter-alia highlights transparency issues. The Authority, therefore, decided to have a re-look at the regulatory framework relating to transparency in the matter of tariff offers through the well established process of public consultation.

2. Based on the feedback received from the stakeholders during the consultation process initiated by the Authority on Issues relating to Plethora of Tariff Offers in Access Service, the Authority came to the conclusion that the existing Telecommunications Tariff Order, 1999 needs to be reviewed to further enhance transparency in tariff offers. The Authority formulated certain amendments to the existing regulatory framework and consulted the stakeholders by circulating a consultation note containing the proposed amended/new provisions. The Stakeholders provided written comments on the proposed measures. The Authority also held a meeting with Cellular Service Providers Association of India (COAI) and Association of Unified Telecom Service Providers of India (AUSPI), the Industry associations of access service providers, on 14th August 2008 on their request and heard their viewpoints. The Tariff Order and the Direction have been issued by the Authority after considering at length the various view points and suggestions received from all the stakeholders.

Provisions of Telecommunication Tariff (48th ) Amendment Order and its’ implications for the subscribers.

No Processing fee on Talk time Top-up Recharges

3. During the process of consultation, a need was felt to review the structure of various top-up recharges, as it was brought to the notice of the Authority that service providers are deducting certain fixed amount even for recharges exclusively meant for providing talk time to subscribers who are already having validity. Such subscribers had already obtained validity by paying a fixed fee. The Authority felt that levy of a second or subsequent processing fee when the customer buys talk time through exclusive talk time top-ups is unjustified. The Authority therefore decided to have an amendment to the TTO to the effect that no fixed fee other than applicable taxes shall be levied on recharges exclusively meant for provision of talk time value. However, the service providers may charge a nominal fee not exceeding Rs.2/- per top-up towards administrative costs. This proposal will effectively mean that a subscriber having validity need not pay more than Rs.2/-as fixed fee other than applicable taxes if he uses a talk time voucher exclusively meant for augmenting talk time.

Unconditional availability of the benefit of straight tariff reductions to the subscribers

4. Some service providers had offered and advertised general reduction in tariffs. But the benefit of the reduced tariff was limited to only those customers who could exercise their choice for the reduced tariff by way of sending SMS to predefined number etc. The Authority has disallowed such implementation of the declared and publicized lower tariffs after having found that the preconditions attached to offer are unfair and unreasonable. To prevent occurrences of such unfair means in future the Authority vide this tariff amendment order has mandated that “in cases of straight tariff reductions, where the declared intention of the operator is to extend the benefit to all subscribers without any attached liabilities, there shall not be any pre-condition of explicit positive action on the part of subscribers”.

Decisions relating to lifetime Plans

5. Initial lifetime plans offered by service providers had an upfront payment in the region of Rs.1000 and the local call rates were Rs.1.99/minute. Recently several service providers launched new Lifetime plans with substantially lower upfront payment ranging from Rs.495 to Rs.195 and with lower local call rates of Rs.1/minute. However some of the service providers did not provide for migration of existing lifetime customers to the new Lifetime schemes though they had paid a higher entry fee than the new customers, thus denying them the benefit of reduced call charges. In some cases it was also found that existing subscribers were being asked to pay a one time charge or a recurring fee by way of special recharges in order to avail lower call charges equivalent to those applicable for non-subscribers. Such unfair measures are not in consonance with some of the existing mandates of the Authority which provide for migration of subscribers from one plan to another plan on offer without having to pay any fee in the nature of migration charge. In order to prevent such anti-consumer measures and to ensure a free and fair migration to the consumers across plans the Authority considered it appropriate to further clarify the provisions of the TTO 1999 that in cases where a subscriber of an existing lifetime validity plan or unlimited validity plan opts for migration to a new lifetime validity or unlimited validity plan, with lower entry fee, the service provider shall not levy any upfront payment or recurring charges or fee for allowing such migration.

6. Lifetime schemes in the market generally require the customers to make a minimum recharge at specified intervals, normally six months. But the Authority had also received proposals from service providers where the frequency of the recharges were proposed at every 60 days. The Authority is of the view that specifying recharges at such very short intervals will dilute the “lifetime” character of the lifetime plans and make it more or less similar to the normal prepaid plans that require recharges at shorter frequent intervals. The Authority through this tariff order has decided that service providers shall not insist on recharges between periods lesser than six months in life time plans.

