Consultation Paper No.

12/2010

Telecom Regulatory Authority of India

Consultation Paper

on

Certain Issues relating to Telecom Tariffs

13th October, 2010

Mahanagar Doorsanchar Bhawan

Jawahar Lal Nehru Marg (Old Minto Road)
New Delhi – 110002
Web-site: www.trai.gov.in
 PREFACE

Service providers periodically publish different tariff offers with the

objective of both customer acquisition and customer retention.
Transparency in the provision of telecommunication services and tariff
offers has always been and continues to be of prime concern to the
Authority. TRAI has in the past taken several steps to enhance
transparency in tariff offers.
The Authority, however, is receiving several complaints and
representations from consumers and their representatives seeking
further effective transparency measures. In view of the increased
competition as well as the spread of telecom activity to rural areas, the
relevance of having a more transparent regime for tariff offerings cannot
be overemphasised. At the same time, service providers and their
associations have also raised certain concerns.
This consultation paper brings out various issues that have a
bearing on telecom tariff offers. In line with established practice, the
Authority seeks the views of all stakeholders by 15th November, 2010.
Comments will be posted on TRAI’s website. Counter comments, if any,
on the comments may be sent by 25th November, 2010.
The consultation paper is available on TRAI website –
www.trai.gov.in. For any clarification/information, Sh. Raj Pal, Advisor
(ER), TRAI, may be contacted at Tel.No. +91-11-23230752, Fax: +91-11-
23236650 or email at raj.pal@nic.in or eco@trai.gov.in.

(Dr. J.S. Sarma)

Chairman, TRAI
 TABLE OF CONTENTS

CHAPTER TOPIC PAGE Nos.

Introduction 1-11

Chapter 1 Multiplicity of Tariff Plans and 12-33

Transparency

Chapter 2 Miscellaneous Tariff Related Issues 34-45

Chapter 3 Misleading Tariff Advertisements 46-56

Chapter 4 Issues for Consultation 57-58

Annexure 59-63
 INTRODUCTION

A. Evolution of telecom tariff regulation in India

I. Telecom Regulatory Authority of India is empowered to fix tariffs

for telecommunication services under Section 11(2) of TRAI Act,
1997. Tariff regulation on Telecom Service in India was initiated
with the notification of Telecom Tariff Order 1999 (TTO 1999). This
order provided a broad and long term policy framework for
telecommunications services in the country. It also provided clear
signals to the investors on the direction of telecom pricing reform
which included rebalancing of tariffs. While emphasizing the social
objective of encouraging low users of telecom to get connected, the
TTO, at the same time provided flexibility to the service providers
for pricing and offering alternative tariff. So far, 49 Amendments
have been made in the Telecom Tariff Order 1999 reflecting various
developments in Telecom.

II. The TTO 1999 aimed to achieve tariff rebalancing in a phased

manner and specified tariffs for basic, National Long Distance
(NLD) and International Long Distance (ILD) services. For basic
and cellular services, the order specified a Standard Tariff Package
(STP) consisting, inter alia, of monthly rental and call charges. The
service providers were mandated to offer STP prescribed by the
TRAI. Apart from that STP, the operators were provided the
flexibility to offer Alternate Tariff Packages (ATP) to the customers
subject to the ceiling rates specified. Though national roaming
services in cellular mobile services were initially forborne under the
1999 Order, it was brought under tariff regulation in January
2002, by fixing ceiling tariff for that service.

1
 Cellular Mobile services - Phases of Tariff Regulation

III. Three years after the implementation of the first tariff order, the
tariffs for cellular mobile services were reviewed by the Authority in
the year 2002. The Authority carried out a consultation process to
decide whether there was a need to regulate the cellular market in
respect of tariff or market forces should be allowed to operate. The
Authority found that there had been considerable increase in the
level of competition in a number of service areas. With the entry of
the PSU as third operator and a private operator as the fourth one
in each service area, the degree of competition was expected to
become much more intense. Taking note of emerging market
scenario, the Authority came to the conclusion that a stage had
been reached when market forces could effectively take care of
cellular tariff and the regulator will keep a close watch on the
developments in the market. Accordingly the Authority forborne
the tariffs for cellular mobile services vide 23rd Amendment to TTO
dated 6/9/02.

Basic Services Phases of Tariff Regulation

IV. In the case of Basic Services, TTO, 1999 had specified availability
of standard tariff package which inter alia comprises of rental, call
charges, free calls etc. along with all other tariff plans on offer by
the Service Providers in the market. The basic services had been
facing intense competition both among Basic Service Providers as
well from Cellular Mobile Service Providers, which resulted in
drastic fall in tariff especially for the long distance calls. Since all
subscribers were enrolled in alternative packages and in effect the
standard tariff package had become redundant, the Authority
decided that mandating a standard package was no longer
necessary for Urban Basic Service Subscribers. In view of the

2
 overall competition and the implementation of ADC Regime, the
Authority decided to forbear with respect to Basic Services except
for Rural Subscribers where a standard tariff package was
prescribed. The Service Providers were free to offer alternative tariff
packages in addition to the standard tariff package. (24th
Amendment to TTO dated 24th January, 2003 & 28th Amendment
to TTO dated 05.11.2003).

Existing Tariff Regime

V. As per the existing tariff regulatory framework the tariffs per se for
telecommunication services are forborne except for:

i) Rural Fixed Line Services.

ii) National Roaming Services.

iii) Leased Circuits.

VI. TRAI has specified a standard tariff package for Rural Fixed Line
Services which the service providers are mandated to offer to the
customers in addition to any alternate tariff packages. Ceiling tariff
have been fixed by the TRAI for the other two services and the
service providers are required to offer these services at or below the
tariffs fixed by TRAI.

VII. The telecom service providers have been mandated to report tariffs
to the Authority within 7 days from the date of implementation of
the said tariff for information and record of the Authority after
conducting a self-check to ensure consistency of the tariff plan(s)
is/are consistent with the relevant regulatory principles in all
respects which inter-alia include IUC Compliance, Non-
discrimination & Non-predation.

3
 Scope of forbearance

VIII. The forbearance of tariff for a service, as per the provisions of TTO
1999, denotes that the Authority has not, for the time being,
notified any tariff for that particular telecommunication service and
the service provider is free to fix tariff for such service. Therefore,
the 23rd amendment to TTO provided operators the flexibility to fix
tariffs for cellular mobile services except for national roaming
which continues to be under regulation. Similarly, the 24th & 28th
Amendment of TTO provided flexibility to Operators in respect of
Basic Services except for Wire Line Services of Rural customers.

IX. Tariff forbearance for a service does not mean end of regulation for
that particular service. Even after forbearing tariffs for any
particular service, TRAI continues to monitor the tariffs for that
service, as the service providers are mandated to file the tariffs
with TRAI within 7 days of implementation of the said tariff. All
tariffs filed with TRAI under this requirement are examined and if
necessary, due intervention is effected. TRAI has taken several
regulatory measures even after forbearing the cellular tariffs in
September 2002. Some of the important measures are -
implementations of Calling Party Pays (CPP) Regime vide 24th
amendment to TTO; protection of subscribers against hike in tariffs
(mandated through 31st & 43rd amendments to TTO); reduction
in tariffs for national roaming services ( through 44th Amendment
to TTO); Directions dated 2nd May, 2005 and 16th September,
2005, relating to disclosure of full details of the tariffs and
transparency in service provision; incoming connectivity in prepaid
services, even if the talk time value has exhausted (through 30th
amendment to TTO). Further, the 48th Amendment of TTO and also
the Direction of 1st September 2008 have mandated several

4
 measures with the focus on consumer transparency. Details on
these measures are given in Chapter I of this consultation paper.

B. Impact of Regulation on Indian Telecommunication Services

X. The impact of various regulatory measures is very much visible in

the Indian telecommunication sector. TRAI through appropriate
regulatory policies and measures facilitating competition has
succeeded in achieving affordable tariffs and also putting in place a
transparent mechanism for implementation of policies to meet
social objectives. The policy has succeeded in providing the
financial sustainability of the operators, promoting the efficiency in
the sector and meeting the social objectives. The results are
evident from the phenomenal growth in subscriber base and the
decline in tariffs for various telecommunication services.

XI. Telecom sector in India has witnessed the highest growth rate in
the world. From a level of about 1.2 million in end March 1999, the
mobile subscribers reached a level of over 670 million in end
August, 2010. The sharp decline in tariffs has contributed in a
big way in achieving high growth rate of telecommunication
subscriber base. The tariff level for voice telephony in India is
among the lowest in the world which enabled to achieve tele-
density targets exceeding expectations. There has been substantial
decline in tariffs ever since TRAI started regulating tariff. A one
minute call between Delhi and Mumbai that cost `37.50 in pre-
TTO 1999 period can be currently made for almost at the price of a
local call, i.e., `0.60/-. Similarly, the tariff for a call to American
continent from India has come down from `75/- per minute to
`6.67 per minute within the same span of time. There are large
number of options available for the subscribers to choose from the
market depending upon their usage profile. There are schemes

5
 offered by most operators wherein the subscriber is assured of
lifetime connectivity without having to pay any fixed recurring
charge. These measures have resulted in overall growth of telecom
sector in terms of subscriber base, number of service providers and
growth of vast network of telecom services across the length and
breadth of the country. The trend in mobile tariffs and mobile
teledensity is depicted in a chart given below.

Chart 1: Mobile Tariff Trends Vs. Growth in Mobile Teledensity

XII. The tariff plans offered by the service providers have different
component of rent and call charges, processing fee / talk time /
value added services etc. Given the competition among the service
providers, tariff for fixed and mobile services vary across service
providers and across service areas. Since a typical tariff plan
incorporates items such as rental, call charges, SMS etc., the
service providers create different packages based on various
combinations of these items with a view to serve varying needs of
customers. It is also an accepted practice that the price of each

6
 component can vary from plan to plan and operators cross
subsidize various segments of the plan. Thus, there are a large
numbers of tariff plans available in the market which has varying
combinations of monthly fixed charges, call charges, free call
allowance etc.

XIII. While forbearance of tariff has positive impact on subscriber

growth and reduction of call charges, subscribers are concerned
about multiplicity of tariff plans, complexity, and non-transparency
of tariff offers. The mobile growth increasingly covers a large
number of persons from rural areas and also low income groups in
its fold. Therefore, the need for transparency and ease to clearly
understand the tariff plans is being increasingly articulated.

C. Need for transparency in tariff offers

XIV. Adequate price transparency is crucial for the correct operation of

an efficient and competitive market. In typical consumer markets
the suppliers of goods and services are obliged to indicate the price
of each item (product or service) in a clear, simple and transparent
manner, which can be easily accessed and understood. There is a
feeling among some of the consumer groups that in provision of
telecom services, consumers are provided with very limited pricing
information. Moreover, the situation is exacerbated by the complex
and varied bundled tariffs, thereby making it difficult to compare
the tariffs on offer.

