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LIVE: TRAI discusses tariff regulation and promotional offers in Open House Discussion

Live Updates

12:48: The discussion has ended. TRAI will continue to accept written responses till Friday on this consultation paper.

12:45: Jio: The present regulatory regime lets customers get 4G, 3G or 2G interchangeably without any control of the customer. That discrimination of 2G 3G is simply not there in that case.

12:40: Stakeholder: What you really need to see is from a consumer perspective are they interchangeable? If you’re constantly changing definitions of relevant markets, TRAI needs to investigate how these things matter from consumer perspective. Then there’s issue of market power and dominance, and from a competition perspective, perhaps market power makes you think, if people were being appropriately compensated for interconnected, would that still be a problem? That’s why if it’s market power, the market share doesn’t really help that much. It becomes difficult to articulate. If it is coming from characteristic of industry, problem needs to be solved, and TRAI needs to clarify on SMP part. Competition Act recognizes SMP and predatory pricing is also recognized. So I don’t think the criteria can be as clear sometimes as we like them to be but it’s important to understand the mechanics.

12:30: Pankaj Sharma: Very interesting question, and answer is yes.

RS Sharma: Please be careful there. Suppose there’s an operator with cost of ₹100 for data delivery. If I say that another operator cost of delivery is ₹30, then the first one cannot give less than ₹100, second one can! That means that the first operator cannot compete. So should we go there?

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12:27: Jio: We will be financially viable — the cost of a new technology will ultimately be passed onto the customer. Overall we all have business plans and try to make money as we are answerable to shareholders. That much the operator should be able to do by thesmelves.

RS Sharma: Do you think just like IUC we need minimum price for data? Is that good for the market?

Idea: Yes, in interest of transparency.

RS Sharma: Here nothing is changing between two operators when data is being consumed. There’s no interconnect taking place. There is need for regulator to get into balance sheets and find out how much is attributable to data.

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Idea: This is a critical question. Networks earlier supported only price, so there was a costing paradigm available to regulator. Now it supports voice+data. So it is important to understand correllation of cost. For voice, there’s only one answer. If you ask for data, maybe not. If you ask for both, you may wonder how the apportioning is done. So regulator needs to ask how this information is arrived at.

RS Sharma: If cost is different for different operators, should the regulator fix minimum price for each operator individually?

Idea: Let’s look at that in another consultation.

12:20: Jio: One decision on what is predatory and whether it should be different for telecom: just to say that it should be different from other industries is wrong. All industries are connected. All industries are framed in a particular manner to avoid predatoriness. The consequences should be looked at — a newcomer without market share offering should be allowed to offer cheap tariffs because they need entry. Second, technologies are converging. Operators should not insist on price controls just because they have legacy businesses to worry about.

Data has to be affordable — in 6 months we as an industry have gone from 20 crore GB a month to 120 crore GB a month. This would not be possible with 2G or with 4G at ₹250 a month.

12:13: RS Sharma ponts out that there are plans by incumbents that is charged below IUC. Telco points out that IUC is actually less than price in tariff on average, and this is an argument that TRAI has accepted in the past.

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12:10: Ravi: As Nikhil said, we need to see if services are interchangeable. Have you seen any customer wanting to move to 2G from 4G? The other way around happens though. Do we see people downgrading? Is rickshaw substitutable by airplane? No, that’s why these are different markets. 4G and GPRS: Both provide internet and data services, but you can’t download anything on the latter. Try going by rickshaw or cycle by Bombay.

12:04: Idea: There’s been a new entrant in the sector. They have given free services. IUC has been paid. The entire environment has been gamed by offering a customer the ability to make a free phone call, there is no cost incurred here. There is no attempt by customer to disconnect the call — he can disconnect anytime. If that call is landing on another network, because of the interconnection feature, who is going to work to deliver that call in an environment where IUC rates have been fixed on traffic patterns that happened before that? There has been a complete shift in volume of incoming traffic versus the normal paradigm. What has happened is that the earier logic has been thrown out of the window. The average realized rate today is what you’re seeing over the last six months. That in a nutshell is the impact that SMP can have in a non-regulated environment.

