In a very consumer friendly move which far exceeded expectation, the TRAI issued a notification on 16th October 2015 - Telecom Consumers Protection (Ninth Amendment) Regulations, 2015 - by which relief was provided to the consumers facing call drops. From 1st January 2016, every consumer who faces a call drop will be credited by one rupee by the originating cellular mobile telephony service provider.
I was one of the many individuals who had provided feedback on the Consultation paper on "Compensation to the Consumers in the Event of Dropped Calls" floated by TRAI. (You can read it here).
I had then observed - "The consumer derives value from the call only when the sum and substance of the intended conversation stands completed" and that "--compensation, while correcting the wrong of the inconvenience to the consumer, would also serve as a financial disincentive to the service provider"
I am gratified that TRAI, in its Explanatory memorandum to its 16th October 2015 order has invoked both these arguments(Verbatim, actually).
But the compensation of Rs 1 for every dropped call exceeded my wildest imagination. My best case scenario was a compensation of about 30 seconds for consumers on a per second billing rate, and that too for calls dropped within the first 30 seconds. The present TRAI order provides for Rs 1 compensation as credit, or roughly 100 seconds of talk time at the current billing rate, for EVERY call dropped, irrespective of the duration.
If this order is implemented, the estimated loss of revenue in the form of compensation to subscribers would be in the region of 2 % of the billed amount. This is substantial - and may account for over 10 % of their profit before Tax.
So should not the market have responded to this news by hammering the stock prices of these mobile telephony service providers?
Here is how the stock prices (of three TSPs - Bharti Airtel, IDEA, and RCOM) looked in the period 16-21 October 2015 - notice the sharp dip in prices on the date of the TRAI order (16th October), and the almost immediate recovery. So what does the market know that this order does not convey? Is it optimism or a frank assessment that the big money Telecom guys will be able to ensure that the order in its current shape would not get implemented.
My money, sadly, is on the order getting diluted substantially. The current order appears to have become too consumer friendly to go uncontested. Did the consumer lose in the process?
I was one of the many individuals who had provided feedback on the Consultation paper on "Compensation to the Consumers in the Event of Dropped Calls" floated by TRAI. (You can read it here).
I had then observed - "The consumer derives value from the call only when the sum and substance of the intended conversation stands completed" and that "--compensation, while correcting the wrong of the inconvenience to the consumer, would also serve as a financial disincentive to the service provider"
I am gratified that TRAI, in its Explanatory memorandum to its 16th October 2015 order has invoked both these arguments(Verbatim, actually).
But the compensation of Rs 1 for every dropped call exceeded my wildest imagination. My best case scenario was a compensation of about 30 seconds for consumers on a per second billing rate, and that too for calls dropped within the first 30 seconds. The present TRAI order provides for Rs 1 compensation as credit, or roughly 100 seconds of talk time at the current billing rate, for EVERY call dropped, irrespective of the duration.
If this order is implemented, the estimated loss of revenue in the form of compensation to subscribers would be in the region of 2 % of the billed amount. This is substantial - and may account for over 10 % of their profit before Tax.
So should not the market have responded to this news by hammering the stock prices of these mobile telephony service providers?
Here is how the stock prices (of three TSPs - Bharti Airtel, IDEA, and RCOM) looked in the period 16-21 October 2015 - notice the sharp dip in prices on the date of the TRAI order (16th October), and the almost immediate recovery. So what does the market know that this order does not convey? Is it optimism or a frank assessment that the big money Telecom guys will be able to ensure that the order in its current shape would not get implemented.
My money, sadly, is on the order getting diluted substantially. The current order appears to have become too consumer friendly to go uncontested. Did the consumer lose in the process?
