Thanks to Jio, TRAI may just put an end to all freebies for new operators
Reliance Jio may have been a boon for customers, but it has created only troubles for the telecom industry. Jio’s entry into the market has seen a cut-throat price war between telecom giants, something that’s getting "bloodier" by the day.
Jio has managed to seduce the masses with its free welcome offer and ultra-cheap data rates (once the free offer ended). It is obvious that this was not good news for the other players. There should be, and is a limit to the amount of freebies one can provide to their customers. Unfortunately, the Telecom Regulatory Authority of India (TRAI) did not stop Jio from breaking these rules, something that it is bearing the consequences of, now.
Last year, the Cellular Operators Association of India (COAI) had alleged that the new entrant Reliance Jio was attempting to acquire customers by offering connection loaded with freebies, in the guise of a trial launch. According to TRAI, the "Happy New Year Offer" launched by Jio on December 4, 2016, was different from the earlier Jio Welcome Offer and could not be treated as an extension of the promotional offer as the benefits under both differed.
Bharti Airtel and Idea Cellular consequently moved the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) against TRAI for allowing free 4G service offers of Reliance Jio beyond the stipulated 90 days. On January 31, TRAI had held that Jio's free voice calling and data plan were not in violation of the regulatory guidelines.
Whatever be the reason, TRAI finally seems to have come to its senses.
Recently the regulatory authority put an end to another one of Jio’s schemes: The Summer Surprise offer, under which the company said it would waive off monthly charges for its services for the next three months.
That’s not all. Possibly making up for its "partisan" behaviour towards Jio, TRAI now plans to possibly put an end to the kind of freebies Jio has provided. According to a PTI report, TRAI, by May 2017, plans to start an industry-wide consultation on framing rules for new mobile operators testing their services prior to full-fledged commercial launch.
Post the Jio fiasco, incumbent cellular operators had demanded a specific set of dos and don'ts, for trial services. The rules are likely to address several factors, such as the number of subscribers that can be on-boarded during the trial period (by a new operator), the duration of trial periods etc.
While there is no denying that a competitive force like Reliance Jio has forced the telecom giants to not just slash rates, but also to improve the quality of their services, analysts say that Jio’s strategy will hamper quality of network in the long run.
“There has to be sustainable average revenue per user (ARPU) in the long run for the survival of the industry. If that is not there, entire investments will be sucked in and it will have a domino effect to destroy the industry,” BK Syngal, former chairman and managing director of VSNL was quoted as saying by The Wire.
TRAI’s got the right idea now, but hopefully it is not too late.