Trai feels flurry of phone plans confuses users

While the Telecom Regulatory Authority of India (Trai) worries that a flurry of options will overwhelm consumers and make them pick unsuitable and more expensive plans, operators fear that capping them will shrink consumer choice and hurt user revenue.

The regulator recently discussed the matter with executives of leading telcos such as Bharti Airtel Ltd, Vodafone Idea Ltd and Reliance Jio Infocomm Ltd, three people aware of the development said on the condition of anonymity. The companies made presentations to the regulator on the number of tariff plans on offer and their benefits to the user.

“Trai’s examination is currently at a preliminary stage and is being undertaken with a focus on consumer interest. The increasing number of recharge plans launched by telecom operators often leads to confusion among users, sometimes causing them to opt for plans they don’t need—and end up paying more than necessary,” one of the three people cited above said.

Different plans for different folks

According to a second person, while the telcos told the regulator that different plans target different sets of users—for instance, heavy users of streaming, education or cricket—Trai was not impressed by their logic. The regulator has sought information on the number of users who have subscribed to different plans, the person added.

Also read | Telcos warn of network rollout delays as states lag on infra rules

Among the telcos, Vodafone Idea had around 150 plans on the offer, Jio and Airtel 100 each, and BSNL around 80 plans, the second person said.

“The vast diversity of plans and the minimal difference in tariffs between them prevents consumers from taking informed decisions,” the third person said, adding Trai views the matter from the consumer’s point of view.

Queries emailed to the telecom operators and Trai on Monday remained unanswered.

Cap on tariff plans 

A 2006 tariff order by Trai had put a cap of 25 tariff plans, including both postpaid and prepaid tariff plans; however, a telecom industry executive said the telecom operators are not violating the order.

“The tariff plans on offer are always less than 25. The plans listed on the websites/apps of operators are a variation of those 25 base tariff plans, which are named as special tariff vouchers, top-ups, promotional offers, etc., as per the needs of consumers,” the executive said on the condition of anonymity. The executive added that the TTO’s (telecommunication tariff order) limit of 25 applies only to full-fledged plan vouchers. Other categories, such as top-up vouchers and special tariff vouchers, are not subject to this restriction.

Read this | Telcos to ring-in profit gains. Airtel leads the pack in September quarter

A second executive at a telecom operator claimed that in India, tariffs are under forbearance—essentially, telcos are free to set tariffs—and Trai should not try to govern the business dynamics of telecom operators. “Recently, the operators introduced voice-only plans upon Trai’s intervention. However, there is hardly any take-up of those individual plans,” the executive added.

Market dynamics

According to analysts, if Trai decides to prune the number of plans, it will affect the structure of pricing and market dynamics in the short term, but telcos could optimize pricing strategies to ensure that average revenue per user (Arpu) remains stable or even grows as tariffs are under forbearance.

“Selection of recharge plans has always been confusing. Telecom operators should rationalize the tariff structure, which helps consumers to make decisions on how much their outgo would be on a daily basis upon choosing a particular plan,” said Faisal Kawoosa, chief analyst at Techarc. Kawoosa also pointed to the need to educate consumers about the right tariffs for them.

And read | Mint Explainer: Why telcos are seeking fair share from OTT apps on top of bundled plans

In December, Trai mandated telecom operators to offer separate recharge plans only for voice and SMS services. This was done to give certain consumers an option to pay only for the services they require. Bundling data with recharge plans prompts such users to also pay for the additional data service they don’t require, Trai said.