India’s leading telecom operators, Airtel and Vodafone Idea have announced that they will be levying minimum charges on their prepaid customers. Tata Docomo, which has now transferred its subscriber base to Airtel, has also joined the two incumbent telcos. This move makes it compulsory for all subscribers of these telecom operators to recharge with at least one plan, essentially ending “Lifetime” validities that were launched a few years ago.
What are these Minimum Charges?
Essentially, users will now have to recharge with any one plan that is being offered by these three telecom operators. Airtel and Vodafone Idea have both announced a minimum charge of ₹35 which will allow you to make outgoing calls and receive incoming calls with a validity period of 28 days. This pack gives you a talk time of around ₹26.
On the other hand, Tata Docomo’s minimum recharge plan is priced at ₹23 and while it is more affordable than Airtel and Vodafone Idea, it is still an anti-consumer move and a regression from the previous policies.
Any user who does not recharge with any of these plans will have their outgoing facility barred. Further, incoming calls will also be barred within 15 days from the date of expiry of the plan. Users are also reporting that their calls have been barred despite having abundant talk time in their accounts.
Why are telecom operators doing this?
Two words - Reliance Jio.
The entry of Reliance Jio has shaken up the Indian telecom sector. While it has not broken up the Airtel, Vodafone and Idea cartel (ICYMI: Vodafone and Idea have merged), it has pushed them against the wall and forced them to introduce competitive plans. At one point of time, Airtel, Vodafone and Idea were offering 1GB 3G data pack for over ₹350. Right now, you can pay ₹399 and enjoy 126GB of high-speed 4G data (and unlimited data at 64Kbps), unlimited voice calls and 100 SMS per day for 84 days.
This scale of disruption is surreal and has been observed only once before when Reliance Communications ushered in a calling rate of ₹1 per minute across India. As a result, the revenues of the incumbent operators have taken a big hit. This move to levy Minimum Charges is an attempt to increase the Average Revenue Per User (ARPU).
Here's what Airtel and Vodafone Idea had to say
Airtel CEO, Gopal Vittal, remarked, “We have about 330-odd million customers in wireless. But if you look at the pattern of consumption, about 100 million customers have very low levels of ARPU. So these ARPUs are at sort of low double-digit. In the last one and a half months in three circles in Tamil Nadu, UP West and Punjab, we’ve introduced minimum ARPU-led plans at the low end. We’ve seen some good results in and we’re now rolling it just now across the country - in fact, in the last seven days, we have already rolled out across the country.”
Vodafone Idea, on its part, said that this move would reduce “incoming-only and non-paying customer base”.
TRAI takes note of Minimum Charges
TRAI (Telecom Regulatory Authority of India) has taken note of Minimum Charges being levied by these telecom operators. The regulatory body has, for now, asked these operators not to bar calling facilities as long as customers have enough talk time in their accounts.