Nikhil Pahwa: I just wanted to say that the authority doesn’t look at 3G, 4G, etc, so that kind of segmentation shouldn’t be looked at to assess SMP. As consumer, I’m subscribing to Internet, regardless of tech. This thought process of SMP needs to extend to wireless and wireline as these two are going to marry. Once we start offloading to WiFi, that SMP is going to be demonstrated. You can slice the ecosystem to say this one is powerful here, that one there, but the aggregate is important. Let’s look at choice: three telcos together had the power to take the market away from smaller networks and then fight among themselves. Does that combination of dominant players across both wireline and wireless lead to demise of other operators and competition is an important question, like we saw Tata Docomo and then everyone did per-second billing. Is the market just going to be three or four players is something that needs to be checked. As a consumer, policy should enable more choice and competition so prices go down and this cooperation doesn’t lead to escalation of prices. Some are profitable and still unable to profit shows that they were pricing disproportional. I’m worried of cooperation and collusion that may lead to wireless or wireline prices remaining high. Final segmentation doesn’t help consumers in terms of whether we are being discriminated against.

12:02: Idea: Significant Market Powers, SMPs, the very use of the phrase, power, implies the ability to damage anyone else within the same segment, correctly so. That is what the attempt is being made to try and define it. As you said, telecom industry has changed significantly. It became more complex. There was data, VAS, and so on. Then there’s the complexity of interconnection, which makes telecom different from other industries. This interconnection is the damaging environment. FMCG is standalone, but in telecom with interconnection, you have the ability to damage the environment around you significantly. So categorization isn’t a form of where — service areas exist, customers exist, networks exist. Here you talk about segmentation in the marketplace. In each segment there’s a potential to be an SMP, and that’s what I think authority is trying to regulate.

RS Sharma: The only touchstone of predatory, typically given in laws, is quite different and will not be applicable to him, because it doesn’t apply in telecom, is what he’s saying.

Idea: I’m not objecting to Ravi’s definition. Within the principles of IUC compliance, non-discrimination and compliance, these are phrases we are seeking to try and define so we can grapple with the situation that emerges. When we look at it, SMP must be looked at through the same prism as we looked at customer base. If we can do segmentation there, there’s adequate space for SMP in each segment.

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11:55: If a customer has VoLTE or a feature handset, then they’re a different market. If customer has to spend more to join a different service, then it’s a different market. TTO has nothing to do with definition of predatory pricing, it is just on services not being below IUC. We are in CPP, not RPP. Since it’s CPP, operators are dependent on each other.

Jio: In the various licenses, UASL, DoT licenses, generally if you see the IUC regulations, cellular mobile, LTE, and so on, these markets have been define. In view of convergence, we can’t make further bifurcations and complicate the market. There’s new IP coming in middle. Distinction between voice and data is obliterated. Voice is running on data, each is instituting other, various OTTs are running free. They’re also increasing voice. They’re constituting the same market. Bundling is contributing in data and voice retail. Geographical distinction: roaming is also being removed. With NTT also promoting convergence of services and data, this distinction can also be removed. For the time being, we can continue the service area concept but remove it later.

11:50: Ravi: “What we need to see when we define predatory pricing is what is presently defined or used in present telequarters. And before that we also need to see what kind of regime we are. We are in a CPP regime. The pricing of one affects the others, which changes the outgoing, incoming prices. In 2002-3, this was discussed. IUC-compliant and non-predatory came from the CPP tariff order. Purpose was that any operator shouldn’t be able to game the system with tariffs below cost and IUC. The definition has been used solely from perspective of less than IUC or less than cost. This puts one operator at profit and another at loss. And more specifically, tariff order doesn’t even talk about size — even new operators have to comply with them, and have to be non-predatory. [Hello again, Jio]

“TRAI itself has defined markets — 4G, broadband, and so on are different market with different segments. These are the broad parameters on which markets need to be defined. As far as present regulation is considered, below IUC or below cost is predatory. From competition, voice is a different segment, narrowband and broadband are different, 4G and 3G are different from each other also.”

He goes on to compare this to cars and planes being different vehicles and products. Nikhil vigorously shakes his head.

11:46: Everyone silent on new questions about significant market powers and predatory pricing.

