Home » , , , ,

A response to Airtel’s justification of its net neutrality violation


Share on Facebook0Tweet about this on TwitterShare on LinkedIn100Email this to someone

Airtel sent us a statement explaining the rationale for its net neutrality violation, wherein it started differential rates for Internet Telephony (VoIP), as opposed to other Internet services. As we explained earlier, a COAI paper mentions what the industry association refers to as ‘OTT’, which it believes eats into telecom operator revenues: VoIP, Instant Messaging (IM), Applications (Apps), Cloud Services, Internet Television, IPTV, M2M – Machine to Machine (M2M) communications, Social Networking. So, all digital services are under threat of being carved out as separate packs.

Also read: Net Neutrality, a simple explanation.

Airtel believes that what it is doing is right, so we decided to ‘fisk’ it’s statement, backed by data:

Airtel: “Over the last twenty years, we have invested over Rs. 140, 000 crores in rolling out telecommunications services in every nook and corner of the country. In addition, we have paid over Rs. 50, 000 crore in terms of government levies in just 5 years. “

Advertisement

MediaNama’s take:

1. On investment made in telecom: In just the last two and a half years, Airtel has earned Rs 141,545 crore in revenues, and Rs 16,211 crore in profit. Over 20 years, they’ve substantially more money, which is great return on their investment. They’ve invested for the return they’ve gotten.

Airtel Revenues India

2. On government fees: They were able to build their business because instead of a fixed license fee, the government reduced their initial costs by allowing them to pay a revenue share. When they earn more money, they pay more government levies. When they earn less money, they pay less levies. Nothing wrong with that: they’ve built a great business, and earned money for their shareholders, but it’s not that Airtel invested this money for philanthropy or for contributing to the government exchequer.

Airtel: “Going forward, we are committed to rolling out data networks across the country. In order to ensure this, our business must be viable and sustainable. Our voice services that are enjoyed by every one of our customers provides us the capacity to continuously invest in and upgrade our networks on an ongoing basis. We, therefore, believe that VoIP services in their current form are not tenable for us as a business. As a result, we will charge separately for VoIP services.”

MediaNama’s take:
1. Airtel or Infratel? Correct me if I’m wrong, but networks are going to be rolled out by Bharti Infratel, not Bharti Airtel. Bharti Airtel provides consumer services, while Bharti Infratel provides tower services to telecom operators, and will invest in networks. Bharti Airtel will not be directly investing in networks, so how is cost of networks a Bharti Airtel consideration?

2. VoIP is not Airtel’s business, access to the Internet is: Airtel is an access service provider, it has a Universal Access Services License. It’s business is to provide consumers with access to voice services over PSTN, and VAS, which includes content services over PSTN networks, SMS and the Internet. The Internet is an access service, for which consumers pay Airtel, and VoIP is a service that consumers use via the Internet. What is provided over the Internet should be none of Airtel’s concern, providing the Internet should be. What Airtel is doing is slicing up the Internet into types of services, and charging for those separately. Which means, and this is a privacy issue, it checks what you are doing online.

3. Data has contributed to growth in telecom revenues, not taken away from it. Last quarter, Airtel reported Rs 1,805 crore of Mobile data revenue, up 73.8% Y-o-Y in India.Data was 14.5% of Airtel’s revenues for the three month period ending September 2014, compared with 5.2% at the end of September 2012. Its data customer base has increased by 43.0% and higher usage per customer by 31.2%. Not counting accidental usage, Airtel has 40.1 mobile Internet connections active.  Data consumption has increased to 40.1 billion MB from 15.87 billion MB in Q2-FY15. If you just look at 2G data rates, Airtel now charges Rs 249 per month for what it used to charge Rs 99 a couple of years ago.

So, when it comes to the Mobile Internet, users have increased, usage has increased, rates have increased and revenues have increased.

4. On eating into telecom services revenues: SMS and VAS revenue has declined, but data revenue has increased. Take Idea Cellular, for example, based on our calculations with Idea Cellular earnings data:

Idea-Cellular-VAS-Revenue

This is Idea Cellular, with 30.92 mobile Internet connections active by the end of September 2014 (Q2-FY15). Airtel has more data, more consumption, more revenues.

