“TRAI”ing to Make the Right Call: Exploring the Possibilities of a Single Tariff Plan

Posted on October 18, 2010 in Business and Economy

By Pradyut Hande:

In their quest to target an ever burgeoning consumer base and maintain (or gain) a foothold in what is transpiring into a rapidly cluttered market, Indian telecom firms have gone into overdrive; “churning” out tariff plans on a seemingly daily basis in their purportedly novel endeavor to deliver the utmost in customer value and satisfaction. If one attempts to look at it from the discerning lens of the telcos and the hyper competitive nature of the market; one realizes the fact that in order to maintain a loyal consumer base while continually attracting potential consumers, taking into cognizance the myriad schemes offered by myriad competitors, firms ought to indulge in proactive product differentiation measures.

One way of ensuring significant product differentiation is by offering consumers a variety of tariff plans that appeal to different customer categories, i.e. the classic “something-for-everybody” strategy. One would be foolish to refute the fact that such a strategy holds most firms in good stead; but one would be equally foolish if one failed to grasp the potential pitfalls of the multiple tariff plans presently on offer. For starters, the plethora of plans and schemes on the table can confound the most seasoned user/recipient of telecom services. The “dilemma of choice” and the prospect of grappling with the increasing complexity of the plans have left scores of users dazed (disillusioned at times!).

Sample this… Now although Indian telcos ought to limit their tariff schemes to 25 in any service area; most firms appear to be flouting (or are on the verge of flouting) the stipulated directive with impunity at present. In the Global Systems for Mobile communications (GSM) segment, the number of tariff plans offered in Mumbai by all telcos in totality is a whopping 134! The corresponding numbers across other Indian metropolitans stand at 114 in Delhi, 81 in Kolkata and 26 in Chennai. The combined Code Division Multiple Access (CDMA), GSM and landline tariff plans add up to 292 in Mumbai, 276 in Delhi, 203 in Chennai and 61 in Chennai. Now the total number of mobile and landline tariff plans on offer across the country is pegged at…hold your breath…5,074! The aforementioned figures make it amply evident that the growing gamut of tariff plans on offer; although beneficial at multiple levels; can often leave consumers in a state of “wanton mental disarray”.

As the number of tariff plans hits the roof, the Telecom Regulatory Authority of India (TRAI) is exploring the possibility of making life a lot easier for existing and potential subscribers by introducing a “single tariff plan for all” — a development that ought to bring some succor to the archetypal “confounded consumer”! A primary consultation paper issued by the TRAI talks about the plausibility of implementing a single tariff plan (to begin with, for pre-paid mobile users). Industry representatives and analysts alike have been invited to send in their statements and queries alike to the TRAI by November 15. After due deliberation on the matter at hand, if the proposals are given the green light, the “single tariff plan” is certain to cause a certain degree of consternation amongst the concerned industry players. However, it would be the consumers who would eventually benefit the most if the proposals come to fruition.

The single tariff plan will infuse a palpable degree of regulation and transparency in the industry that is currently inconspicuous. The enhanced regulation would address the pressing matter of deficient, ambiguous and misleading information regarding tariff plans that often impair the consumer decision making process. Hence, the consultation paper also calls upon telsos to ensure that tariff plans be made simpler and more comprehensible, relegating complexity to the backburner. The consultation paper has also sought the views of industry players addressing other germane issues such as the prevalent cap of 25 with regards to the number of tariff plans on offer and proposed limits on the rates of premium calls and SMSs. The single tariff plan is a most rational and promising idea; however it would remain just that unless suitably implemented in the near future. Only time will tell whether the “confounded consumer” can dial R for Relief… from the plethora of tariff plans on offer that is!

The writer is a Correspondent of Youth Ki Awaaz and a business student with wide ranging interests and strives to address myriad issues of national and global consequence.

Image courtesy: http://www.product-reviews.net/2008/03/25/india-mobile-news-more-cell-phone-users-than-us-by-april-2008/