XV. Sometimes it becomes difficult for consumers to find, understand

and use the information available on the market in order to make
decisions on the choice of service provider and/or tariff packages
that best meet their needs. Regulatory intervention may therefore
be appropriate to address the issue of deficient consumer
information in its various forms including lack of information,
7
 unclear or hard to find information, misleading information or the
“bounded rationality” of consumer decision-making1.

XVI. Over the years the telecommunications markets have grown and
competition has developed, accordingly the need to directly protect
and empower the users of telecom services has been increasingly
perceived and recognised. According to a recent OECD report2
informed consumers who are prepared to exert an ability to choose
between competing suppliers are necessary to stimulate firms to
innovate, improve quality and compete in terms of price. In making
well-informed choices between suppliers, consumers not only
benefit from competition, but they initiate and sustain it.
Conversely, where consumers have too little information, poor
quality information, or mis-information, they may end up misled
and confused by the choices on offer, may pay too much or buy the
wrong service. This may, in turn, inhibit and dampen the
competitive process.

XVII. Regulators around the world have become more and more
concerned with the issue of deficient consumer information under
its various aspects - lack of information, unclear or hard to find
information, misleading information or what has been called the
“bounded rationality” of consumer decision-making3.

XVIII. Lack of transparency may mean that end-users cannot easily make
informed decisions and compare services. This may be because the
information does not exist or is deceptive. It might also be because

1
ERG (The European Regulators Group) Report on Transparency in Tariff Information (March 2009)
2
OECD (Organization for Economic Co-operation and Development) (2008), “Enhancing Competition in
telecommunications: protecting and empowering consumer” – Ministerial Background Report.
3
OECD (2008)

8
 the information made available to the consumers is presented in
such a way that renders it difficult to interpret or compare.

XIX. Increasing number and diversity of offers due to increased

competition and innovation in the telecommunications sector,
while delivering considerable benefits to consumers, is also
bringing more service offers into the market, with new and diverse
features. This increases the complexity of the marketplace for
consumers and makes it difficult for them to compare and decide.

XX. A recent workshop on “How can we help consumers to choose the

right service provider?” was held at European Commission
Consumer Summit on 18th March 2010. The purpose of this
workshop was to identify main solutions to the challenges
consumers face when trying to choose the right service provider. In
particular, the workshop was aimed at bringing to the surface
main challenges, to share best practices and possible solutions
and to determine how the European Commission can support
participants in providing guidance to consumers choosing a service
provider. It was informed at the workshop that the recent
liberalization in some service markets and creativity in the sector
created new challenges for consumers in choosing the right service
provider. The workshop attempted to understand the main
challenges consumers face, when choosing a service provider, and
investigate on possible solutions.

XXI. The main challenges faced by the consumers while comparing

offers of service providers and choosing the right one, highlighted
during the course of the workshop, were as under:

• Trustworthiness of source of information.

• Information is unclear or not available.

9
 • Consumers are not critical enough.

• Consumers are not sufficiently engaged.

XXII. A fundamental challenge for consumers is that of understanding

the nature of telecom services offerings. The difficulty that average
consumers have in comparing such offers limits head-to-head price
competition. Comparisons become even more difficult when
telecom services are sold in bundles.

XXIII. The above analysis suggests the need for policies and other
interventions to help consumers to make better decisions. A
guarantee of transparent tariffs and up-to-date information on
standard terms and conditions is one of the cornerstones of the
consumer protection measures. Consumers need access to up-to-
date information on tariffs of telecom services in making intelligent
choices about the options available to them in the market.

XXIV. One attractive policy alternative in this context is to seek to

improve the quality of competition by ensuring that consumers get
better information about their choices, so that they can compare
offers and select the telecom service (tariff plan) that best suits
their needs.

XXV. TRAI has in the past taken several steps with a view to enhance
transparency in tariff offers. Details of measures taken towards
this end have been discussed in Chapter 1 of this paper. Despite
existence of several regulatory guidelines, the Authority continues
to get complaints and representations from consumers and their
representatives alleging lack of effective transparency and resultant
confusion for subscribers. The areas of concern expressed by the
Consumer Groups include multiplicity of tariff offers leading to
confusion, presenting/ advertising tariff offers in misleading
manner etc. The Authority has attempted to analyse and address
10
 these specific concerns in the different chapters of this
consultation paper.

XXVI. The transparency of tariff in telecom sector is necessary to protect

interests of consumers and to facilitate further growth of telecom
services in India. The mobile telecom penetration is expanding in
rural and remote areas, which is changing profile of telecom
subscribers with new subscribers being enrolled from ordinary
socio-economic background and low income category. The scheme
of tariff offers has been changing drastically and leading to a
situation where a large number of add-on packs with complex
features flooding the markets. The marketing strategies adopted
by various operators to augment /retain their customer base, to
encourage network usage, to achieve specific revenue targets etc.
are making the nature and scope of such offers further complex.
The above mentioned developments augur well for a need to
further improve transparency in tariffs offer. TRAI has time and
again revisited the issue of transparency of tariff offers in the past,
and it has been a continuous ongoing process keeping in view the
fast changing market dynamics.

XXVII. Based on the comments and inputs that may be received

from stakeholders the Authority would, if felt necessary, mandate
further measures.

11
 CHAPTER 1

MULTIPLICITY OF TARIFF PLANS AND TRANSPARENCY

Background

1.1 The mobile telephony segment is the fastest growing market in

India today and is characterized by intense competition. The
service providers are coming out with innovative tariff plans, which
are designed to suit the needs of various market segments with a
view to acquire new customers as well as to retain the existing
ones. Further, the focus of the activities in the telecom sector is
increasing in the semi urban and rural areas. The Authority has
been receiving representations from consumers and the
consumer’s organizations indicating that the tariffs offered by the
service providers are offered in such manner that they are complex
and confusing which makes it difficult for the telecom consumers
to make an informed choice. In this chapter two issues relating to
number of tariff plans and facilitating the consumers to choose
among the tariff plans are discussed.

A. Multiplicity of tariff plans

1.2 There are a large number of tariff plans on offer both in postpaid
and prepaid segments. It is observed that a large proportion of
subscribers are being acquired in a few plans only. The
subscription is very minimal in the rest of the plans, and in many
cases negligible. Despite availability of large number of tariff plans,
it is noteworthy that lifetime tariff plans, which are simple and
easy to understand, continue to attract large number of
subscribers.

1.3 By virtue of the provisions of 21st amendment to TTO, dated 13th

July, 2002 the number of plans that can be offered by an access
12
 provider in each licensed service area is subject to a cap of 25
plans. The TTO specifies that “At any given point of time not more
than 25 plans shall be on offer by a service provider. This includes
both post paid and pre paid tariff plans.” The above cap of 25
plans on offer was reviewed in the year 2004 and 2008 after going
through the process of consultation. Consultation Papers titled
“Limiting the number of tariff plans by the Access Providers” was
issued on 8th March 2004 and another on “Issues arising out of
Plethora of Tariff Offers in Access Service Provision” was issued on
29th January, 2008. On both the occasions, divergent views were
received, both for and against regulating the number of tariff offers
in the market. The latter view was predominantly shared by the
stakeholders. The Authority after examining the views had decided
to continue with the cap of 25 tariff plans on offer.

1.4 In the intervening period the telecom access market has grown
phenomenally with the entry of new operators thereby increasing
the number of tariff plans on offer for subscription. One of the
important developments in the mobile telephony in the recent past
is the introduction of second based charging system by most
telecom service providers. With separate tariff schemes in the
second based billing, total number of tariff plans / schemes also
increased. Further, the new subscribers are being enrolled from
semi urban and rural areas which are generally low income/ARPU
subscribers. Through this consultation process, the Authority
seeks the views of stakeholders, inter-alia, on the desirability of
further limiting the number of tariff plans offered by a service
provider in a service area.

1.5 One of the main issues raised in the earlier consultation papers, on
this subject, was the existence of large number of tariff plans and
the widespread concern that too many tariff plans confuse the
13
subscribers and render informed choice very difficult. Too many
plans affect the ability of a customer to identify the ideal tariff
package to suit his/her requirements and affordability. Nearly 2
years down the line, the situation in the access segment has not
changed much. Rather, with the entry of new operators the
number of tariff plans on offer has in fact gone up. Details of
operators-wise and service area-wise tariff plans on offer for the
customers are given in Table No. 1. In addition, a compilation of
total number of tariff plans available for subscription in different
service areas is given in Table No. 2.

14
Table No. 1 : Service Provider-wise and service area-wise
number of tariff plans as on 31st March, 2010

Service Service GSM Mobile CDMA Mobile

Area Provider
Prepaid Postpaid Total Prepaid Postpaid Total

AP Bharti 5 16 21
AP BSNL 10 8 18 3 - 3
Reliance
AP Comm 1 7 8 1 12 13
AP Tata 2 4 6 9 12 21
AP Etisalat 1 - 1
AP Aircel Ltd 2 9 11
AP Uninor 2 - 2
AP Idea 4 13 17
AP Vodafone 2 23 25
29 80 109 13 24 37
Assam BSNL 7 8 15 3 6 9
Assam Tata - - 5 11 16
Assam Bharti 2 19 21
Reliance
Assam Telcom 1 9 10
Assam Aircel Ltd 4 16 20
Assam Idea 3 6 9
Assam Vodafone 2 9 11
19 67 86 8 17 25
Reliance
Bihar Telcom 1 11 12
Bihar BSNL 8 6 14 2 7 9
Reliance
Bihar Comm 1 11 12
Bihar Sistema
Bihar Tata 1 4 5 8 12 20
Bihar Bharti 7 10 17
Bihar S Tel 6 0 6
Bihar Dishnet 8 7 15
Bihar Uninor 2 - 2
Bihar Idea 5 5 10
Bihar Vodafone 1 3 4
39 46 85 11 30 41