Airtel: However, in line with our philosophy of putting our customers above all else – we are committed to making VoIP services extremely affordable and attractive by ensuring adequate minutes for a very small charge on VoIP.

As a result, in line with the recent announcement of our VoIP (Voice over internet protocol) pack, Airtel would like to clarify the following:

· Our Customers can enjoy a superior VoIP calling experience on Airtel’s network by choosing from a range of new VoIP specific data packs that will soon be launched. For prepaid users, the VoIP exclusive pack will be priced at Rs. 75 for 75MB with a validity of 28 days. This will allow customers to make between 200 and 250 minutes of calling. Similarly, affordable VoIP plans will soon be launched for postpaid customers. There would be no other charges in respective of VoIP calls.

MediaNama’s take:

1. VoIP is becoming more expensive, not cheaper: We did the math, by taking the Rs 249 and 449 data pack rates from Airtel’s own site. VoIP calls are becoming 311% more expensive if you take the Rs 249 data pack, and 470% more expensive if you take the Rs 449 data pack (2.5 GB).

Airtel-VoIP-Charges

I just got an SMS from MTNL, offering 100 GB of data for Rs 5000 per year.

MTNL-Plan

That is Rs 50 per GB, or Rs 0.049 per MB. Airtel VoIP is 1948% more expensive.

2. Shows how expensive regular calls are in comparison with Internet Telephony: Also note how Airtel tried to put a spin on it by comparing VoIP with actual phone calls, by changing the vocabulary from “MB’s” to minutes of usage. Imagine if you were being charged for watching YouTube on the basis of minutes of videos viewed or type of content watched. If there’s one thing this change in vocabulary indicates, it is that phone calls are actually priced exorbitantly high. Technology advancement makes calling cheaper, and Airtel is trying to make more money of it, by increasing the cost by 470%. Should we really allow the cost of outdated technology to determine the cost of newer, more efficient technology?

· The VoIP update is not applicable with immediate effect. This change will be implemented in a phased manner over the next few weeks. In all cases, our customers will proactively be informed about these VoIP charges in advance through the company’s standard communication channels like SMS, USSD pop-up, email etc.

· Prepaid customers who have purchased data plans before 24th December 2014 are entitled to use all services opted-for till their packs are consumed or expire, following which, the new terms & conditions on VoIP usage will apply.

MediaNama’s Take

– Customers are not informed, consent is not taken: To this, all I have to say is that the last two times my data pack charges have been increased by Airtel, I have neither been informed, nor has my consent been taken in order to subscribe to a more expensive plan. In fact, I found out about the latest increase a couple of days ago, when I called up Airtel customer care to confirm this anti-net neutrality move. They say they sent me a message on November 7th, but I’ve never received it. Tomorrow, Airtel can increase rates by 10 times, and I would only find out via my post-paid bill. Really, the TRAI should ensure that telecom operators take customer consent before subscribing them to higher cost plans. I’ve now discontinued the data plans on Airtel altogether, and am looking to port out.

Share on Facebook0Tweet about this on TwitterShare on LinkedIn100Email this to someone

  • Only a Supreme Court case may force AirTel to ‘follow the law.’ Some of us remember the ’90s and how AirTel and others made exorbitant bids and then were bailed out by the government by saying “oops, we cannot pay the high fees we promised to pay; our business will go bust.”

    Let them stay within the ambit of their licenses or let them go bust or let their licenses be suspended. India can do without frauds like AirTel. Oh and Reliance.

    • Sphinx

      SC interference is not required in this case, unless their is cartel among all telecom service providers. Airtel & others are genuinely facing losses due to VOIP, and Airtel is first to start charging for it.

      • What? I thought this article roundly counters AirTel’s lies.

        • Sphinx

          Replied above.

