Supreme Court verdict on Aadhaar: No major impact on telecom operators

The Supreme Court striking down Aadhaar authentication by companies may have jolted the telecom industry in terms of getting new customers, but returning to its old ways of doing verification is not going to cost the operators a fortune.

According to estimates of mobile operators, the use of Aadhaar authentication was easy and cost-effective because it used to cost just Rs 2.5 for authenticating a subscriber. With physical verification, the costs are likely to go up to around Rs 25, but that will be manageable for the industry. The on-boarding time, however, will increase to a few days whereas in the case of Aadhaar it used to be instantly done.

Business Standard spoke to executives of telecom operators as well as officials in the Telecom Regulatory Authority of India (Trai) and Department of Telecommunications (DoT). 

A general feeling emerged that the telecom industry will not be affected in a major way in monetary terms for doing physical verification. It will only call for increased paper work on the part of dealers and operators. 

The cost will not increase much because operators do door-step verification for only post-paid customers, who constitute 3-4 per cent of the total. In the case of pre-paid subscribers, the dealers usually see the original documents for verification and issue a SIM card. As the documents reach the mobile operators, the number is activated. To ensure that forged documents are not submitted for getting SIM cards, telecom operators do random checks for verifying pre-paid customers by visiting their houses and checking the authenticity of other documents.

“Telcos verify post-paid customers by visiting their houses because they have to offer services on credit. Usually, no such physical verification happens for pre-paid customers. So how will costs increase too much for telecom operators in the absence of Aadhaar,” an official in Trai asked.   

Queries sent to mobile operators remained unanswered till the time of going to press. Meanwhile, the DoT is seeking legal opinion regarding voluntary use of Aadhaar and whether authentication can be done in such cases. 

Industry watchers, however, say incumbent operators will not see any impact because they are not adding too many subscribers. However, for Reliance Jio, it will lead to increased cost because the telco has the maximum subscriber addition every month. “Also, Jio has enrolled most of its subscribers through Aadhaar, so it may feel a pinch because of the Supreme Court verdict. But even Jio will get used to the older practice of verification in some time,” said an analyst.