15
Table No. 1 : (contd.)
Service Service GSM Mobile CDMA Mobile
Area Provider
Prepaid Postpaid Total Prepaid Postpaid Total
Reliance
Chennai Comm 1 12 13
Chennai Tata
Aircel Cellular
Chennai Ltd. 4 13 17
Chennai Vodafone 6 3 9
10 16 26 1 12 13
Delhi Tata - - 9 15 24
Delhi Bharti 6 19 25
Delhi MTNL 6 13 19 4 5 9
Reliance
Delhi Comm 1 9 10 1 12 13
Delhi Etisalat 1 - 1
Delhi Aircel Ltd 6 12 18
Delhi Idea 7 14 21
Delhi Vodafone 6 14 20
33 81 114 14 32 46
Gujarat Bharti 4 11 15
Gujarat BSNL 8 7 15 4 6 10
Reliance
Gujarat Comm 1 7 8 1 11 12
Gujarat Tata 1 - 1 9 15 24
Gujarat Etisalat 1 0 1
Gujarat Idea 2 6 8
Gujarat Vodafone 5 18 23
22 49 71 14 32 46
Haryana Bharti 5 15 20
Haryana BSNL 7 8 15 2 7 9
Reliance
Haryana Comm 1 10 11 1 11 12
Haryana Tata 1 4 5 9 12 21
Haryana Videocon 1 - 1
Haryana Idea 5 12 17
Haryana Vodafone - 9 9
20 58 78 12 30 42
Reliance
HP Telcom 1 10 11
HP BSNL 7 6 13 1 - 1
Reliance
HP Comm 1 9 10
HP Tata 1 - 1 7 15 22
HP Bharti 6 17 23
HP S Tel 10 - 10
HP Aircel Ltd 4 6 10
HP Idea 2 5 7
HP Vodafone 2 5 7
33 49 82 9 24 33

16
Table No. 1 : (contd.)
Service Service GSM Mobile CDMA Mobile
Area Provider
Prepaid Postpaid Total Prepaid Postpaid Total
Reliance
J&K
Comm 1 8 9
J&K Idea 1 9 10
J&K BSNL 4 9 13 3 6 9
J&K Tata - - 5 12 17
J&K Bharti 1 9 10
J&K Aircel Ltd - 9 9
J&K Vodafone 2 11 13
9 55 64 8 18 26
Karnataka Bharti 4 19 23
Karnataka BSNL 8 7 15 3 6 9
Reliance
Karnataka Comm 1 7 8 1 11 12
Karnataka Tata 2 4 6 11 13 24
Karnataka Etisalat 1 - 1
Karnataka Aircel Ltd 5 12 17
Karnataka Uninor 2 - 2
Karnataka Vodafone 3 13 16
26 62 88 15 30 45
Kerala Bharti 5 10 15
Kerala BSNL 12 6 18 - - 0
Reliance
Kerala Comm 1 8 9 1 14 15
Kerala Sistema
Kerala Tata 2 4 6 10 12 22
Kerala Etisalat 1 - 1
Kerala Aircel Ltd 4 4 8
Kerala Uninor 2 - 2
Kerala Idea 7 5 12
Kerala Vodafone 2 23 25
36 60 96 11 26 37
Reliance
Kolkata Telcom 1 10 11
Kolkata Bharti 4 19 23
Kolkata BSNL 2 6 8 - 1 1
Reliance
Kolkata Comm 1 12 13
Kolkata Tata 1 4 5 12 11 23
Kolkata Aircel Ltd 1 9 10
Kolkata Vodafone 8 16 24
17 64 81 13 24 37

17
Table No. 1 : (contd.)
Service Service GSM Mobile CDMA Mobile
Area Provider
Prepaid Postpaid Total Prepaid Postpaid Total
MH Bharti 5 14 19
MH BSNL 6 6 12 2 7 9
Reliance
MH Comm 1 7 8 1 9 10
MH Tata 2 5 7 10 14 24
MH Etisalat 1 - 1
MH Aircel Ltd 5 8 13
MH Idea 4 8 12
MH Vodafone - 13 13

24 61 85 13 30 43
MP Reliance
Telcom 1 10 11
MP BSNL 12 6 18 8 6 14
MP Reliance
Comm 1 12 13
MP Tata 1 4 5 9 11 20
MP &CG Bharti 5 16 21
MP&CG Idea 6 13 19
MP&CG Vodafone 3 14 17
28 63 91 18 29 47
Mumbai Bharti 3 15 18
Mumbai MTNL 9 16 25 4 7 11
Reliance
Mumbai Comm 1 7 8 1 11 12
Mumbai Sistema
Mumbai Tata 2 5 7 11 13 24
Mumbai Loop 7 7 14
Mumbai Aircel Ltd 5 9 14
Mumbai Idea 3 20 23
Mumbai Vodafone 9 16 25
39 95 134 16 31 47
NE Tata - - 5 11 16
NE 1 BSNL 7 9 16 1 6 7
NE 2 BSNL 4 6 10 4 4 8
NE Reliance
Telcom 1 9 10
NE Bharti 2 19 21
NE Dishnet 5 14 19
NE Idea 3 6 9
NE Vodafone 2 9 11
24 72 96 10 21 31

18
Table No. 1 : (contd.)
Service Service GSM Mobile CDMA Mobile
Area Provider
Prepaid Postpaid Total Prepaid Postpaid Total
Reliance
Orissa
Telcom 1 10 11
Orissa BSNL 5 6 11 3 6 9
Reliance
Orissa Comm 1 11 12
Orissa Tata 2 4 6 9 13 22
Orissa Bharti 5 14 19
Orissa S Tel 6 - 6
Orissa Aircel Ltd 2 9 11
Orissa Uninor 2 - 2
Orissa Idea 4 6 10
Orissa Vodafone 2 18 20
29 67 96 13 30 43
Punjab Bharti 6 15 21
Punjab BSNL 6 5 11
Punjab HFCL - - 0 8 13 21
Reliance
Punjab Comm 1 11 12 1 11 12
Punjab Tata 1 - 1 9 14 23
Punjab Etisalat 1 0 1
Punjab Vodafone 3 17 20
18 48 66 18 38 56
Rajasthan Bharti 2 17 19
Rajasthan BSNL 9 7 16 - - 0
Reliance
Rajasthan Comm 1 7 8 1 12 13
Rajasthan Sistema
Rajasthan Tata - - 10 14 24
Rajasthan Etisalat 1 - 1
Rajasthan Idea 15 6 21
Rajasthan Vodafone 1 15 16
29 52 81 11 26 37
TN Bharti 3 15 18
TN BSNL 9 6 15 - 2 2
Reliance
TN Comm 1 8 9 1 13 14
TN Sistema
TN Tata 2 4 6 9 15 24
TN Aircel Ltd 5 13 18
TN Uninor 2 - 2
TN &
Chennai Idea 5 13 18
TN &
Chennai Videocon 1 - 1
TN Vodafone 6 3 9
34 62 96 10 30 40

19
Table No. 1 : (contd.)
Service Service GSM Mobile CDMA Mobile
Area Provider
Prepaid Postpaid Total Prepaid Postpaid Total
UP (E) Dishnet 4 2 6
UP (E) Uninor 2 - 2
UP(E) Bharti 6 14 20
UP(E) BSNL 7 8 15 3 6 9
Reliance
UP(E) Comm 1 6 7 1 12 13
UP(E) Tata 1 4 5 8 15 23
UP(E) Etisalat 1 - 1
UP(E) Idea 2 16 18
UP(E) Vodafone 8 17 25
32 67 99 12 33 45
UP(W) Bharti 6 16 22
UP(W) BSNL 8 6 14
Reliance
UP(W) Comm 1 8 9 1 11 12
UP(W) Tata 1 4 5 8 12 20
UP(W) Uninor 2 - 2
UP(W) Idea 8 11 19
UP(W) Dishnet 3 2 5
UP(W) Vodafone 8 17 25
37 64 101 9 23 32
WB BSNL 8 6 14 6 12 18
Reliance
WB Comm 1 11 12
Reliance
WB Telcom 1 10 11
WB Sistema
WB Tata 1 - 1 9 12 21
WB &
KK Idea 7 10 17
WB Bharti 6 18 24
WB Dishnet 4 8 12
WB Vodafone 5 4 9
32 56 88 16 35 51
Grand
Total 619 1394 2013 275 625 900

Source: Information received from the Service Providers.

20
Table No.2.Number of plans available for subscription as on 31.03.10

Sl. Service Area Number of Plans on offer (as on 31.03.10)

No.
Total
GSM CDMA Fixed Wireless Wireline Plans
Pre Postp Pre Postp Pre Postp Post
paid aid Total paid aid Total paid aid Total paid
1 AP 29 80 109 13 24 37 7 43 50 56 252
2 Gujarat 22 49 71 14 32 46 8 32 40 53 210
3 Karnataka 26 62 88 15 30 45 7 46 53 70 256
4 Maharashtra 24 61 85 13 30 43 5 39 44 72 244
5 Tamil Nadu 34 62 96 10 30 40 10 43 53 76 265
6 Haryana 20 58 78 12 30 42 6 47 53 63 236
7 Kerala 36 60 96 11 26 37 5 41 46 69 248
8 MP & CG 28 63 91 18 29 47 8 46 54 40 232
9 Punjab 18 48 66 18 38 56 5 35 40 77 239
10 Rajasthan 29 52 81 11 26 37 8 46 54 49 221
11 UP(E) 32 67 99 12 33 45 8 45 53 68 265
12 UP(W) 37 64 101 9 23 32 5 26 31 44 208
13 West Bengal 32 56 88 16 35 51 5 26 31 32 202
14 Assam 19 67 86 8 17 25 10 25 35 15 161
15 Bihar 39 46 85 11 30 41 8 45 53 46 225
16 HP 33 49 82 9 24 33 6 43 49 36 200
17 J & K 9 55 64 8 18 26 5 36 41 23 154
18 North East 24 72 96 10 21 31 9 33 42 14 183
19 Orissa 29 67 96 13 30 43 8 46 54 48 241
20 Chennai 10 16 26 1 12 13 2 5 7 15 61
21 Delhi 33 81 114 14 32 46 5 34 39 77 276
22 Kolkata 17 64 81 13 24 37 6 27 33 52 203
23 Mumbai 39 95 134 16 31 47 5 26 31 80 292
TOTAL 2013 900 986 1175 5074

Source: Information received from the Service Providers.

1.6 The highest number of tariff plans in a service area in respect of
GSM prepaid category is 39 (Bihar and Mumbai) and the average
number is 27. Whereas, in case of CDMA prepaid category, the

21
 highest number of tariff plans is 18 (MP and Punjab) and the
average number is 12. The above Tables show that the number of
plans in the postpaid category is much higher than those in
prepaid category. In respect of GSM postpaid, the highest number
of tariff plans is 95 (Mumbai) and the average number is 61. In
respect of CDMA postpaid, the highest number of tariff plans is 38
(Punjab) and the average number is 27.

1.7 The number of tariff plans on offer as on 31st March, 2010 is much
higher compared to the position that prevailed when the Authority
visited the matter in the year 2004 and 2008.

