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Here’s what Airtel should do instead of auto-renewing data plan for postpaid customers

AirtelEarlier today, we wrote about Airtel’s decision to auto-renew data plans for its postpaid customers when they end up consuming their data plan, instead of falling back to pay-as-you-go as the default. While Airtel might be legally okay in auto-renewing data plans, it doesn’t feel right for consumers (see 1, 2, 3).

Airtel’s justification: they want to avoid bill shock. Under the new plan, the company automatically charges customers Rs 250 for an additional 1 GB for the remainder of their billing period, instead of Rs 0.03 per 10 kB (for 3G), which amounts to Rs 3145.73 (0.03 * 1024 * 1024) per GB. At the same time, there are two key issues with what Airtel is doing:

1. They’re not giving customers a choice: they’re automatically shifting customers to the new billing plan, and it appears, without their consent.
2. They’re charging customers an inordinately high price, keeping the validity the same: if you have only 2 days left in your billing cycle, you’re still charged Rs 250 and given only 2 days to consume that 1GB. A fresh cycle begins after that. This is patently unfair to a customer.

What Airtel Should Do

Airtel should take explicit user consent. Customers have signed up for data plans with a pay as you go model, and not for a model which has Rs 250 as an additional charge. The data plan is activated after an SMS alert. Considering the number of spam SMSes one receives there is a high chance that people might not even notice an SMS informing the user about the impending auto-renewal. That being the case, the telco should wait for consent from user, failing which they should disconnect data for the rest of the month. Airtel should give the customer three options, to choose from:

1. Stop the service: This should be the default option. If a user has achieved a data limit mentioned in the plan, the service should be stopped.
2: Offer smaller data bundles for renewals: Why isn’t there an option to be charged Rs 25 per 100MB or 75 for 300 MB, via Smartbytes? The bill shock won’t be as high, and customers can choose plans based on how they expect the service to be used over the remaining days. Who needs 1GB of data for two days?
3: Pay-as-you-go rates: If a customer wants, he should have the option to continue with pay-as-you-go rates. If Airtel had the best interest of consumers in mind, it would have lowered its exorbitant pay as you go rates. Some calculations:

– At Rs 0.03 per 10 kb, the cost of 1 GB is Rs 3145
– At Rs 250 for 1 GB, the rate is Rs 0.000238 per kB, which is almost 1/12.6 of the current pay-as-you-go rate.

Airtel can still reduce the pay-as-you-go rates, and maybe charge customers a little higher than what they are for the 1GB plan:


Currently, all Airtel ends up doing is penalizing post-paid customers who consume more than their planned quota in a month, without giving them adequate choices.

(Edited by Nikhil Pahwa)

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