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Wednesday, Mar 10, 2004

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Opinion - Editorial

Wrong call on tariff plans

NO DOUBT THE plethora of tariff plans offered by service providers, particularly mobile operators, makes it hard for telephone users to make an informed choice. Yet, the proposal of the Telecom Regulatory Authority of India to set a cap on the number of tariff plans that basic and mobile service providers can offer may not be an appropriate solution. In a burgeoning mobile telephone market where tariffs are dropping dramatically, practically all battles are being fought on the tariff front. As most mobile service providers are still focussed on subscriber additions, flexibility in tariff setting is their principal instrument to attract subscribers. Moreover, innovation and differentiation in tariff packages in terms of bundling of handsets with low tariff offers, schemes tailored to the requirement of specific high-value users, service plans with value-added freebies are just beginning to be offered to the consumers. Any attempt by TRAI to regulate the tariff plans is bound to stifle the fledgling attempts at improving the competitive behaviour in the market.

TRAI's recommendation that the promotional offers be done away with and replaced with standard discount rates on tariffs in individual packages also seems to defy logic. Promotional schemes have played a significant role in the spectacular rise of the mobile subscriber base over the past year and a half. There is no reason to tinker with this arrangement, though these schemes have not lapsed within the 90-day period prescribed by the regulator in quite a few cases. As long as consumers can opt for any scheme with no migration charges, or switch service providers with no strings attached, the regulator has no cause for concern. Introducing standard discount rates on tariffs robs the flexibility available to service providers in a competitive marketplace. Instead of limiting the number of tariff plans, TRAI will be better off improving user awareness in consultation with consumer organisations. It may be the right time for TRAI to come out with a guidance note on how comparison shopping (for different tariffs and services) can be done. It can also consider starting a consumer portal which provides composite tariff details of all service providers and also offers unbiased opinion on the service quality.

It is equally important that TRAI prescribe a strict Advertising Code to prevent abuse of consumer interest by competing service providers. The Code must attempt to standardise the minimum requirements for tariff disclosures by service providers. It must also ensure that service providers are penalised for launching misleading promotional campaigns. Finally, TRAI will have to start building awareness among consumers about benchmarks for "quality of service" offered by different service providers. Once that is done in a transparent manner to the satisfaction of all service providers, it will go a long way in helping customers do comparison-shopping.

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