1.8 In the initial stages of telecom operations, service providers were

offering tariff packages that were much simpler in nature. In
postpaid, a comprehensive tariff package was offered. In prepaid,
at the time of enrolment customers used to choose a tariff pack
with items of tariffs specified and they continued to avail the
service buying validity and talk time as per their requirement. The
talk time was deducted from the account of the customer at rates
set in the initial pack. However the scheme of tariff offers has since
changed drastically with the intensified competitive activity with
service providers striving to acquire new subscribers and also to
prevent churn from their network. This has led to a situation
where a large number of add-on packs have been flooding the
markets, especially in the prepaid segment, which constitute more
than 96% of the mobile subscriber base.

1.9 Further, several tariff packs are on offer and a large number of
which virtually replicate the features of a full fledged tariff package
making it difficult to distinguish the packs from normal tariff plan.
The manner in which these packs are marketed also has become a
major cause of discomfort among the consumers as the Authority

22
 is receiving representations that such tariff plans are misleading
consumers.

1.10 The number of promotional offers has been on the rise constantly
with the increased competitive activities witnessed by the market.
The marketing strategies adopted by various operators to augment
/retain their customer base, to encourage network usage, to
achieve specific revenue targets etc. are making the nature and
scope of such offers further complex. The segmentation of
customer base is resorted according to a large number of criteria
for the purpose of offering such schemes. Such criteria vary from
usage profile, loyalty, to customary/religious days to non-descript
occasions. The incentives offered under promotional offers do also
vary, e.g. rebate in rental, reduced STD/ISD charges, free SMS,
free pulses/talk time, waiver of activation fee/security deposit, free
Internet access, VAS free or at concessional rate, free gifts,
eligibility to win prizes either in the form of additional benefits in
terms of talk time etc. or prizes from other industry.

1.11 The Authority has received representations from consumers

against the multiplicity of plans in the market leading to confusion.
The tariff plans offered by each service provider are so large in
number that various customers have complained that even the
marketing executives are not able to explain these tariff plans.
Suggestions have also been received from consumer organizations
that the pre-paid tariff plans are complex and creating confusion
among the subscribers and that to overcome this, TRAI should look
into the matter and bring transparency in prepaid mobile tariff by
mandating “One Plan for All”.

1.12 There are equally counter views on the issue. It is argued by some
that the number of options in the matter of tariff is a natural

23
 outcome of the competitive activities and intervening in the matter
is against the spirit and the policy of fostering competition in the
market. The large number of plans/packs provides the consumer
with more options and the opportunity to avail a better package
suiting his requirements, if not, getting a package which is tailor-
made to his usage profile.

1.13 It is also contended that the majority of the tariff plans are offered
in the postpaid category. This set of customers are generally high
value subscribers like corporate customers etc, who are capable of
identifying their specific requirements and also tariff plans suiting
them most. For these reasons, the inability in understanding and
identifying suitable tariff plans, aired as a general concern
emanating from the “too many tariff plans” argument, it is stated,
is not of much relevance in respect of post paid subscribers. In so
far as the vast majority of prepaid subscribers (above 96%) is
concerned, it is argued that many of the plans offered by the
operators are more or less identical offers with virtually no
difference in the applicable tariffs (e.g. life time plans and per
second billing plans etc). A similar view in respect of promotional
offers is that they are in general beneficial to the consumers
conferring them with free/concessional usage etc.

Existing regulatory measures relating to tariff offers and

transparency
1.14 The Authority has issued several regulatory mandates from time to
time in order to enhance transparency in provision of service and
to protect the interests of the consumers of telecommunications
services in the country.

1.15 As discussed in the first part of this chapter, regulatory mandates

are already in place which bar a service provider from offering
more than 25 tariff plans in a service area at any given point of
24
 time. In addition, the Authority has in the past issued a number of
Regulatory guidelines with a view to protect the interest of telecom
consumers. While some of these guidelines have a direct link to
the Tariff for various services, other guidelines are intended to
enhance transparency in the service provision. Some of the
initiatives taken by TRAI to enhance transparency in tariff issues
are briefly mentioned below:-

a) Tariff related measures

1.16 Charges for itemized bill relating to Long Distance Calls: As per the
provisions of Telecommunication Tariff (32nd Amendment) Order
notified on 07.10.2004, if any postpaid customer requests for
itemized bill relating to long distance call, it should be provided
free of charge by the access providers.

1.17 Hard copy of the bill to be provided free : The 46th Amendment to
TTO issued by the Authority on 24th January 2008 mandated that
hard copy of the summary bill/printed copy of the bill to be
supplied free of cost to all postpaid customers of telecom access
service.

1.18 Protection against hike in tariff: The TTO 31st Amendment notified
on 07.07.2004 and 43rd Amendment notified on 21.03.2006
provide for protection to telecom consumers against hike in tariff.
Thus, no tariff item in a tariff plan shall be increased by the service
provider-

i) In respect of tariff plans with prescribed periods of validity of

more than six months including tariff plans with lifetime or
unlimited validity and also involving an upfront payment to be
made by the subscriber towards such validity period, during
the entire period of validity specified in the tariff plan;

25
 ii) In respect of other tariff plans, within six months from the
date of enrolment of the subscriber; and,

iii) In the case of recharge coupons with a validity of more than

six months under any tariff plan, during the entire period of
validity of such recharge coupon.

1.19 Simplification of tariff structure for National Roaming Service: The

Authority on 24th January 2007 notified a Tariff Order (44th
Amendment) specifying revised tariffs for national roaming service.
This Amendment, apart from ordering substantial reduction in the
then prevailing tariffs, also replaced the two part charging regime(a
monthly fixed charge for access to the roaming facility + an airtime
charge that depend on usage) with a composite roaming tariff.
Besides the abolition of roaming rental, the Authority did away
with the surcharge and the PSTN charges from the applicable
roaming tariff structure so as to make the charging process simple
and transparent.

b) Transparency related measures

1.20 Publication/advertisement of tariff for consumer information: The
direction issued on 2nd May, 2005 inter-alia mandated that the
websites of the service provider shall contain complete details of
the tariff plans as well as financial implications for various usage
slabs. Separate guidelines were also issued on 18th May, 2005
clarifying that the details of the tariff plans appearing in the
website as mandated by the Direction dated 2nd May, 2005 should
include domestic and international roaming charges. It also
mandated that these tariff details shall be available with the
Customer Support Service and should be up-dated as soon as
there is a change.

26
1.21 Provision of chargeable Value Added Services without explicit
consent: On 3rd May, 2005, the Authority issued a Direction that
no chargeable Value Added Services shall be provided to a
customer without his explicit consent and also mandated that any
Value Added Services which was earlier provided free of charge
shall not be made chargeable without the explicit consent. In
continuation, the Authority issued directions on 30th October
2007 and on 27th April, 2009 further supplementing this measure
by clarifying the manner of seeking explicit consent from the
customers.

1.22 Information to customers about complete details of the tariff plan:

The Authority issued a direction on 29th June 2005 directing the
access service providers to inform the customer in writing, within a
week of activation of service, the complete details of his tariff plan.
In addition, as and when there are any changes in any aspect/item
of tariff in the chosen package, the operator shall intimate, in
writing, such changes to those subscribers whose tariff packages
undergo a change.

1.23 Tariff plans with misleading titles: Another consumer interest

matter, which entailed the attention of the Authority, was the
practice of tariff plans being offered in the market with titles which
lacked transparency and were misleading or had the potential to
mislead the subscribers. In order to address this aspect, the
Authority on 16th September, 2005 issued a Direction to Telecom
Service Providers prohibiting them from offering tariff plans with
misleading titles. This direction also requires that all monthly
fixed recurring charges which are compulsory for a subscriber
under any given plan shall be shown under one head. Through a
separate direction dated 23.08.2007, it was mandated that charges
for CLIP facility cannot be made a compulsory item of tariff for the
27
 subscribers in any tariff plan and whenever CLIP charges are
sought to be levied by Service Providers, this shall be optional for
subscribers.

1.24 Disclosure of tariff information: Guidelines were issued to all

service providers on 23rd May, 2006 requiring them to provide
printed material of tariff information both in English and
Vernacular Language at the time of enrolment. Such information
shall inter-alia contain full and complete tariff information sheet,
features of the service offered, terms and conditions including the
exceptions, rights of the consumers emanating from the various
decisions of the TRAI and the common charter of service agreed
upon by the service providers.

1.25 Provision of usage details to prepaid mobile customers: The Telecom

Consumers Protection and Redressal of Grievances Regulation,
2007 notified on 4th May, 2007 inter-alia specify that on request
from any prepaid mobile customer, the information relating to
usage details in terms of all call data records including value
added services, premium rate services and roaming charges, and
their monitory value shall be provided to him at a reasonable cost.

1.26 Charging for SMS on Festival/customary days: Several telecom

operators were offering free/discounted SMS Schemes. Such
free/discounted SMS under various plans/packs were not
available to customers on certain specified days which happen to
be social, cultural/ festival days. On 23rd May 2007, the Authority
laid down guidelines to ensure transparency in the charging of
SMS on such days, which are generally termed as ‘SMS blackout’
days. These guidelines have been further modified vide Direction
dated 1st September, 2008.

28
1.27 The Telecommunication Tariff Order (48th Amendment) and
Direction dated 1st September, 2008 mandated several
transparency measures including the following:-
(i) Tariff information to be provided in vernacular
language also.
(ii) Blackout days (customary/festival days on which
free/concessional calls/SMS are not available)
restricted to a maximum of 5 days in a calendar year.
Such days to be pre-specified and no subsequent
alteration or addition is permitted
(iii) Straight tariff reductions are to be posted on to
consumers without any precondition.
(iv) The service providers shall not insist on recharge
between periods lesser than six months in lifetime
plans for remaining connected during the promised
lifetime validity period.
(v) Subscribers to get full talktime on talktime recharges
barring an administrative fee, which shall not exceed
`2/- per recharge and applicable taxes.

1.28 Despite the existence of a number of regulatory guidelines

intended to ensure transparency and protect interest of
subscribers as discussed above, there are still demands from
different sections to further simplify and streamline the tariff
offers. It is a fact that due to increase in the number of service
providers and aggressive price competition, the number of offers in
the market is constantly on the rise. While some may argue that
increase in the number of offers provide more choice to the
subscribers and address the requirement of each categories of
subscribers, others argue that too many plans and offers are sure
to confuse the subscribers. Some consumer organisations have
29
 even gone to the extent of demanding a regulatory mandate on
“One Plan for all” for prepaid segment so that the subscribers are
not confused with the multiplicity of offers.

B. Facilitating the consumers to choose among tariff plans

1.29 European Regulatory Group (ERG) Report on Transparency on

Tariff Information has concluded that tariff transparency is
mentioned as an area of concern in a significant number of
countries. In particular, the difficulties experienced by end-users
in comparing tariffs seem to be a matter of concern shared by most
of the National Regulatory Authorities (NRAs).

