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Update: After issuing the draft amendment in July, stakeholders and consumers expressed overwhelming support to increase maximum validity of Special Tariff Vouchers (STV) for data only packs from the existing 90 days up till 365 days, TRAI said in a statement. This has now been published on the gazette of India, and has come into force as “Telecom Consumers Protection (Tenth Amendment) Regulations, 2016 (6 of 2016)”.

TRAI added that one particular telco (without naming it) suggested providing “usage of certain apps/websites free to the users, so that such users can be on boarded as internet users”, during the consultation. However, the regulator found this in violation of the earlier ruling in February that disallowed differential pricing.

Earlier: Mobile data services offered by telcos in form of Special Tariff Vouchers (STV) should have a maximum validity of 365 days instead of the existing 90 days, TRAI has recommended in a draft amendment, saying that this could benefit ‘marginal consumers’ who largely depend on cellular data for Internet since they prefer low-priced data packs with longer validity.

Wireless data usage grew by 58% from the quarter ended March 2015 to March 2016, according to the authority; however, subscribers connecting to the Internet through cellular data grew by just 16% in the same time-frame. The regulator pointed out that out of 1.03 billion wireless subscribers in the country as of March 2016, only 315 million of them used Internet, which translates to a wireless Internet penetration rate of 30%. This prompted the regulator to escalate data availability period.

Challenges to Internet adoption

The challenges in improving wireless Internet penetration arise from both the demand side (consumers) as well as the supply side (telcos and ISPs), and according to the regulator, following are the reasons affecting wireless Internet penetration:

  • Low level of literacy and even lower digital literacy
  • Low perceived utility of Internet
  • Lack of adequate Internet coverage
  • Non-affordability of data amongst marginal consumers

Most data packs are not affordable: However, TRAI stresses on the fact that “non-affordability” of most data packs among marginal consumers is the biggest roadblock to overall Internet penetration. It claims to have received “many complaints” from consumers who mention that data packs in the market are “unaffordable” and most of them have a “very short validity period”. First-time smartphone users consume lesser data from their data packs when compared to existing users, leaving a significant amount of data being unused, which expires after the validity period.

TRAI said that first-time users and consumers who have migrated from other service providers are “relatively more price sensitive than an average prepaid customer”. In addition, such consumers will look for cheaper data packs as they progress in their prepaid connection:

“As a result the churn-rate for such consumers is much higher than the churn-rate of average prepaid customers and apparently the average lifetime of a new prepaid mobile connection is in the range of six months to a year…it appears reasonable to keep the maximum period of validity for the “data only” STVs, which are intended to be offered to attract marginal consumers, first-time data users and price-sensitive consumers, as one year (365 days).”

MediaNama’s Take: Both 3G and 4G wireless data is costly in India, with operators charging anywhere between Rs 1000 to Rs 1500 for data packs over 10 GB (valid for 28 days). A longer validity of at least 60 days could be mandated for high value data packs, above Rs 500. We understand that a longer validity does not always mean “affordable Internet”. Cheaper prices for spectrum, opening up unused spectrum to MVNOs, setting up Wi-Fi hotspots in rural locations, could add to Internet penetration.

Also, the TRAI should note that the numbers it mentions for both mobile and mobile data subscribers aren’t representative of users, since they also include multi-SIM usage. There’s a difference between subscribers and subscription.