Exclusive: In the note to providers of Value Added Services (VAS), Bharti Airtel has instituted fresh guidelines regarding of billing of VAS. A copy of the email, from S Ravikumar (Chief Supply Chain Officer Operations), is with MediaNama possession, and its receipt has been verified by multiple VAS companies. In India, where most subscribers are pre-paid, services and content are often provided in a monthly billing format, sometimes with daily subscription charges.
Negative charging, which involved billing of customers when there is less than adequate balance on their account, is being removed in many cases, though not all. Today when a prepaid customer with a balance of Rs 2 opts for a service of Rs 10, telecom operators charge Rs 2 and give a credit of Rs 8, which is charged when the customer recharges the prepaid service next. With these changes, Airtel appears to be moving from a ‘line-of-credit’ model of billing, to a sachet pricing model, by reducing instances of negative billing.
More importantly, the company has also instituted specific guidelines for First Time Activations, First Time Renewals of a Value Added Service, step up charging, among others. We’re requested Airtel for inputs on the rationale behind these changes in rules, and will update once we get a response. One reason could possibly be that there are customers who use a service, are extended a line of credit, and never recharge, thus leaving the telecom operator with receivables. Indian telecom customers use multiple SIMs. (Note: One criticism we did hear from a VAS company was that these changes were shared at 8:50pm last Friday, and compliance was expected by Sunday.)
Key changes being made:
1. Negative Charging: Airtel’s VAS billing policy currently allows to activation, billing, and renewal even with low or insufficient balance, thus offering customers a short term credit until the next recharge. No negative charging in Rajasthan, whether for activation or renewals. In all other circles:
– No negative charging allowed at the time of First Time Activation (FTA) of any VAS service. If the customer doesn’t have the money, they won’t be charged – no line of credit will be extended to the customer. However, there is an option of offering a lower cost alternative, if there is requisite balance. However, sachet pricing for content can be offered. Also, billing needs to be executed within 24 hours of request of service by the customer, Charging requests post 24 Hrs would not be allowed.
– For First Time Renewals: negative charging would not be allowed for customers who have not “taken an action to use the service in the last 10 days”. This is likely to primarily impact services like Voice portal, Voice blogs and Mobile Radio (where customers need to dial in to use), but will not address Caller Tunes (CRBT) and alerts, which are passive services. Negative charging is being allowed for First Time Renewals passive services.
– Subsequent Renewals: negative charging is being allowed all subsequent renewals for engaged customers (who have used the service in the last 10 days) of active services and for all passive services (CRBT, Alerts etc).
– Suspension/Deactivation of service: For monthly products, yn case of failure in charging a customer on account of low balance during renewal of a service, the suspension of the service must be after 5 days of grace period. After 25 days of continuous service suspension, customer should be permanently deactivated from the service. For daily billing products, the grace period will be 2 days and suspension/deactivation period of the service will be 5 days from the date of renewal.
– Step Up charging: is not being allowed. If a customer is charged on a lower denomination pack (say Rs 10 because he only has that balance when he opts in for a service worth Rs 30), he cannot be taken to a higher denomination pack. All subsequent renewals will be Rs 30.
Our Take: What Remains To Be Done
Our take on this is that these are steps in the right direction, but more can and should be done: false billing in VAS needs to be addressed as well, because while seeking short term revenues, VAS companies and telecom operators end up making customers vary of subscription in the long term. While reducing instances of negative billing, telecom operators still need to address other issues related to billing.
– False billing: Well, negative billing is one issue, but there is also the concern related to false billing. Scour the web and you’ll find innumberable complaints from telecom customers about being billed for services they’ve never subscribed to, or for content they’ve never bought. We’ve heard of lists of ‘Revenue Positive’ numbers being circulated by telecom operators to VAS companies, which allow them to bill prepaid customers for services. Circle heads have targets which need to be met, and we’ve heard that this is more of a circle level phenomenon. I’ve received messages informing me that I’ve purchased some animation content in the middle of the night.
– Automated renewals: customers subscribed to services receive messages that a service is up for renewal, but it is in their hands to stop the service before a designated date. Auto renewal is a default action, and in most cases, services are renewed without explicit customer consent, and I don’t think that is the ideal scenario. We often hear about customers not being able to unsubscribe from services, and default unsubscription should be the norm to address this situation.
The problem is that, as a customer, I now think three or four times before actually subscribing to a service, because I’m unsure of whether I will be able to stop it.
From a telecom operator perspective, they should also look to incorporate plug-and-play billing, with standardised billing integration API’s. Airtel Money could operate as a mobile based payment gateway service provider, allowing for purchases on the mobile web, similar to Paypal, instead of limiting purchases only to a specific set of companies.