1.30 In several countries, regulatory authorities have begun to address

consumer information concerns. Some Member States in
European Union, having recognized the need for measures to
improve transparency of tariffs, have developed various web-based
price comparison tools. An alternative to an NRA running an
interactive price calculator website is where the NRA establishes a
system for the accreditation of such websites maintained by third
parties. Ofcom in the UK runs the Accreditation Scheme for Price
Comparison Services (PASS) scheme which enables them to
accredit websites which compare prices of different providers.

1.31 In addition to service providers, NRAs and other public bodies,

many other private/non-government organizations like consumer
organizations and service providers associations are also in the
area of consumer education and facilitating transparency of tariff
information.

1.32 ERG Report on transparency of tariff information has highlighted

the following challenges in developing and maintaing the
comparison websites:

30
 • One of the main prerequisite for developing and maintaining
comparison websites is working closely with the market players
in developing the detailed website specifications, in defining the
data formats and in devising the content update procedures.

• Another challenge faced by some of the NRAs relates to the

instances where certain service providers did not keep their
information updated on a regular basis.

• The very different formats of price lists used by operators made

the work particularly cumbersome for the NRA in some cases.
Furthermore, the structure of the price comparison website
generally requires substantial work to accommodate even very
little changes due to the links existing between several different
items.

• The choice of the algorithms that would deliver the most

accurate results is considered an important challenge. There
have been instances of operators complaining against low
ranking on account of an unfair treatment or that distorted
results were generated by limitations in the calculator.

• Choosing the most important parameters while keeping user

friendliness is seen as a real challenge when developing the
website.

• Building public visibility for the website and making users

aware of the practical relevance of this tool is generally
considered a challenging task.

• A persistent problem is how to include all price schemes that

the service providers offer.

1.33 The problems and challenges experienced by European countries

listed above could be universally applicable to any telecom market
31
 including Indian telecom sector. But what makes things extremely
different and difficult in the Indian context, is the gigantic size of
the Indian telecom market, its unique licensing/regulatory regime
and the innovative tariff plans/packages offered by the Indian
telecom operators.

1.34 In India, within the mobile segment itself, there are services based
on different technologies (GSM/CDMA) and different services (Fully
Mobile/Limited Mobile/Fixed Wiresless). Thus there would be a
large number of operators and tariff plans/schemes to be covered
under any model as compared to the handful operators and their
offers as in the case of ERG countries.

1.35 The basic components of tariff plans in India differ and are more in
comparison. The service area-wise license regime results into
intra-circle and inter-circle traffic, national roaming service, etc.

1.36 Furthermore, majority of the Indian telecom subscribers (currently

96%) are prepaid subscribers. A prepaid subscriber at the time of
enrolment subscribes to a base plan, which can be valid from a few
days to the entire license period of the service providers.
Accordingly, a prepaid subscriber has the option of choosing any
tariff vouchers or add-on packs according to his requirements and
the actual financial implications in his case are governed by such
options exercised by him without having much relevance to his
base tariff plan.

1.37 In order to facilitate the consumers in choosing among the tariff

plans by understanding the financial implications depending upon
their usage pattern, TRAI has been, from time to time, issuing
guidelines/directions regarding publication of tariff plans. In
addition, TRAI has from time to time initiated various measures in
order to improve transparency in tariff offers, the details in respect

32
 of these measures have already been indicated in first part of this
chapter.

Issues for consultation

1. What, according to you, are the challenges which Indian

telecom subscribers face while understanding and choosing
the tariff offers?

2. What according to you are the required measures to further

improve transparency in tariff offers and facilitate subscribers
to choose a suitable tariff plan?

3. Do you think mandating “One Standard Plan for All Service

Providers” particularly for the prepaid subscribers as
suggested by some consumer organizations would be relevant
in the present scenario of Indian telecom market?

4. Do you think the existence of large number of tariff plans and

offers in the market are beneficial for the subscribers?

5. In your opinion is it necessary to revise or reduce the existing

cap of 25 on the number of tariff plans on offer? If so, what
would be the appropriate number?

33
 CHAPTER 2

MISCELLANEOUS TARIFF RELATED ISSUES

2.1 In this chapter, certain tariff related issues which have a bearing
on the transparency as well as on the protection against tariff hike
available for telecom subscribers in the existing tariff framework,
have been discussed.

A. Premium rate calls and SMSs

2.2 Premium rate services generally offer some form of content that is
charged to subscriber’s phone bill or his prepaid phone account.
Typical premium rate services include helpline services,
competition, voting, information, etc. Calls made or SMS sent to
the premium rate numbers are charged higher than the normal
rates. The revenue generated as a result of premium rate services
(calls/SMS) is shared between the network provider and the
content provider.

2.3 The market for services provided through high tariff (premium)
numbers has been growing rapidly. In the present multi-operator
and multi-service scenario, such premium rate services have
increased considerably. It has been observed that a large number
of operators and also some independent agencies have been
providing value added services, like quiz, ringtones, tele-voting, etc.
through SMS.

2.4 In case of premium rate services, the charges are more than
normal published tariffs. The service provider is aware of the pulse
rate for these services as the service is either provided by the
operator concerned or through an agreement with the provider of
such premium services. The cost for such premium rate services

34
 is generally known to the customer only after the service has been
utilized.

2.5 The complexity in the product chain of premium rate services

arises on account of involvement of different parties and their
specific role as under:

• The originating operator i.e. the access provider, who contracts

the subscriber for access and billing.

• The terminating operator.

• The called party i.e. the premium rate service provider.

• Possibly other intermediate parties.

2.6 According to recommendation (07)02 of Electronic

Communications Committee (ECC)4 on consumer protection
against abuse of high tariff services, there have been increasing
instances of misuse of high tariff services. The underlying cause of
the misuse is that the product chain through which high tariff
services are offered, has some specific vulnerabilities to
disadvantage of the consumer. The position of the consumer with
respect to provider of these services is weak as the consumer only
has a direct contractual relationship with his access provider. It is
often difficult for consumer to approach the premium rate service
provider in the event of disputes. Further, revenues to the
premium rate service providers are often guaranteed by the access
provider and paid out to them before payments are received from
the calling subscriber. Some examples in this regard are:

• Cases in which the user is not aware of the tariff applied.

4
ECC is a Committee of European Conference of Postal and Telecommunications Administrations

35
 • Cases where consumers are attracted to dial numbers where
the services are not actually available or are of low quality.

• Artificial call duration lengthening by increasing waiting times.

• The use of high tariff numbers for customer care where the
customer has no alternative to reach the service.

• The use of high tariff numbers for services such as TV games

with unclear call prices and procedures.

2.7 Considering the above facts, the ECC inter-alia recommended as

under:

• The high tariff services should only be allowed in appropriate

numbering ranges that are exclusively or non-exclusively
allocated for these services to facilitate tariff transparency and
call barring.

• The consumers should be well informed by the premium rate

service provider about the tariffs and content of high tariff
services by clear and unambiguous announcements of tariffs at
the beginning of the calls in order to allow the user to cancel the
call before the charging starts.

• Where technically possible, the tariff rates, the duration of the

call or the total cost of a call or the total amount of the
telephone bill should be subject to limitations according to
consumer preferences.

• Consumers are enabled to block number ranges in order to

prevent usage of high tariff services in appropriate cases.

• There should be a rapid response mechanism to suspend

payment or to block access to numbers while problems and
abuses are investigated.

36
 • Appropriate means should be established to provide refunds
and compensation for consumers who suffer from abuses and
unauthorized calls.

2.8 In UK, PhonepayPlus regulates phone-paid services with focus on

pre-empting and preventing problems for consumer protection.
PhonepayPlus publishes and enforces a Code of Practice which
contains the rules governing the content and promotion of
premium rate services. Under the communications Act 2003,
Ofcom has responsibility for regulating the premium rate services
and PhonepayPlus acts as an agency to carry out day to day
regulation of the premium rate services (PRS) market on Ofcom’s
behalf. In October 2009 Ofcom published its statement on the
scope of PRS regulation which included recommendations grouped
around three themes:

• Making sure consumers are able to make informed decisions.

• The need to provide consumers with effective redress when

things go wrong; and

• Helping providers act more responsibly and so prevent

consumer harm.

2.9 In Singapore, under the Telecommunications Act, the Info-

communications Development Authority (IDA) of Singapore is
implementing a code of practice for provision of PRS. This code
aims to protect interest of public in general and the interests of
consumers of PRS in particular by specifying the duties to be
observed by PRS providers in their promotion and provision of
PRS. It also specifies the duties to be observed by the billing
network operators. Every PRS provider and billing network
operator is required to comply with this code.

37
2.10 In Ireland, from July, 2010 the responsibility for regulation of PRS
has been transferred to the Commission for Communications
Regulation (ComReg), from the Regulator of the Premium Rate
Telecommunications Services Ltd. (Reg Tel) pursuant to the
enactment of the Communications Regulations (Premium Rate
Services and Electronics Communications Infrastructure) Act
2010. The licensing of PRS is governed by the Communications
Regulation (Licensing of PRS) Regulations 2010. The regulations
detail amongst other things the terms and conditions under which
a license is granted. A PRS license is required for promotion and
operation of specified PRS.

2.11 In India, TRAI through Direction dated 3rd May, 2005 directed all
the Cellular Mobile Service Providers and Unified Access Service
Providers to publish in all communications / advertisements
relating to PRS the pulse rate / tariff for the service. Further,
Quality of Service (Code of Practice for Metering and Billing
Accuracy) Regulation 2006 inter-alia provides that where a value
added service (e.g. download of content, such as film clip or
ringtone) or entry to an interactive service (such as a game) can be
selected through a choice of the service user (e.g. by dialing a
specific number) then the charge for the service must be provided
to him before he commits to use the service.

2.12 Recently, some consumer organisations have represented to TRAI

against misuse/lack of transparency in provision of premium SMS
and premium calls. Attention of the Authority has been drawn to
the problems caused by mushrooming growth of “Pull SMS” and
“Pull Calls” in the recent past. It has been represented that the
premium SMS is charged in the range of `3-5. A mention has also
been made about FM radios, TV channels, newspapers and other
organisations making attractive announcements to pull SMS/calls.
38
 In addition, it has been represented that a consumer is required to
send SMS (charged at premium rate) in order to buy a DTH service
or to lodge a service complaint in respect of DTH. Further, the
instances of artificial call duration lengthening by increasing
waiting times, relating to pull calls have also been brought to the
notice of the Authority.

