Seeks response on exit costs and likely predatory pricing
CHENNAI: The Telecom Regulatory Authority of India (TRAI) on Monday sought the views of different sections of stakeholders on aspects the "life time" schemes floated recently by several cellular service providers including implied lock-in or high switching costs, barriers to exit and viability and sustainability of the schemes.
TRAI, which issued a consultation paper (No 04/2006) on the life time schemes just a few days after seeking relevant data from the operators concerned, said the life time schemes could lead to greater teledensity and access to the service for low-income groups and rural areas by extending free incoming calls for a "life time". The paper, however, points out that "life time" has not been defined and poses the question whether the cellular companies should be obliged to state the residual period of existing licences. In the alternative, should life time be defined to mean the period for which the licensee is permitted to provide the service subject to renewal of the licence, it asks.
The paper has said that considering the long-term nature of the customer "loyalty" that such schemes seek to build, the issue needs to be examined whether the customary ban on changes in leviable tariffs or basic features before six months should be applied for a longer period in the case of life time schemes.
The subscribers impliedly pay a switching cost while switching over to another provider, considering that the schemes do not provide for either partial or full refund of the upfront payment made by the subscriber, it says. It also raises the question whether a differential regulation should be imposed on the "dominant operator'' in the cellular sector compared to others to check the impact of any predatory pricing.
Among technical issues, it has pointed out that the schemes would lead to a massive increase in outgoing calls, especially from land line phones to mobile phones, which may have implications in terms of congestion and adequacy of spectrum.