The Hindu : IN CONSUMER INTEREST

Online edition of India's National Newspaper
Friday, Mar 12, 2004

Opinion

Opinion - Editorials

IN CONSUMER INTEREST

CONSUMERS HAVE BENEFITTED enormously from the policy of deregulation and technological change in telecom in recent years. Tariffs have tumbled and value-added services have multiplied. Ask consumers, however, if they have chosen the tariff plan best suited to their needs and the answer will in all likelihood be "not sure." This is the outcome of companies offering far too many packages for a consumer to study and make an informed judgment. In theory, consumers should be able to subscribe to a scheme that fits their purse. In practice, the dozens of offers from landline, wireless and mobile phone service providers, which are based on innumerable combinations of monthly rentals, user tariffs, peak/off-peak rates, closed user group charges and many more variables, leave a consumer confused rather than spoilt for choice. Subscribers will therefore welcome the proposal of the Telecom Regulatory Authority of India to place limits on the number of schemes that each company can offer. The challenge will be to strike the right balance between consumer interests and imposing restrictions that reduce consumer choice.

The TRAI discussion paper provides bewildering statistics on tariff plans and details the subtle and not-so-subtle ways in which telecom companies have been abusing the principles of fair competition as they fight for market share. In 2003, service providers filed an incredible 3,925 tariff plans with the regulator for prior approval. Yet only 25 per cent of these packages were offered to consumers. The need to apply for permission has since been done away with. That, however, has not brought the number down to a level that consumers can handle with ease. A total of 1,421 schemes were sold late last year; this worked out to an average of 42 by cellular phone companies and 18 by landline firms in each circle. The variety was the largest in the cellular service market: commercially important circles like Mumbai had as many as 58 different kinds of tariff arrangements. The entire process appears to militate against the consumer interest. TRAI has outlined a format to facilitate comprehension of phone rates but the guidelines are usually not observed. Service providers offer a scheme on subscription but very often revise the rates: tariffs were changed as many as 2,278 times last year. The result is that the consumer is not protected against rate hikes once he has signed on to a package. Firms introduce and withdraw packages at will. They are forbidden from demanding a migration fee but when consumers want to switch from one scheme to another they are often presented with a hidden charge.

The regulator has proposed imposing a ceiling of five tariff plans that a company can offer in each market segment (pre-paid, post-paid, business and individual). The number is arbitrary but, as the discussion paper points out, this should suffice for competition since BSNL and Reliance, the two biggest players in the mobile service market, have been able to race to the top in a year by selling just four or five schemes. The key question is whether the forest of packages contributed in any way to the exponential growth of new connections in recent years. The answer has to be an unequivocal `no'. Growth was the result of falling prices and not the number of schemes on offer. A related question is: will restrictions on the number slow down the rate of increase in new subscriptions? The answer again will have to be in the negative. Indeed, with consumers better able to compare prices and services, limits may even facilitate a more rapid expansion of the market. All in all, the TRAI proposal is one that the industry and consumers should welcome as serving their long-term interest.

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