        • Subho majumder

          one question why is airtel and voda phones so expensive while aircel and docomo are so cheap while they offer same services
          Aitcel: rate cutter 61rs gives me a-a 1p/3sec
          And a-others 1p/2sec
          Full talk time on all recharges of 60 and above
          Data pack 128rs 1gd 3g

          Why aren’t these companies brought under control.
          They provide us with internet claims that they will provide us 34 mbps of speed but the actual speed is much less (all the companies do this theu devide the connection by 8)and they have a put speed barrier after you have reached 12gb then on 14gb so on
          and according to net neutrality Internet should be like electricity once you get a connection you can use it however you want

        • Sphinx

          I think Aircel is doing as well as Spicejet, so it is just a matter of time.

          Don’t try to juice the telecom service provider so much that they have to close down. The data services are cheap in India but the service and coverage is pathetic.

        • shirish

          If you look at Akamai’s State of Internet and other sites as far as either bandwidth is concerned or buck for bandwidth is concerned in both ways we are waaaaaaay behind. See Akamai’s State of the Internet Reports or any number of story pieces. The end point is we have monopolies and oligopolies and not enough competition so they are able to do whatever they want.

          India is 130th also according to http://www.netindex.com/download/allcountries/

          I would like to see some stats where price and cost of bandwidth per GB is calculated and see where India stands.

        • Sphinx

          Maybe your usage of VOIP is high and you are lucky to have good 3g connectivity in your area which is first necessity of making a VOIP call. But I am more concerned about the pathetic coverage of 3g services.

        • I dont think so, airtel generally provides good services in most of areas,…

          Signature: how to apply flipkart coupon codes

        • abdul Razak c a

          You are telling airtel’s profit is not sufficient for them. Well, can you explain what that means?

      • Airtel’s job is to give us the data pipe. They have no business looking into the pipe to see what we are doing with that data. Like someone on Twitter said: “Airtel charging more for VoIP data is like your potato vendor charging more if you will make ragda pattice instead of puri bhaji with it.”

        • Sphinx

          Unlike potato seller, they have technology to sneak and Airtel is more innovative. If these companies can give Facebook/ whatsapp free, they can logically charge for premier services like VOIP.

        • But that’s the thing. It IS unethical inasumuch as it is unethical for the potato vendor to charge more for his potato depending on what we do with it. The question is this – what is Airtel selling? They are selling data. What we do with the data is our business. They are charging for something they are not selling.

          That’s pretty unethical all right. And it WILL be illegal. It started in the Netherlands, and now finally the US is going to bring in laws making net neutrality mandatory. It was always unethical to discriminate between bits, but now it will be illegal also.

        • Sphinx

          There are no free lunches. They have to recover their running cost & investment. If charging VOIP is struck down by courts/ TRAI, they will have to increase data service rates for all customers. At present they are trying to differentiate between small group of VOIP customers and others.

          If you are giving example of Netherlands inform us about the minimum monthly rentals also there.

        • Then let them charge more for the data itself! Who will object? You cannot charge for what you don’t provide! What nonsense is this?

        • gnurag

          We shouldn’t be taking Airtel’s “recover the running cost & investment” argument at face value. Remember, Airtel is a for-profit business, it works for its shareholders and shareholders alone and will make hard-to-verify statements to maximize promoter net-worth. TRAI must step in and crack its proverbial whip and stop this funny business.

      • Can you back your words “genuinely” and “losses” with data please, for us to understand where you are coming from?

        • Sphinx

          On a second thought it may be true that they are violating/ re-engineering some terms of data service defined by TRAI.

          My point is that they are in business and not for charity. There net profit is around 10% of their revenue/investment, which is low for telecom/ service business.

          Bharti is a professional organization and must be facing serious threat on their revenue & profits due to VOIP. They must be convinced that other operators will follow suit sooner rather than later, and they are aware of risk of losing large number of customers to other competition.

          If the people are shifting from ISD/STD calls to cheaper VOIP, to make up the losses, they can either ask the VOIP customers to pay more or increase the charges of data services for all customers. They are trying first recourse.

        • Ramesh Kumar

          Bharti is loosing money in other countries where they have invested and now trying to milk Indian customers to make up for those losses?

        • Ramesh Kumar

          Bharti has faced such threats before. Remember when reliance launched 40paise per minute calls. They competed and won.

          This move is seriously wrong. Imagine if the electricity department wants to come into your home and charge extra for power to your television?

