Silver lining in the cloud of verification guidelines

The regulatory environment in the telecom industry is dynamic and fast changing. On one hand, it poses a formidable challenge in keeping pace with regulatory amendments, on the other it presents companies an opportunity to revamp processes and stand out in the market.

The new subscriber verification guidelines, made effective just before Diwali, are likely to impact business in various ways.

The licence agreement mandates adequate verification of customers before enrolling them. The new guidelines were issued on the recommendations of a joint expert committee set up after the Apex court’s decision (in the case of Avishek Goenka vs Union of India) on security and other threats posed by inadequately verified connections.

Subscriber activation: Under the new regime, activation of a connection should be preceded by the entry of subscriber details in the database, and confirmation by the service provider on the completion of documentary requirements. The confirmation should be made by an ‘employee of the company’ and include his/her name, designation and signature. Tele-verification, which was hitherto applicable only to select customers, has been made mandatory. Prior to tele-verification, even incoming calls are barred. Guidelines for issue of connections to foreign nationals have also been tightened.

Over the past few years, there was a tremendous surge in customer acquisitions, fuelled by mobile number portability. Apart from denting margins, this led to customer churn and low-revenue (ARPU), the two looming challenges today. The new guidelines promise to screen customers effectively, which, in turn, could result in better and sustainable revenue.

Bulk connections: Earlier, there was rampant misuse of bulk connections. The Department of Telecommunications recently detected customers with thousands of connections under a single name. The new guidelines prohibit bulk connections for individuals. Apart from an initial physical verification of the subscriber, subsequent checks are required every six months to ascertain bona fide use. On the lines of import regulations, ‘actual user’ condition has been imposed on the licensee. To ensure level playing field, existing bulk customers have been given three months to comply with the new regime.

Retrieval of documents: Strict timelines have been imposed for documents and other information sought by telecom monitoring cells. Defaults could lead to connections returning to pre-activated state, and severe penal consequences. While this may seem onerous, an efficient document management system would serve telecom companies better in the long run.

Impact

The above changes have significant business impact in terms of timelines for activation, alignment of internal processes, beefing up resources, and even re-evaluation of the existing business model. To ensure smooth transition, change management should be facilitated through training sessions and workshops.

As regular audits are conducted by regulatory agencies, aberrations will result in fiscal costs to the company. Heavy fines have been imposed on leading telecom companies for discrepancies in customer verification. It is, therefore, preferable to err on the side of caution.

While some of the regulatory directives may be questioned or debated, there is no denying that it is a tremendous opportunity for companies to reengineer and streamline business processes. It requires initial investment and effort but, in the long run, companies with robust processes and governance would command a premium. The current regime — with its emphasis on transparency — mandates displaying scores for service quality on Web sites, thereby enabling customers to make an informed choice. Regulatory compliance is not just about keeping administrators at bay — it can lead to protection as well as enhancement of stakeholder value.

Manpreet Singh Ahuja is Executive Director and Pankaj Tewari is Senior Manager — Risk Advisory Services, PwC India

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