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11:42: Stakeholder: the definition of promotional offers — if someone wants to give promotion for everyone, there’s a time limit. But if there’s a smaller slice, then there’s no limit there, and it’s justified as discount. Customers should be aware of promotions fully. Operator should be allowed to do this from their discretion.

Next set of questions: How to define dominance in these relevant markets? Please suggest the criteria for determination of dominance. How to assess Significant Market Power (SMP) in each relevant market? What are the relevant factors which should be taken into consideration? How should predatory pricing be assessed?

11:38: Airtel: As Pankaj alluded nicely, a promotional offer is something sold or provided below the prevailing market prices. If something is selling at ₹100 in the market and ₹80 for a while, that’s promotional. Whether it is being used for new or existing customers is also a differentiator. One case of promotional pricing can lead to predatory pricing. If it is promotion, it should be 60-90 days. If it is below cost, it should be less than that. Nobody should be able to game the system by renaming their plans and relaunching them in a different name. [Hello, Jio]

They have given an offer in a much lower price, and then keep recurring again and again.

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11:35: RCom: I think the basic fundamental principle for promos should be the same as any tariff — non-discriminatory, non-predatory, and there should be a gap of 90 days. Again, different categories can have promos going on simultaneously. Promotional offers should be for maximum of 90 days.

Pankaj Sharma: Since we’re talking about definition of promotion, let’s talk about in general what we do in promos. One is a lower price. Discounts help customers to try out products. The significance is that it’s temporary and for a small period. We have talked to TRAI for a long period and arrived at a limit of 90 days. Now there are two kinds of offers: one is for new subscribers, and other is enhancing VAS services. Any promotional offer shouldn’t go on after 90 days.

(looks like this point will come up 90 times)

Pankaj Sharma: If you’re lowering price, it’s difficult for TRAI to decide what it should be if it’s zero or cheaper. If it is zero, we need to limit it to 30 days.

11:32: Hemant from Aircel: Defining promotional offers, those are typically for acquiring new customers or to drive usage for existing users also, from operator’s perspective. Second type is you already have a set of customers so you want to drive tests for new services, and you’ll try to drive usage there. These are the objectives for running promotions. Obviously they take different shapes and forms, either in minutes or data.

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11:27: Airtel: We answered the proportional thing. As far as promotional is concerned, promotional is also related to the next set of questions. As far as we believe, the promotion shouldn’t be for a very long duration, it should only be long enough to test the new service, either at acquisition or at launch of new service. Promotion can’t be very long time. 90 days is okay, it shouldn’t be more than that. 90 days is the ceiling. The present ceiling is also the ceiling for the period of offer, not till the time offer would be open. So the benefits should be limited to maximum 90 days.

Sudhir Gupta, TRAI Secretary: Do the same principles on discrimination and transparency apply to promotion?

Airtel: Answer to that is in other industries. They also have a different promotional offer for trying a new service to get a feel of the product or the service. If it extends beyond a certain period, that can’t be termed as promotional.

11:22: Nikhil Pahwa: When a promotional offer is given to consumer, post-promotion tariffs should also be disclosed to the consumer, and it should be made clear that this is not the final offer which will not go on indefinitely.

Jio: Full disclosure is good, but at all times the customer can opt out and in from any promotional offer. Another related point on segmenting is that new vs old, is that fair segmentation? A consumer can join a segment if they want to. If a customer joins a segment, that’s their choice. An existing customer and new customer, however, can’t join each other’s classes on will. It becomes discriminatory then because I am not allowed to join those segments. That option of which class to be in should be in hands of customer.

Idea: Then customer has option to game the system, so gaming the system is permitted? [laughs]

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RS Sharma: The promotional offer, once you get into it, you have to disclose what’s at the end of the tunnel there. Unfortunately that distinction, the routes of acquisition don’t apply to you thereafter. If you have differential standards of transparency, that can change.

Idea: I’d like to go back to the example by Pankaj and how his Tata Sky retention thing happened. If he were to do this more than thrice, his data will reflect that he is gaming the system, and later on, this offer probably won’t be made for him. Such gaming is often prevented. If TRAI wants to step in, you have to look at how the system is being gamed. The broad differences need to be regulated, not the nitty-gritties.

11:17: TRAI moves on to promotional offers.