          This is what Airtel is trying to do now.

  • bugslammer

    Today they are just targeting apps like Skype, Viber and Whatsapp which are focused on communication. Later they might decide to extend their ambit to all kinds of apps and multi-player games which have VoIP built-in.

  • Shiju Vethamuthu Nesamony

    A clear of abuse while providing essential services and can’t be allowed. Will the regulators open their mouths is the question that’s looming.

  • Jayakrishnan Balakrishnan

    GoI should force them to take out FUP and the word “unlimited” , there is no such them called unlimited.

  • Guest

    @nixxin I know you are really good at digging into a company’s annual reports – but in this instance, your take on trying to prove whether the investment and taxes numbers Airtel quoted are correct or not, or how much money they make and how expensive the suggested prices of the “VoIP” pack is – you have completely missed the point on why Net Neutrality is important. There is a big chunk of “digital” junta in India who probably don’t understand why it is free. You are an extremely talented writer and MediaNama is a great forum and I hope you will also write about this very important issue more from the ethical perspective – rather than just this number heavy article (which I also appreciate nonetheless). Thanks, Jitender Sharma

  • Aroop

    The facilities afforded by apps such as Skype or Whatsapp should be restricted to those companies alone. By charging incremental costs for VOIP, Airtel is indirectly claimimg credit for intellectual property created by those companies. Has anyone thought about this angle at all? Should be an interesting case of IP infringement!

  • Pretty good fisking @nixxin. After a very long time. :-)

    Airtel seems to be gouging its customers by justifying its old technology. It is also holding us back to old inefficient ways. They do not want to lose out on the old streams of revenues.

    Another business tactic is to actually provide the most popular choice at even more attractive prices to get a large share of the market.

    Aircel OTOH makes Facebook and WhatsApp free when you subscribe to data since they are the two most popular apps.

    And yes, a short writeup on why net neutrality is important other than the fisking done here, or at least a link to a good article on that somewhere in the body of the article would be a ready reckoner for all the people who will be coming here Nikhil.

  • Subho majumder

    one question why is airtel and voda phones so expensive while aircel and docomo are so cheap while they offer same services
    Aitcel: rate cutter 61rs gives me a-a 1p/3sec
    And a-others 1p/2sec
    Full talk time on all recharges of 60 and above
    Data pack 128rs 1gd 3g

    Why aren’t these companies brought under control.
    They provide us with internet claims that they will provide us 34 mbps of speed but the actual speed is much less (all the companies do this theu devide the connection by 8)and they have a put speed barrier after you have reached 12gb then on 14gb so on
    and according to net neutrality Internet should be like electricity once you get a connection you can use it however you want.

  • naguakkina

    Today they are just targeting apps like Skype, Viber and Whatsapp up police constable exam key which
    are focused on communication. Later they might decide to extend their
    ambit to all kinds of apps and multi-player games which have VoIP
    built-in.

  • Viren

    Its back to the future with this. Once again Airtel are trying to charge basis content carried rather than by data consumed. Remember my bit on charging toll versus collecting octroi.

    They have a term license for a fixed capacity of frequency hence a limited amount of data throughput. They could be operating at close to peak capacity of data consumption now that they are looking to raise cost per MB throughputted.

    If they are not at peak capacity its like trying to kill the golden goose. Their first step should be to keep increasing the usage of data till its really full. They should then look to give guaranteed speeds at premium from premium customers. If they are allowed to go down this route, its a really slippery slope and if taken as approved, they could ask for different rates for different accesses.. x for email… y for banking…z for shopping.

    I dont agree with the spirit let along the law. they have to stop them .. but the million dollar question is … who will?

    • Ramesh Kumar

      Net neutrality is important. Airtel can increase internet pack rate from 250 to 275 per GB if they have higher expenses.

      Internet is like electricity. Electricity companies charge more when it becomes expensive. But they do not charge separately for lights versus TV versus electric ovens.

      That is why Airtels move is wrong and must be rejected the same it s been done in other countries where similar proposals came in. We nerd to shout. Tell our legislators. Form consumer groups.

