Can Reliance Jio Extend Its Free Data Offer Beyond 31 December?

Does the existing regulatory environment support the aggressive customer acquisition being experienced by Jio?

Reliance Jio may still go ahead and extend its free data offer beyond 31 December.(Photo: BloombergQuint)

Despite stiff opposition from existing telecom operators like Bharti Airtel, Vodafone India and Idea Cellular, Reliance Jio may still go ahead and extend its free data offer beyond 31 December. According to a report in a leading business daily, Reliance Jio is likely to do so in order to boost its customer acquisition, causing additional pain to the incumbents.

Jio aims to add 100 million subscriptions in quick time. But does the existing regulatory environment support such aggressive customer acquisition?

A top Telecom Regulatory Authority of India (TRAI) official told The Quint:

The matter should have been dealt with in the licensing agreement. But the agreement is silent on the matter. There is nothing in the current regulatory environment that can stop a new entrant from launching an extended trial offer.

Licence Agreement Silent

The unified licence agreement has sections on tariffs and subscriber registration but nothing on free trial period.

The sense one gets after talking to telecom regulators and experts is that the gap needs to be plugged. But by the time the regulatory regime is updated, Reliance Jio is likely to get through with its large scale customer acquisition process.

An expert tracking the sector told The Quint:

The department of telecom needs to change the licence agreement or else TRAI may come up with a regulation. For that to happen, TRAI will first have to float a consultation paper, seeking comments from various stakeholders. But the entire process will take time.

Updating Regulation May Take Time

But the war of words continues among operators. Cellular Operators Association of India (COAI), the body that represents Bharti Airtel, Vodafone and Idea among other, had written to the department of telecom in August alleging that what Jio was doing was “full-blown service” amounting to “predatory pricing”.

COAI also alleged that calls emanating from Jio customers have “choked” the networks of the incumbent.

Jio is reported to have acquired 1.8 million users during its extended trial period. While by extending the free trial offer, Jio aims to add numbers, the new entrant is set to launch special packages to woo high-end customers. According to reliable estimates, incumbent players get nearly 70 per cent of the total revenue from just 30 percent high end consumers.

Broking firms tracking the sector have come out with reports saying that it will hurt data growth numbers of the incumbent. Existing players will have to further reduce their data tariff by 25-50 percent to come close to Jio’s offerings, say experts.

The right forum to raise the predatory pricing issue is the Competition Commission of India, not the DOT or TRAI.

Telecom Expert

“The other available forum is the court”, he adds. He is, however, of the view that since the current regulatory regime is silent on the issue, it is going to be tough to prove illegality in what Reliance Jio is doing.

In the absence of a clearly defined regulatory structure, regulators and the government departments concerned seem to be passing the buck even as the incumbent players are crying hoarse.