It's a new tariff plan, not service: Voda Idea to Trai on priority offering

Vodafone Idea Ltd (VIL) has justified its pay-more-for-priority-experience plan offered to its subscribers, and also said that telecom operators face a double whammy of having to make continuous investments in an era of call and data charges falling way below cost due to cut-throat competition.

Responding to questions raised by the Telecom Regulatory Authority of India (Trai) over the priority plan, Vodafone Idea argued that a new tariff plan is not a new service.

VIL has countered Trai's contention that the RedX plan, which commits higher speeds, should have been informed separately so different aspects could have been examined before such service was launched.

"It is not a new service and the service remains same... A new tariff plan is not a new service," VIL said in its reply to Trai on the priority plan.

Vodafone Idea also flagged the financial stress being faced by operators like itself. It said the operators "have been compelled to reduce prices and go below costs with a double whammy of making continuous investments in the networks to cater to unprecedented increase in data usage arising out of below costs tariffs".

PTI has seen a copy of VIL's submissions to Trai.

An e-mail sent to Vodafone Idea Ltd did not elicit a response.

VIL has urged the regulator to consider periodic reporting on the service quality and and other material provided by the company "to objectively arrive at its query/ conclusions".

"The overall better experience to subscribers is the purpose of the tariff plan and we respectfully submit that start point of the question cannot be: 'induce customers to opt for REDX'. This is not the sentiment shared by consumers," VIL said in reply to a specific query.
 

Trai had asked the company if any deterioration in services for non-RedX (non priority) subscribers could induce them to opt for RedX plan (priority plan) to get access to internet and particularly for crucial applications such as childrens' education.

VIL emphasised that its network has seen substatial capacity augmentation, resuting in more efficient use of spectrum and better services despite unprecedented traffic growth. VIL said proportion of RedX customers is a "very miniscule fraction" of overall 4G base.

Trai's view in the question seems to be bereft of proper appreciation of the facts and material available with it, VIL said in its detailed response.

Defending the plan, VIL claimed that subscriber stickiness in this tariff plan is higher compared to other postpaid plans for the value and experience they got.

Currently, Trai is probing VIL's priority plan RedX and Bharti Airtel platinum offerings to see if network preference to specific customers leads to deterioration of services for other non-premium subscribers or violates any norms.

The regulator had shot off questions to the two operators asking them to explain their positions on the controversial issue and provide relevant data to substantiate their claims.

On its part, Airtel has strongly defended its platinum offering saying it was launched with bonafide understanding that the regulator does not have concerns over such an offering as no objection had been raised on a similar plan by Vodafone Idea for 8-9 months.

Airtel argued that operators often bundle their tariff plans and provide plan-linked benefits with regard to content, devices, and discounts for voice and data.

"For example, Jio bundles its plans with free Hotstar OTT and also bundles JioPhone device with some of its plans only available on this phone... The offer by Airtel is no different from what was done by Vodafone Idea Limited in November 2019," Airtel has said.

Such offers are also a standard norm in banking, airlines, hospitality, and other industries where customers are given a differential treatment for higher spends, Airtel has said.

Speed will be a differentiator as India embraces new technologies such as 5G, it pointed out.

"Any bar on offering differentiated services to customers on the basis of speed would...permanently impair the monetisation of 5G...take away the flexibility of operators to innovate and drive the Indian market," Airtel said.