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TRAI Modifies Tariff Rules; Additional Charges Reduced

The Telecom Regulatory Authority of India has issued a directive regarding tariffs that mobile operators are charging, citing a lack of transparency. The changes primarily impact prepaid services, which constitute a majority of mobile connections in the country:

— Full talktime on recharges, and an admin free of max only Rs. 2 and taxes. So a Rs. 125 top-up will give a talktime of Rs. 109.25 instead of Rs. 96.25, with processing fee reduced from Rs. 15 to Rs. 2.
— In case of reduction, subscribers to automatically get a reduced tariff, without any preconditions like sending an SMS etc
— Lifetime Plan subscribers to be able to migrate to new Lifetime plans without additional payment. They shouldn’t have to recharge more than once in six months
— No change in mobile number when subscribers change plans, or switch between prepaid and postpaid
— Promotional offers to be streamlined: declare the period of the promotional offer, and specify the eligibility criterion.

The TRAI felt that, particularly when it came to top-ups, the customers were being charged fees for validity and processing, while they already had talktime validity. They were also being charged to switched from one lifetime service platform to another. Apart from that, because they have selective and transient promotional offers, there was little clarity on who can apply for them, and who can’t. Particularly with the promotional offers, that are hawked by third party agents in campuses etc – lets just say that there have been differences between what has been communicated to users, and what has actually been sold. This should put an end to any ambiguity there. More on the reasons behind these orders, here.

So it appears that declining ARPUs will be squeezed further. On a related note, Manoj Kohli, JMD and CEO of Airtel says that customers are agnostic to tariffs, and are more concerned about service quality. Airtel looks at cost-per-minute, revenue per minute, and the margin, rather than ARPU. Some interesting inputs on rural consumers there – 90 percent of recharges in Bihar and UP are through e-recharges. More here.

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