  • Viren

    Telecom needs a shake up badly. Despite all the hue and cry about pay offs and sweet deals, nothing much has changed. We have among the largest consumer base in the world, low cost IT capabilities yet almost no innovation happens here. The operators just dont know what to do and how to build a Eco-System and so they are afraid and terrified of trying anything new. The only short term game is play with tariffs. The TRAI will never go against them and the media needs the ad spend so the only choice is to see the power of social media. BTW, maybe Airtel should charge a premium to access Modi’s twitter handle since so many people want to read it.. just saying!

    • Akshay Dogra

      (y) true that

  • amiham

    Brilliant work guys!

  • 2emkay

    Fantastic work Guys!!!

  • Jaikumar Hundlani

    Well best thing is to port out. I know airtel’s network is the best but others are not too bad. Once users will port out then they will learn a lesson. Other operator should take advantage by shouting in the advertisement that they don’t charge extra for VOIP calls. I don’t think its a viable option for them.

  • Hiranand Chawla

    Nikhil Pahwa You nailed it perfectly to Screw the #Airtel #India

  • Mayank Bhatnagar

    Apart from Voip , the charges for data on roaming being charged by companies like tata docomo are exhorbitant ….10p per 10 kb ..which works out to over 10000 Rs per gb !! To top it there is absolutely no net pack one can activate while on roaming being…leaving one no choice but to pay these rates !!

    • Jayanand Supali

      i would suggest to use Vodafone. If one has a Data Pack then it can be used at the same rate when roaming too. I have been using it for last year or so. And more recently it became even better. If you are near to exhausting your data usage while on roaming, you can subscribe to add on package (Min being Rs 100 for 300Mb data) which is valid till the end of the bill cycle. Its very cost effective and highly useful.

  • Shashank

    Great that you put your arguments indicating facts and figures… Airtel used to have my admiration..

  • Jayanand Supali

    Very Informative article. It really shows how Airtel is really juicing out the profit from the services provided. Though am afraid to say this that this is just the beginning to telcos starting to charge for various internet based services. The worst part being TRAI is all fine with it. This move will give Airtel, the teeth to start charging separately for whatsapp too. After all thats the most used messenger over the net.

  • vaibhav_kaushal

    Nice explanation. Loved reading it.

  • Samanvaya Chaturvedi

    It has also come to light that Airtel is trying to promote its own VoIP App Airtel Talk by discouraging use of Skype or Viber.

  • Mayank Sharma

    I hope everyone who knows about this has applied for a port.
    The time is to act now or else the other service providers could/would also copy this unethical practice.

  • Google is providing free Internet to mobile call in US and Canada, and here indian companies are trying to charge for internet to internet call.

  • George Mathew


    This a Video About Net Neutrality and how it was challenged in India by Airtel

  • Arpit Singhi

    This is bad news for everyone. Thanks author for all facts and figures. TRAI is not working for people. It’s working for these people who give them good money as a revenue share or who knows even bribe.

    Take a case a loop. They have filed business deal approval well in advance. Every business has a right to sell its stake. As far as a consumer is concerned I had an opportunity to port out engender after the deal was made. They just said customers can port and made the deal a limbo.

    Customers suffered.
    Even vodafone blocked calls from their network. If TRAI was so concerned about people they would had acted for it.

    Someone please file a PIL

  • 100Gb(Gega bit) = 12.5GB(Gega Byte), it makes 400rs/GB or nearly .40 rs/MB . This way airtel VoIP plan is 2.5 times or 250% expensive than MTNL data pack. You can edit your post accordingly. The message you got is deceiving as much as airtel plans are..!

    • adam

      dude its 100GB from mtnl and not 100Gb

      • “Dude” checkout the image below and try to make difference between Gb and GB.

  • Yash Raj Karthikey

    Really airtel is far expensive however, I use airtel and it provides good services…

    Signature: how to apply flipkart coupon codes

  • Sudharsan R

    The daylight robbery company.

  • Sudharsan R

    Internet the basic human right and access to information is another basic right but airtel in India broke the basic concept of neutrality that broke millions of hearts that cannot be compromised any more even if airtel provides free internet.