B. Flexibility in implementing ISD tariff for lifetime subscribers –

in the light of the provisions of 43rd amendment to TTO

2.13 The Telecommunication Tariff (43rd Amendment) Order contains

regulatory guidelines on tariff plans with longer validity including
lifetime validity. As per these guidelines no tariff item in such plans
can be hiked during the entire validity period. By virtue of these
guidelines, the service providers are debarred from effecting
changes in any tariff component to the disadvantage of an existing
lifetime subscriber. A copy of the TTO 43rd Amendment is placed at
Annexure.

2.14 In arriving at the decision to have a separate tariff regulatory

regime for lifetime validity plans vis-à-vis other tariff plans, the
Authority was influenced by the following facts and features of the
lifetime validity plans that were on offer:

(a) An upfront payment of substantial amount, which was in the

region of `1000/-, was payable by the subscribers for getting
enrolled into the plan.

(b) No fair exit options were provided for the customers thereby
restricting their ability of free choice of the plans on offer.

(c)The call charges applicable in lifetime plans were higher

compared with the normal prepaid plans.

39
 (d) Initially various optional packs/top-ups were not offered to the
lifetime customers by many operators.

2.15 In the recent past the Authority has received several

representations from individual service providers as well as their
Associations (COAI - Cellular Operators Association of India and
AUSPI - Association of Unified Telecom Service Providers of India)
seeking review of the provisions of 43rd Amendment to TTO, so as
to implement revision of ISD rates for all subscribers, including the
existing lifetime subscribers.

2.16 In their submissions to the Authority, it has been explained that

traffic to certain special numbers (chat site, gaming etc.) to some
countries has increased several times. Termination charges to
such special numbers are much higher (`17/- to `45/- per minute)
than the normal prevailing termination charges. This meant that
the pay out to the ILD operators on account of traffic to such
special numbers exceeded far beyond the tariffs realized from the
subscribers in India which is generally in the range of `6.40 per
minute to `9.20 per minute. It was also contended that the tariff
protection to the lifetime subscribers enforced through 43rd
amendment to TTO does not take care of unforeseen circumstances
or factors outside the control of the regulators and therefore, no
specific ISD rate can be committed to the subscribers for lifetime.

2.17 Summary of the submissions of the Operators/Associations

(i) Termination charges to several countries have been increased

in the recent past.

(ii) There has been a 25% increase in foreign exchange rate

resulting in higher payout in rupee terms, affecting the
revenues from ILD business.

40
(iii) In some of the countries the payout is more than what the
service providers get from the subscriber.

(iv) Recently higher termination charges are being levied by some

service providers (near monopolies in some gulf countries
which control the international gateways).

(v) Just like in the case of international roaming tariff, the factors
relevant for deciding ISD tariffs are also outside the control of
Regulatory Authorities in India.

(vi) The price freeze on all tariff items for lifetime customers
without providing a corresponding guarantee that there shall
be no increase in the input costs is unfair.

(vii) A large percentage of subscriber base (65-70%) is in the

lifetime prepaid category and the provisions of 43rd
amendment to TTO prohibit them from increasing tariff for
this category of subscribers creating difficulties in recovering
the cost of ILD business.

(viii) The termination charges for incoming international calls are

specified in the IUC Regulation and the Indian service
providers do not possess the equal opportunity to negotiate bi-
lateral agreements on a reciprocal basis with their overseas
counter parts.

(ix) The limitations on increasing tariff were introduced by the

Authority to provide some insulation to the customers from
arbitrary increases in tariff. However, in the instant case of
ISD tariffs, the revision in tariffs are necessitated by
commercial and financial reasons affecting sustainable
business

41
2.18 Recently most service providers have realigned the ISD rates for
subscribers of all plans except that of the protected categories. The
issue that is required to be addressed is whether the service
providers can be permitted to apply the realigned ISD tariff
structure to the existing lifetime subscribers as well. The lifetime
validity plans have been in the market for about five years after its
first launch in December, 2005. The features of the lifetime plans
have under gone substantial changes with the passage of time due
to intense competitive activity in the mobile market. At present,
the upfront payment applicable in lifetime schemes has come down
to a negligible level of `25/-, with many operators providing SIMs
with lifetime validity free of charge. The call charges applicable in
the lifetime schemes are also at par with standard applicable rates.
The lifetime customers get an equal consideration in matter of
subscription to various add-on/top-up vouchers. These
developments seem imply that the factors which guided the
Authority while framing the 43rd Amendment to TTO, have been
considerably taken care of by the market forces.

2.19 The basis for the demand for review of 43rd Amendment is the need
for flexibility to Operators in designing and revising ILD rates as
per the market conditions. What the TTO 43rd Amendment seeks
to protect are the features of the lifetime scheme including tariff as
declared/promised at the time of enrolment of a subscriber. The
tariff order does not specify the components of the promised
lifetime package. As a practice however, all the operators were till
recently specifying specific ISD rates as a feature of the lifetime
plans. Of late, some service providers have already implemented
new lifetime plans wherein the ISD tariffs offered at the time of
enrolment of subscriber under the such tariff plans are stated to
be subject to changes in future under intimation to subscribers.
42
 However, even after introduction of new life time validity plans by
keeping ISD calls rate outside the scope of protected tariff, the
service providers are not able to realign the ISD tariffs in respect of
the subscribers already enrolled under such plans who constitute
a major portion of existing telecom subscribers.

2.20 The main argument contained in the submissions made by service

providers/their associations is that the factors governing the cost
of ISD tariffs, like that of international roaming tariffs are beyond
their control. They have also mentioned about increase in
termination charges in respect of ISD calls to several destinations
resulting in higher pay out and negative revenues on account of
freeze in the ISD tariffs offered under lifetime plans.

2.21 The service providers had also raised concerns against permanent
freezing of the tariffs offered to lifetime subscribers during the
process of consultation leading to notification of 43rd amendment
to TTO. According to them, the then existing protection for a
period of six months as contained in 31st Amendment to TTO was
sufficient.

2.22 The Explanatory Memorandum to 43rd amendment to TTO reads as

follows:

“ …. Further, it is important to realize that the cost of providing

telecommunication services is on the decline and thus the apprehensions
raised in this regard of a possible hike in cost of providing services in
future are untenable. The Authority is also of the view that in event of the
apprehensions pointed out by the industry association becoming true, the
provisions of this Amendment can be reviewed.”

C. Cross restrictions on recharge packs

2.23 One issue pertaining to recharges which came to the notice of the
Authority is about the cross restrictions imposed by service
43
 providers on recharges which are not properly communicated to
the subscribers and lack of information about the features /
benefits available with the recharge vouchers. Few examples in this
regard are given below:-

a) Subscriber in a particular plan cannot have the benefit of

reduced tariff offered through a special pack.

b) Subscriber can have the benefit of only one pack at a time.

c) Recharge vouchers applicable to only subscribers enrolled in

specific plans.

d) Subscriber having lifetime validity recharges with a voucher

which inter alia provides validity.

2.24 In all such cases mentioned above due to lack of proper

information if the subscriber recharges with a wrong voucher, he
does not get the intended benefit. This has led to customer
complaints and consequent refunds. To avoid the instances of
subscribers paying charges for un-intended recharges, there is a
need to ensure that the restrictions / features / benefits of the
recharge vouchers are transparently conveyed to the subscribers.
The service provider will also need to develop appropriate system
so as to reject a recharge when an in-eligible subscriber recharges
with a particular recharge voucher.

Issues for consultation

1. Should there any limit be prescribed on the rates for premium

rate SMS and calls? If so, what should be the norms for
prescribing such limit?

2. If not, what further measures do you suggest to improve

transparency in provision of the premium rate services to

44
 prevent the instances of subscribers availing such services
without understanding financial implications thereof?

3. Do you think there is sufficient justification to allow the

service providers to realign the ISD tariff in respect of existing
lifetime subscribers in view of the grounds mentioned in their
representations?

4. What measures do you think are necessary to improve

transparency and to prevent instances of un-intended
recharges by subscribers in situations of cross-restrictions of
recharges?

45
 CHAPTER 3

MISLEADING TARIFF ADVERTISEMENTS

A. Introduction

3.1 Advertisement acts as a communicating bridge between the

producers/service providers and consumers. With
industrialization and expansion of market access, importance of
advertising is steadily increasing. However, sometimes, it goes
beyond the traditional role of ‘fair and truthful’
information/disclosure. Deceptive advertising and marketing
practices have been around since the beginning of time and are
still prevalent today. Sometimes it is done unknowingly by an
advertiser, however, it can also be an intent to mislead the
consumer.

3.2 Deceptive advertising is the use of false or misleading statements

in advertising. As advertising has the potential to persuade people
into commercial transactions that they might otherwise avoid,
many governments around the world use regulations to control
false, deceptive or misleading advertising. False advertising, in the
most blatant of contexts, is illegal in most countries.

3.3 In most of the countries, authorities have found it necessary to

impose some form of regulation over advertising. It is believed that
the principle of caveat emptor is no longer appropriate in today’s
market place.

3.4 In European Union, European legislation regulates comparative

advertising and protects consumers and those involved in
commercial, industrial, craft or professional activity, and the
public interest in general, against misleading advertising and its
46
 unfair consequences. In formulation of the directive for regulation
of misleading advertising, the Council of EU have accepted that
advertising, whether or not it induces a contract, effects the
economic welfare of consumers. Further, the EU Council has
found it desirable in certain cases, to prohibit misleading
advertising even before it is published.

3.5 In Canada, the misleading advertising and labeling provisions

enforced by the Competition Bureau prohibit making any deceptive
representations for the purpose of promoting a product or a
business interest, and encourage the provision of sufficient
information to allow consumers to make informed choices. The
false or misleading representations and deceptive marketing
practices provisions of the Competition Act contain a general
prohibition against all materially false or misleading
representations.

3.6 In United States, Advertising is regulated by the authority of the

Federal Trade Commission, a United States administrative agency,
to prohibit "unfair and deceptive acts or practices in commerce.

3.7 In India, Advertising Standards Council of India (ASCI) is a

voluntary self regulatory organisation of the advertising industry.
The ASCI has Code for Self Regulation in the advertising, which
covers the following principles:

i) To ensure the truthfulness and honesty of representations and

claims made by advertisements and to safeguard against
misleading advertisements.

ii) To ensure that advertisements are not offensive to generally

accepted standards of public decency.

iii) To safeguard against the indiscriminate use of advertising for

the promotion of products which are regarded as hazardous to
47
 society or to individuals to a degree or of a type which is
unacceptable to society at large?

iv) To ensure that advertisements observe fairness in competition

so that the consumer’s need to be informed on choices in the
market-place and the canons of generally accepted competitive
behaviour in business are both served.

3.8 There have been instances in many countries about penalising the
guilty of misleading/deceptive advertising, which also includes
some of the telecom service providers.