Ashok Sood: We would like to say, on promotional offers. On limits of number of promotional offers. We certainly believe that promotional offers can’t be offered one after the other. There should be a 90 day gap between one offer and the next. However, if there are two offers which are being made to two different segments, this wouldn’t be in effect.

Rajat from Idea: Again, class of subscribers. In an environment with new products and services, promotion for trial to get customers on the product is critical. I think over a period of time this 90 day period was accepted, however I am making a sub-point, this is acceptable for a class or group of customers. In the same way segmentation was being done earlier, if there’s a customer being acquired, once they’re new they’re new, and then later their class changes and then they become ‘existing’ so new promotions no longer apply. If existing subscriber is being offered new or value added service, a promotional offer is possible. The 90 day period is something which has come through over a period of time, but needs to be looked at from standpoint of class of subscriber. That’s how you define whether that promotion can work. Reiterating: 90 days, agreed, subject to class of subscriber.

RS Sharma asks audience to sharpen definition of a promotional offer.

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11:13: Carnegie: I’d like to take off from the AI and robotics thing. That’s an important thing for transparency. Transparency to regulator and customer is different. The National Taxi Policy, where it is a two-sided platform, suggestion was that algorithm which prices and customizes on ridesharing should be opened up to C2C. As such, these algorithms that telcos are deployed should be opened up to the regulator.

The current measures for transparency are not adequate. There has to be a mechanism where data is published on government website. Customer has to choose what is best for them. A lot of customers aren’t even educated to understand these plans. Only the authority can put a transparent system in place, and arbitrary segmentation cannot happen. No regulation should allow arbitrariness.

Idea: A lot has been discussed on non-discrimination and segmentation. I agree with the foundational principle of segmentation and treating different classes of subscribers differently. TRAI’s CTO itself says that ‘non-discrimination means SPs shan’t discriminate between subscribers of the same class and such division of classes isn’t arbitrary’. The Gupta-ji Sharma-ji divide is arbitrary. But if one of those subscribers is happy and the other one isn’t, that’s a differentiator. At the end of the day, whatever that segmentation is, it is never arbitary. It is always based on the existing relationship between customer and their service provider.

11:10: RS Sharma: Segmentation can’t be Gupta-ji and Sharma-ji, it cannot be arbitrary. You need to be transparent about it.

Telco: You may feel this discrimination is individual, but as a telco we can’t discriminate on individual basis, hundreds of customers receive these plans. Tomorrow AI and big data will be doing such segmentation.

11:08: Telco: Retention tariffs can’t be published.

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RS Sharma: So you’re saying transparency is okay for acquisition, but not thereafter, right?

Telco: Yes.

RS Sharma: *looks at TRAI colleagues and grins*

(I may have laughed a little too loudly here.)

11:05: Telco: Existing customers and new customers are two different segments for example. ARPU also — I can give different discounts to high ARPU and low ARPU customers. I’ll obviously give more discounts on more highly available networks like 4G and less for 2G, for example. We won’t be giving arbitrary discount.

RS Sharma: And you’ll be publishing those criteria, right? Because if Gupta-ji is getting discount and Sharma-ji isn’t, then that needs to be disclosed, right?

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10:58: Telco compares telecom retention to a hotel offering cheaper rent after a guest threatens to move to a cheaper hotel after a month. (side note: who lives at a hotel for a month?)

10:53: Telco: As far as discrimination is concerned, TRAI has been allowing it, between different classes. What’s on debate is how a class is defined.

10:49: Telco says “we’re okay with this in principle” and RS Sharma mocks him for it. “Wrong word”, embarrassed telco rep clarifies.

10:46: Telco rep talks about his experience with Tata Sky as a consumer. The point: “what we’re discussing is not just for telecom.” As a consumer, satisfaction matters. For someone willing to entice me, discrimination may be something else for me. That examplee of Uber is a little too– we’re talking about something available in abundance here. Going back to COAI’s point, if you are giving me the price as a consumer, and if it’s benefiting me, that’s all.

10:45: COAI: When you say that somebody ‘counter-offers’ for staying, the next person offers you more… it’s a benefit to the consumer.

RS Sharma: This violates non-discrimination.

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COAI: Discrimination needs to be looked at again, ‘classes’ is no longer an adequate way to look at it. When you have things like Big Data, and using this for customized services.

