Reliance Jio tariff offers on mind, Airtel, Vodafone, Idea suggest limiting measures; 5 proposals

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Telecom service providers including Bharti Airtel, Vodafone India and Idea Cellular have reportedly made a slew of proposals to the regulator TRAI (Telecom Regulatory Authority of India) regarding promotional offers in order to ensure that such offers by an operator do not put the others at an unfair disadvantage, amid the onslaught of competition from Reliance Jio’s free voice and data services.

The three largest telecom service operators in the country, in a response to a consultation paper by TRAI on promotional offers in the telecom industry, have made suggestions ranging from limiting validity and timing to allowing penal action for violating rules regarding such offers, CNBC TV18 reported citing unidentified sources.

Here is what they are learned to have said:

  • Tariff protection: The leading telecom service operators have said that the promotional offers should provide additional benefits, and not “disguised price cuts”, to ensure that such offers do not undercut base tariffs in the guise of promotional discounts.
    Reliance Jio’s entry into the telecom space has forced the incumbent players to drastically cut tariffs – as much as by 66% – in order to retain their customer base, and has put the entire sector under tremendous pressure of choosing between protecting margins and user base.
  • Timeframe: The telecom operators have further said that promotional offers must be subject to seasons or festivals, such as Diwali or New Year, adding that the validity of promotional offers must not be more than 30 days.
    Reliance Jio extended its inaugural free voice and data plan till March 31, drawing complaints and criticisms from its biggest rivals Airtel, Vodafone and Idea, who assert that its anti-competitive practices and freebies are hurting the industry.
  • Number of offers: The incumbent telecom operators, already amid major consolidation moves in order to withstand the intense competition from Reliance Jio, have suggested limiting the number of promotional offers an operator can provide in a year or in a quarter.
    Notably, Reliance Jio, which launched its services on September 8 last year, has been providing data and voice telephony services for free under various promotional schemes.
  • Penalty: The established telecom operators have recommended imposing penalty and providing for legal action against the operators which violate the terms set by the regulator TRAI (Telecom Regulatory Authority of India).
    Earlier last week, the Telecom Commission – the government’s policy decision making body – also reportedly asked TRAI to review its rules regarding the promotional offers from service providers in order to ensure not only the financial growth, but also the health of the telecom industry, which is under the combined debt of about Rs 5 lakh crore.
  • Uniform implementation: The aggrieved telecom operators are also learned to have said that standard norms must be implemented on promotional offers to provide a level playing field to all the service providers. They have suggested that TRAI must be notified before the introduction of any promotional offer, with a 72-hour advance notice.