B. Misleading advertisement and regulators – Indian context

3.9 The regulatory agencies established under different statutes have

formulated rules, regulations and codes to ensure that advertisers
do not mislead consumers through their publicity material
including advertisements, as discussed below.

(a) Insurance Regulatory and Development Authority (IRDA)

3.10 Insurance Regulatory and Development Authority (Insurance

Advertisements and Disclosure) Regulations 2000 lay down strict
guidelines not only on the content of the advertisements issued by
insurers and their intermediaries, but also on their compliance.
Further, IRDA has issued guidelines on Advertisements, Promotion
& Publicity of Insurance Companies and Insurance Intermediaries
on 14th May, 2007. These guidelines are intended to protect the
interests of insuring public, enhance their level of confidence on
the nature of sales material used and ultimately encourage fair
business practices. They are to be considered as the minimum
standards to be adhered to, in addition to compliance with IRDA
(Insurance Advertisements and Disclosure) Regulations 2000 and
the code of conduct prescribed by ASCI and any other regulations
as applicable.
48
 (b) Securities and Exchange Board of India (SEBI)

3.11 Chapter IX of the (Disclosure and Investor : Protection) Guidelines,

2000 of SEBI provides specific guidelines on advertisements. In
addition, SEBI has also drawn up exclusive advertising code for
mutual funds under the SEBI (Mutual Funds) Regulations 1996
and as a supplement to the code, it has also published detailed
guidelines for advertisement on mutual funds.

(c) Reserve Bank of India (RBI)

3.12 As a regulator and supervisor of the financial system, RBI also

exercises powers to curb false and misleading advertisements by
various financial institutions. The RBI has notified detailed
directions on advertisements issued by non-banking financial
companies, miscellaneous non-banking companies and residuary
non-banking companies.

(d) Telecom Regulatory Authority of India

3.13 In exercise of powers conferred upon it under Sub-section 2 of

Section 11 of the TRAI Act, 1997 read with clauses 7 and 9 of the
Telecommunications Tariff Order, 1999, TRAI issued the
Telecommunications Tariff (Publication and Reporting)
Requirements on 8th April, 1999. In order to facilitate the
consumers in choosing among the tariff plans by understanding
the financial implications depending upon their usage pattern,
TRAI has been, from time to time, issuing guidelines/directions
regarding publication of tariff plans. Through its guidelines dated
1st August, 2003, TRAI prescribed formats for publication of
advertisement of tariffs. These guidelines were
reiterated/elaborated through Directions dated 23rd September,
2003 and 24th May, 2004.

49
C A Review of the existing Regulatory Measures by TRAI on
Publication/Advertisement of Tariff

3.14 TRAI’s Direction dated 2nd May 2005 regarding

publication/advertisement of tariff for consumer information inter-
alia prescribed certain formats containing minimum essential
information for advertisement of tariff. The Direction emphasized
the need for transparency in communicating tariff offers to the
subscribers so that the tariff-advertisements do not mislead them.

3.15 It is pertinent to mention that the tariff structure at that point of

time, when the above mentioned direction was issued, was more
complex than that is today. In the then prevailing tariff structure,
long distance calls within service area and outside service area
were charged under various distance slabs. Differentiation between
peak & off-peak, on-net & off-net calling etc were generally part of
the tariff plans. Differential tariffs between calls terminating in
GSM and CDMA were not prohibited and were in vogue. Security
deposit and other entry fees were significant.

3.16 Further, the structure of tariff offers available in the market in the
year 2005 has since undergone considerable changes due to
increased competition and changes in the tariff regulatory
framework. The changes have led to simplification of the structure
of tariff plans offered by the operators and also made the need for
and the utility of the formats mandated in the year 2005 more or
less redundant.

3.17 In view of the above, it is felt that there is a need to review the
applicability of the above mentioned direction, particularly the
provisions specifying formats for publication of tariff. It is
important that the information on tariff given to the subscribers

50
 through publications and advertisements shall be such as to
facilitate informed choice and not misleading in any manner.

D. Need to prohibit ‘Misleading Advertisements’ to ensure

transparency in tariff offerings

3.18 The Authority has in the past issued several Regulatory guidelines
to bring in transparency in tariff offerings. Apart from the
Direction dated 2nd May, 2005 on Publication/ Advertisement of
tariffs for Consumers, a separate Direction was issued on 16th
September, 2005 prohibiting tariff plans with ‘Misleading Titles’.

3.19 By definition, an advertisement can be considered as misleading, if

the truthfulness and honesty of its claims are doubtful, that gives
wrong impression or idea, lead someone to wrong direction, is
tending to confuse and designated to deceive or mislead the
customer either deliberately or inadvertently.

3.20 The major modes of advertising tariff by a service provider are print
media (newspapers, magazines, periodicals etc.); point of sale
(PoS), web-sites; outdoor hoardings (including walls, buses, trams,
metros etc.) and the electronic media. Irrespective of the medium
chosen for advertisements, it is essential that the advertisements
should not be misleading in any sense, whether directly or by
means of implication or omission. There is a need to restrict
presentation of the facts in a manner that could be prone to
ambiguity and likely to be interpreted by customers of different
backgrounds differently.

3.21 The focus of the advertisement could change with the place/spot
where it is displayed. For example, the advertisement on the
website may be guided by the mandatory regulatory provisions and
thus would be comprehensive, but at the PoS, in addition to the
above consideration, informing the probable customers about
51
 special features of a scheme could be the main focus of the
contents of advertising material. Space constraint limits the size of
advertisement to make it more precise in the case of print media.
Sloganeering and resorting to the brand-image is a common
practice in print media advertisements. The brand-ambassador’s
face finds a prominent place here than the mandatory tariff
information. This aspect is even more significant in outdoor
hoardings where space constraint is even bigger and visual impact
becomes prime focus of advertising. The danger of omission
increases immensely on outdoor hoardings as normally the ‘catch-
word’ coined to attract customers does not speak the full truth,
and the space constraint limits display of more facts.

3.22 The Authority has received representations regarding lack of some

vital information on tariff in an advertisement on a hoarding of one
of the major service providers. The vital information alleged to be
missing on the said hoarding was as under:

• The rate advertised does not indicate the fact that it is available
only for on-net calls.

• The advertisement does not indicate the requirement of having

a special tariff voucher to avail the discounted rates.

• No website link or contact no. has been given in the

advertisement.

3.23 The above example points out that apart from omission of vital
information, facts can also be displayed in different ways to
mislead. An advertisement may create confusion in the mind of a
customer if he is not familiar with the practice adopted in a
presentation of facts. When a new concept is launched, different
sellers using the concept may advertise it in different manners. For
example with advent of per-second billing system, the customers
52
 familiar with the practice of uniform pulse-rates may get confused
by two operators advertising as per two different
granularity(1paisa/2 seconds and ½ paisa/second). Therefore,
uniformity in presentation of such facts needs to be ensured.

3.24 The Authority feels that there is a need to prevent misleading

advertisements and to ensure adequate disclosure/display of
essential elements of tariffs in advertisements. For the purpose of
better understanding of the intent of the proposed regulatory
mandate, a detailed list of illustrative examples of misleading tariff
advertisement is given below:

(i) Advertising a particular call rate as ‘Per Second’ or ‘Per

Minute’ would be misleading in cases where the pulse rate is
higher than ‘One Second’ or ‘One Minute’. Thus, declaration
of call rate as ‘½ paisa or ¼ paisa per second’ would mislead if
the actual rate is 1 paisa per two seconds or 1 paisa per four
seconds. Similarly, to present a call rate as ‘40 paise per
minute’, would be misleading if the actual call rate is `1.20
per 3 minutes.

(ii) Advertising a reduced call rate as invitational call rate would

be misleading if it involves a ‘start-up charge’ or call set-up
charge’ in addition to the declared rate or if the first minute
usage attracts a higher charge than the stated rate. For
example, presenting the call rate ‘@ 29 paise per minute’ in
situations where there is a call set-up charge of 39 paise
would be misleading because the first minute usage would
attract 68 paise and not the declared 29 paise per minute.

(iii) Advertisement of a specific reduced call rate/SMS charge

would be misleading if such reduced rate is applicable only
after the first minute usage or first SMS everyday. For

53
 example, ‘1 paisa per SMS’, would be misleading if 1 paisa
per SMS becomes applicable only after the first SMS which is
charged at the base rate/higher rate.

(iv) Advertising or presenting a tariff plan under a title which

suggests absence of rental would be misleading if the tariff
plan has recurring mandatory fixed charge in one form or
other. Tariff plans with titles ‘Zero Rental’, ‘Rental Free’
etc. come under this category.

(v) Advertising a specific call rate or SMS charge would be

misleading if such rates are applicable to only on-network
usage and such vital restrictions are not conveyed explicitly
in the advertisement. For example, ‘Call @ 50 Paise Per
Minute’ without mentioning that the rate is applicable only
for calls within the network of the service provider, would be
misleading.

(vi) Advertising the titles of the tariff plans or other

packages/schemes, which suggest unlimited usage will be
treated as misleading in situations where the features of
such plan/scheme/package put restrictions on the quantum
of usage in any manner including by way of Fair Usage
Policy etc. on the usage. Thus, a plan advertised, as
‘unlimited free calls’ would mislead if there is daily limit or
ceiling on the total minute of usage either by way of fair
usage policy or otherwise. For a common man the term
'unlimited' would only mean without any limit whatsoever.

(vii) Advertising a discounted call rate/SMS charge would be

misleading if such discounted rate is applicable only during
specific duration of time/ period. For example, ‘Call @ 10

54
 Paise’ in situations where this rate is valid for off-peak
/night, would be misleading.

(viii) Advertising a tariff plan as ‘Per Second Plan’, if the per

second based tariff is valid for some particular duration only.
For example, plans with per second billing for initial one year
after which the subscribers would be moved to the base per
minute bill plan.

(ix) Advertising a discounted rate without mentioning the fixed

fee component to be paid by the subscriber for availing such
discounted rate would be misleading in situations where
such conditions are not explicitly stated in the
advertisement. For example, ‘call @ 30 paise per minute
for six months’, would be a misleading advertisement if a
recurring fixed charge is compulsory to avail the benefit.

(x) Advertising a scheme/pack as ‘Free’ would be misleading if

there is a cap on the daily usage and such cap is not
conveyed in the advertisement. For example, ‘5000 Free
SMS’ but with a daily limit of 500 SMS.

(xi) Advertising a broadband plan for higher download speed (e.g.

3 to 4 times faster than the original plan) by paying fixed
monthly charges. If it fails to disclose that once the
customer exceeds a particular data download limit, the
broadband speed would be restricted as per the original
plan.