Nikhil Pahwa: Using big data for segmentation may not always end well. For example, some users on Twitter were reporting that they felt Uber had higher pricing for women at night, than men going the same distance. While this may not be the case, granular targeting and dynamic pricing can also lead to discrimination. TRAI’s remit is to ensure fairness in pricing.

10:39: RS Sharma to COAI on discrimination: You can’t have two principles. You have to publish rules for sake of transparency. This is like bribing, retention pricing. This is a regulated business using public resources. You’re not a credit card company. You can’t have the freedom, in my view, to avoid transparency and fair play.

COAI: Globally, in the US for example, there are multiple networks, if I threaten to leave AT&T for Verizon, you bet I will get a customized offer. [laughs]

10:35: Nikhil Pahwa: I disagree with COAI. Transparency on mobile: I think there should be a UIN for each plan that exists and customers should be able to use SMS for it. If there are 25,000 plans, there can be codes for all of them. If customers can pay for a plan, they should be able to verify what they’re buying. For example, plan terms might change without intimation to consumer. Second thing: telcos often change plans without informing subscribers, without taking consent. No information was made available when something like this happened last year — people found out via media reports.

Another example is recurring billing. In 2014, Airtel introduced auto-renewal for post-paid customers, where plans renewed in a way that the same plan would only run till the end of the preceding billing cycle. One complaint I have is when there was false billing taking place on MVAS, TRAI released a report on false billing. I request you release data to see if the scale of this problem still exists. There is also the negative tariff billing, which led to fraudulent practices that hurt poor people. On transparency of Internet plans, there is misleading information about the term ‘unlimited’ in advertising where it is given with asterisk. If ‘unlimited’ is used in an ad it should not have conditions. Contention ratios are also not being disclosed on websites.

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If I subscribe to an internet plan today, I’m paying for a subscription to a service. MTNL is serving advertising on my connection. This is not disclosed in MTNL’s tariff plans. Secondly there’s data collection and insertion of cookies and codes. User data is being stolen without intimation to them. I don’t see how they can sell my data. In 2013, Airtel tied up with V-Serv, using demographic targeting, which stole a bevy of data, without disclosing this in tariff data. There are privacy issues here.

10:23: Rajan Mathews, COAI: Simplicity is in the eye of the beholder. Dynamics of the Internet are enough to ultimately provide transparency.

RS Sharma: Transparency is one thing and complexity is another. Those aren’t contradictory concepts. Simplicity isn’t the same as transparency. I’m curious to know if similar application to what happen in airlines — for comparison — is in telecom.

Hemant Kumar, Aircel: Transparency is a hallmark principle. There are more accurate and up-to-date measures and practices that can be put in place like mobile apps, USSD, pulling tariffs with that — it’s transparent, between customer and service provider. Publication on website may be onerous.

RS Sharma: You say you can’t publish on website and still be transparent? Really?

Anil Kaushal: If you have only 25 plans, that should be easy to publish.

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10:18: Question 1:


TRAI is discussing whether it should review its tariff regulations to improve transparency, and what kind of rules should be set for promotional offers. It also asks on what basis a telecom operator should be allowed to provide different tariffs to different users. For example, many telecom operators price data differently depending on which circle, or region, a user is in. Airtel has said in its written response that it differentiates tariffs on a number of criteria (and should continue to be allowed to do so). These include “usage pattern, age on network, ARPU, loyalty, grievance, and QoS being offered to the customer”.

As for promotional offers, Jio said in written comments that it’s essential that a newly established telecom operator give away services for free to get people to try their service. Airtel said that telcos shouldn’t be allowed to charge tariffs that are cheaper than Interconnect Usage Charges (IUC), which is the amount an outgoing call’s network pays the incoming network, in a clear reference to Jio.Vodafone refused to answer the questions in the consultation paper, saying that the subject matter is being discussed by courts and the telecom arbitrator TDSAT, and that it had requested TRAI to enforce tariff rules, not review them. The company did not, however, rule out that it would attend any open house discussions TRAI would hold.

TRAI hasn’t announced if there’s a livestream, but it should be available here or on the regulator’s Twitter page.

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Written By

I cover the digital content ecosystem and telecom for MediaNama.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.



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