The Telecom Regulatory Authority of India (TRAI) has blocked the premium plans of Airtel and Vodafone Idea, followed by a letter from Reliance Jio. On 7 July, Reliance wrote a letter to TRAI citing the premium plans offered by Bharti Airtel Ltd and Vodafone Idea Ltd as “discriminatory.” Four days later, on 11 July, the regulatory authority put a hold on these plans and blocked them on 12 July.
Bharti Airtel Ltd had launched its Platinum plan on 6 July which offered higher data speed and special services to the postpaid customers paying above Rs. 499. Vodafone Idea Ltd had launched a plan in November 2019 called REDX which promised upto 50 percent higher speed and priority services at a cost of Rs. 999. The plan was re-filed with TRAI in March 2020, when the cost was increased by Rs. 100.
In the questionnaire sent to Airtel and Vodafone Idea, TRAI asked the telecoms to explain these plans and if the improved quality for higher paying customers would mean deteriorated quality for other general customers.
In response to this, Airtel’s spokesperson said, “We want to keep raising the bar for our postpaid customers in terms of service and responsiveness. This is an ongoing effort at our end.” A senior Telecom Analyst says that the two plans do not violate any rules and they can offer “better services for expensive subscriptions.”
Against the TRAI order, Vodafone moved to Telecom Dispute Settlement Appellate Tribunal (TDSAT) on Monday, seeking a stay on the order. It raised the issue that it was only offered one day before the plan was blocked. The letter also said that the plan was launched in November 2019, that is eight months ago and was filed with TRAI twice in these eight months, but was stalled only after it was flagged by a rival company. TDSAT did not, however, put a stay on order, but did ask TRAI to respond.
The deep crisis
These plans were brought to boost up the Average Revenue Per User (ARPU). The Telecom industry has been in a fix since long. Airtel and Vodafone Idea are supposed to make an upfront payment of their Adjusted Gross Revenue (AGR) dues, before the amount be staggered in installments for maximum of 20 years. To this, the telecoms have told Department of Telecommunications (DoT) that they paid all they could and now are in no position to pay an upfront amount. Airtel has to pay Rs. 25,980 crores and Vodafone Idea has to pay Rs. 51,400 crores.
Vodafone has even said that it will shut down the company if not given some time to pay the dues. In addition to the grievances of these telecoms, Airtel and Vodafone Idea collectively lost 75 lakh subscribers in March 2020, as per TRAI’s report. In a contrast, Reliance Jio earned 46 Lakh new subscribers according to the same report.
In March 2019, the telecom companies had requested TRAI to raise data tariffs to overcome the ‘deep financial stress’ in the market. The deepening crisis may lead to shutting down of Vodafone which has a 27.57 percent of subscriber market share. Airtel has a market share of 28.31 percent. Reliance Jio enjoys the highest market share of 33.47 percent.
If the issues do not get resolved, and the company is shut down, it would mean a sudden surge in unemployment as the employees will be left without jobs and a higher pressure on Reliance Jio to cater the subscribers of these companies as well.