7. The Authority also noted that in case the customer fails to meet the condition of a minimum recharge after a specified period of time, the connection is liable for deactivation. The customers may forget or fail to keep track of the days of recharging in the intervening period and this may lead to unintentional disconnection by default. In order to minimize the incidences of such disconnection by default, the Authority considered it advisable that the service providers should make efforts to remind the customers by way of SMS or customer care call prior to the due date of making such recharge. However, this consumer friendly measure does not preclude the subscribers from not honoring their contractual obligation of making recharges at the specified intervals for remaining connected.

Provisions of the Direction issued today and its’ implications for the subscribers

Disclosure of information

8. The telecom services are generally marketed through an unorganized supply chain which is not equipped to provide correct and proper information to the telecom consumers. The absence of tariff information in the language understood by the local telecom consumers is a hurdle in appropriate dissemination of information essential for making meaningful choice, and the lack of proper understanding of key features of tariff at the time of subscribing to a plan leads to consumer dissatisfaction and complaints at a later stage. This aspect is acquiring more relevance with the roll out of telecom services to areas outside the Metros and in semi-urban areas. The socio-economic standing of the population in these emerging rural telecom markets calls for more transparency measures. Therefore, the Authority has mandated display and provision of key tariff information in the vernacular language where such plans are offered, in addition to in English and any other language being in use. The information is also required to be prominently displayed at all the retail outlets of such service providers and also at all the retail outlets of their franchisees.

Provisions for smooth migration between plans and billing platforms

9. The Authority has laid down the regulatory provision that the customers has the right to choose the plan of their choice and they are also free to migrate from one plan to another on offer. However, the Authority has found that there are certain non-tariff barriers being introduced into their operation to give the customers their right to choose and move to the plan. In order to prevent such anti-consumer measures and to provide a free and fair migration scheme to the consumers the Authority has directed that there shall be no barrier when a consumer migrates across plans or from postpaid to prepaid platform and vice versa e.g. forcing customer to take new number/new SIM Card. However migration from prepaid to postpaid shall be permitted subject to operational feasibility.

Differential Voice/SMS tariffs on festival/customary days:-

10. Several telecom operators are offering free/discounted calls and SMS Schemes. Such offers are made either as part of regular tariff plans with or without an additional monthly payment, or are offered as packs valid for specified period or as promotional schemes. Some operators are not making available such free/discounted calls/SMS under various plans/packs to customers on certain specified days which happen to be social, cultural/ festival days, known as blackout days. Full disclosure on the part of service providers has always been a subject matter of key importance to the Authority in the interest of transparency, which will enable the consumer to make an informed choice. In order to ensure that these tariffs are implemented in a transparent manner and to protect the interests of the consumers, the Authority has decided that the operators who implement such a ‘black out’ on specified days shall ensure the following:

i) The number of ‘black out’ days shall be limited to a maximum of five days in a calendar year.

ii) The ‘black out’ days i.e. the days on which free/concessional tariffs are not available shall be clearly indicated in the package itself.

iii) The charges applicable on these special days shall be explicitly conveyed to the subscribers.

iv) The dates corresponding to the black out day shall not be altered after the pack is subscribed by the customer.

v) There shall be no addition to the list of black out days after the pack is subscribed by the customer.

treamlining Promotional offers:-

11. The service providers are offering large number of promotional schemes as a part of the increased competitive activity in the market. The offers are withdrawn abruptly and also offered in a selective manner. Several times the customer are not able to judge to themselves whether they are eligible to avail the special offers available in the market. The Authority has, therefore, decided to streamline the promotional offers by mandating that i) the period of the promotional offer to be declared i.e. beginning and end dates of the offer and ii) the eligibility criteria for the offer to be clearly defined.

12. In the Consultation Process which culminated in the above decisions, the Authority had also considered if there is a need to further reduce the number plans that can be offered by an access service provider from the existing cap of 25 and if the minimum validity period of 6 months specified for tariff plans by the 31st amendment to TTO requires review. After due deliberations, the Authority decided that the existing provisions on these two issues do not require any amendment.

Contact Address in case of any clarification:

M. Kannan

Advisor (Economic)

Telecom Regulatory Authority of India

5th Floor, Mahanagar Doorsanchar Bhawan

Jawahar Lal Nehra Marg (Old Minto Road)

Next to Zakir Hussain College

New Delhi-110002.

Email: mkannan05 {at} gmail(.)com

Telecom Regulatory Authority of India

PIB, New Delhi: September 01, 2008 (Bhadrapada 10, 2008)