Date:12/02/2006 URL: http://www.thehindu.com/2006/02/12/stories/2006021206881500.htm

Business

COAI opposes mandatory exit option in `lifetime' schemes

Special Correspondent

Cautions TRAI against micro management and asymmetry in regulation

CHENNAI: The Cellular Operators' Association of India (COAI) has opposed introduction of mandatory exit option and asymmetric regulation (between dominant and other operators) for cellular companies offering "lifetime schemes" which envisage free incoming calls even when the subscriber does not recharge his account.

In its response to the consultation paper issued by the Telecom Regulatory Authority of India (TRAI) last month, COAI has said that as there is no exit load in any of the lifetime plans, the consumer is free to migrate to any other tariff plan and hence there is no need to spell out any exit options for these plans. "As in the case of all other tariff plans, the Authority should only ensure that no item in the tariff plan is altered to the detriment of the subscriber for a period of six months," it has said.

The association feels that since the lifetime schemes are being offered by every service provider and TRAI has itself acknowledged that it has not received complaints of predatory pricing, the application of asymmetric regulation in this regard is "unnecessary, undesirable and unwarranted".

While the two industry associations which have given their responses (COAI and the Association of Unified Telecom Service Providers of India-AUSPI) as also individual service providers have expressed similar views on many issues raised by the TRAI paper, Tata Teleservices has observed that "introduction of asymmetric regulation could be a healthy measure for the industry, as it will help the regulator restrain the dominant player(s) from announcing tariff schemes which are predatory in nature". This, in the long run, will benefit the consumers, it says, emphasising the need for appropriate regulation for developing (as distinct from developed) markets.

While expressing the view that at least six months are required to come to a reasonable conclusion on the viability of any tariff plan, COAI has urged TRAI to "use this opportunity to transparently share the principles and parameters on which it assesses the tariff plans of operators". It has also pointed out that any "substantial change" in the Interconnect User Charge (IUC) scheme may necessitate a change in the tariff package offered by the service providers. Opposing suggestions for penalty on operators for reneging on the contract of lifetime offer, it says TRAI "having prescribed forbearance for cellular tariffs should now not seek to withdraw this flexibility or indulge in micro management".

The AUSPI has cited the following factors to allay doubts about long-term viability and sustainability of lifetime schemes: lower churn of subscribers, revenue stream from termination charge for incoming calls, additional revenue from originating calls and improvement of economies of scale.