(xii) Advertising a specific discounted STD/ISD as general rate

would be misleading if such STD/ISD rates are applicable
only in respect of calls to specific regions/countries. For
example, ‘STD calls @ 40 paisa per minute’, if the rates are
applicable only for southern states. Similarly, a ‘gulf-pack
55
 offering ISD calls @ `2/-‘, but the rates are only valid for
UAE would be misleading if the factual position is not clearly
conveyed in the Advertisement.

(xiii) Advertisement that omits certain vital terms and conditions

attached to a set of tariff such as the ‘validity period’ would
be misleading in situations where such declared tariff benefit
is available only for a specific period. For example, ‘for
`20/- make all local calls @ 10 paise per minute and STD
@ 20 paise per minute’, in situations where the validity of
the said concessional offer is limited to a period of 5 days
only and this fact is not clearly reflected in the
advertisement.

Issues for consultation

1. Considering the nature and structure of the prevailing tariff

offerings in the market and advertisements thereof, do you
think there is a need for TRAI to issue fresh regulatory
guidelines to prevent misleading tariff advertisements?

2. Do you agree that the instances of ‘misleading’ tariff

advertisements listed in this paper adequately capture the
actual scenario in the market? If not, provide specific details.

56
 CHAPTER 4

ISSUES FOR CONSULTATION

1. What, according to you, are the challenges which Indian

telecom subscribers face while understanding and choosing
the tariff offers?

2. What according to you are the required measures to further

improve transparency in tariff offers and facilitate subscribers
to choose a suitable tariff plan?

3. Do you think mandating “One Standard Plan for All Service

Providers” particularly for the prepaid subscribers as
suggested by some consumer organizations would be relevant
in the present scenario of Indian telecom market?

4. Do you think the existence of large number of tariff plans and

offers in the market are beneficial for the subscribers?

5. In your opinion is it necessary to revise or reduce the existing

cap of 25 on the number of tariff plans on offer? If so, what
would be the appropriate number?

6. Should there any limit be prescribed on the rates for premium

rate SMS and calls? If so, what should be the norms for
prescribing such limit?

7. If not, what further measures do you suggest to improve

transparency in provision of the premium rate services to
prevent the instances of subscribers availing such services
without understanding financial implications thereof?

57
8. Do you think there is sufficient justification to allow the
service providers to realign the ISD tariff in respect of existing
lifetime subscribers in view of the grounds mentioned in their
representations?

9. What measures do you think are necessary to improve

transparency and to prevent instances of un-intended
recharges by subscribers in situations of cross-restrictions of
recharges?

10. Considering the nature and structure of the prevailing tariff

offerings in the market and advertisements thereof, do you
think there is a need for TRAI to issue fresh regulatory
guidelines to prevent misleading tariff advertisements?

11. Do you agree that the instances of ‘misleading’ tariff

advertisements listed in this paper adequately capture the
actual scenario in the market? If not, provide specific details.

Stakeholders are free to raise any other issue that they feel is
relevant to the consultation and give their comments thereon.

(Stakeholders are requested to send their comments

preferably in electronic form by 15th November, 2010 and
counter comments, if any, by 25th November, 2010.)

58
 ANNEXURE

Telecom Regulatory Authority of India

Notification

New Delhi, the 21st day of March, 2006

No. 301-2/2006- Eco. — In exercise of the powers conferred upon it

under sub-section (2) of section 11 read with section 11(1)(b)(i) of the
Telecom Regulatory Authority of India Act, 1997, the Telecom Regulatory
Authority of India (TRAI) hereby further amends the Telecommunication
Tariff Order, 1999 as under, namely: -

1. Short title, extent and commencement: -

(i) This Order shall be called “The Telecommunication Tariff

(Forty third Amendment) Order, 2006” (3 of 2006).

(ii) This Order shall come into force from the date of its
publication in the Official Gazette.

2 Under Section III, in clause 6 (Flexibility and Packages) of the

Telecommunication Tariff Order, 1999, hereinafter referred to as TTO,
the contents of sub-clauses (v) to (vii) thereof shall be substituted by the
following: -

“(v) A tariff plan once offered by an Access Provider shall be

available to a subscriber for a minimum period of SIX
MONTHS from the date of enrolment of the subscriber to
that tariff plan. However, any tariff plan presented, marketed
or offered as valid for any prescribed period exceeding six
months or as having lifetime or unlimited validity in lieu of
an upfront payment shall continue to be available to the
subscriber for the duration of the period as prescribed in the
plan and in the case of lifetime or unlimited validity plans, as
long as the Service Provider is permitted to provide such
telecom service under the current license or renewed license.
In the case of plans with lifetime validity or unlimited
validity, the service provider shall also inform the
subscribers of the month and year of expiry of his current
license.

(vi) The subscriber in the said tariff plan shall be free to choose
any other tariff plan, even during the said SIX MONTHS
59
 period or the specified validity period. All requests for change
of plan shall be accepted and implemented immediately or
from the start of next billing cycle.

(vii) For any tariff plan, the Access Provider shall be free to
reduce tariffs at any time. However, no tariff item in a tariff
plan shall be increased by the access provider -

(a) In respect of tariff plans with prescribed periods of

validity of more than six months including tariff plans
with lifetime or unlimited validity and also involving an
upfront payment to be made by the subscriber towards
such validity period, during the entire period of validity
specified in the tariff plan;

(b) In respect of other tariff plans, within six months from

the date of enrolment of the subscriber; and,

(c) In the case of recharge coupons with a validity of more

than six months under any tariff plan, during the
entire period of validity of such recharge coupon.

3. General: -

In case of any doubt with regard to the interpretation of any

provisions of this Order, the decision of the Authority shall be final.

This Order contains at Annexure A an Explanatory Memorandum

which explains the reasons for this amendment to the TTO.

By Order

(M. Kannan)
Advisor (Eco)

60
 Annexure-A

EXPLANATORY MEMORANDUM

In the month of December 2005/January 2006 most of the mobile

operators launched tariff schemes with lifetime validity. These schemes
entitled the subscribers to receive incoming calls for an indefinite period.

2. The Authority had undertaken a consultation process, which has

since been concluded. The Consumer Organizations have emphasized the
need for clarity on the term ‘lifetime validity’ since there is lot of
confusion in the minds of subscribers. The Service Providers are almost
unanimous in their view that ‘lifetime’ cannot exceed beyond the license
period. However, few operators have suggested that the services under
lifetime validity schemes can be extended beyond the current term
provided the licenses are renewed.

3. The Authority has noted that no service provider has explicitly

conveyed to the subscribers the specific year by which their current
license expires. Many of the operators have also not given any indication
to the effect that the lifetime schemes would be limited to their current
license period. The impression in the minds of the common subscriber is
that the scheme would have indefinite/unlimited validity without any
restriction in terms of time. In order to maintain transparency for the
subscribers it is necessary for the Service Providers to indicate the
month and year of expiry of current license in all their promotional
literature/advertisements.

4. The concept of lifetime validity may mean that there is no

restriction in terms of time during which the talk time could be utilized
and also that the subscriber would continue to get incoming calls for an
indefinite period i.e. lifetime. Since these schemes are declared and
marketed as having lifetime validity, and an upfront payment is taken
from the subscriber on this ground, it is mandatory for the service
providers to continue to extend the validity as long as they have the
permission to provide telecom service under the current license or
renewed license. This amendment to the TTO seeks to bring clarity to the
obligation of the service providers to continue to provide such validity to
subscribers of lifetime tariff schemes. In this context, the Authority
recalled its Direction dated 16.9.2005 wherein it mandated all telecom
service providers that no tariff plan shall be offered, presented, marketed
and advertised in a manner that is likely to mislead the subscribers. The
Authority continues to hold the view that titles of tariff plans which are of
misleading nature or having the potential to mislead the subscribers will
61
be considered as lacking in transparency. Further, the Authority also
mandates that any tariff plan with a specified validity period shall
continue to be available to the subscriber during the entire promised
validity period.

5. As per the Telecommunication Tariff (31st Amendment) Order,

2004 notified on 7th July, 2004, no tariff item in a plan shall be
increased at least for a period of six months from the date of enrolment
of the subscriber to that plan. This amendment order also reiterates the
right of a subscriber to choose any tariff plan at any time. These
provisions are applicable for normal tariff plans offered by an operator.
Because of the fact that operators have subsequently introduced tariff
plans with specified longer period of validity including life time validity /
unlimited validity, etc., it has become necessary to protect the interest of
consumers against any hike in the tariff items during the period of
validity of such plans particularly considering that such plans involve an
upfront payment by the subscribers in lieu of longer period of validity.
Since these schemes involve an upfront payment, the right of the
subscriber to move to any other plan of his choice gets restricted to the
extent that he has to forfeit the upfront payment made, unless
appropriate exit options are provided. In this situation it is essential that
the interests of subscribers are not adversely affected by any action of
the service provider while the subscriber remains under any such tariff
scheme.

6. One industry association has represented to the Authority that the

provisions of TTO (31st Amendment) provides that the service providers
are only required to ensure that no tariff item in a plan shall be
increased at least for a period of six months from the enrolment of the
subscriber to that plan. Therefore, they are of the view that it would be
incorrect, improper and undesirable on the part of the Authority to
suggest that any tariff plan once introduced by the service providers can
never be varied in any aspect. This industry association has urged the
Authority to refrain from modifying the TTO (31st Amendment).

7. The Authority has considered the opinion of the industry

association and is of the view that the life time tariff plans with its
declared features were offered by various operators taking into account
various factors. Further, it is important to realize that the cost of
providing telecommunication services is on the decline and thus the
apprehensions raised in this regard of a possible hike in cost of providing
services in future are untenable. The Authority is also of the view that in
event of the apprehensions pointed out by the industry association
becoming true, the provisions of this Amendment can be reviewed.

62
8. The provisions of TTO envisages that any subscriber (including
subscribers of lifetime packages) can move to any other plan on offer
without having to pay migration charges. However, since the packages
implemented by the operators do not provide for refund of the upfront
payment in cases of exit, the flexibility available for the subscriber of
such schemes to freely choose any plan gets restricted. Such restriction
on flexibility for subscribers to freely choose any other plan offer also
exists in cases where subscriber makes an upfront payment for a longer
validity. The forfeiture of the upfront payment while moving to other
plans can in some sense be interpreted as a barrier to exit. Subscribers
of lifetime tariff packages and other schemes having longer validity
deserve protection beyond the six months period envisaged in 31st
Amendment for the reason that they make an upfront payment on the
understanding of some basic considerations, which include the facility of
incoming calls for an indefinite period, the call charges and other
features presented to him at the time of subscription. The Authority is,
therefore, of the view that there is a need to protect the interest of
subscribers in case the tariff and other declared features of the tariff
plans with longer validity period including lifetime plans are changed to
the disadvantage of the subscribers during the promised validity period.

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