Return of Voice Calls and SMS: TRAI Order Set To Hit Telcos

The saga began on December 23, 2024, when much of the Corporate world was getting ready to embark on its year-end break and cheer in the new year with hope of sales jumps and profit humps. However, watchdog Telecom Regulatory Authority of India (TRAI) had other ideas. It delivered a year-end triple whammy for telecom operators.

Return To Old Telecoms: Voice, SMS & Long Validity

First, TRAI mandated that telcos offer a separate STV (Special Tariff Voucher) for ‘Voice and SMS’, giving consumers the option to pay for only those services they need and use, not the entire bouquet, which includes the 4G/5G data hoopla.

Second, telcos were asked to extend the validity for STVs and CVs (Combo Vouchers) from the existing 90 days to 365 days (a year), as was the case earlier. Third, telcos were asked to offer at least one top-up voucher of Rs 10.

In its year-end order, TRAI said: “This will benefit consumers such as the elderly and those living in rural areas.” It added that many such consumers do not use or need data services, with some not even possessing the Smartphones needed to access bundled data.

TRAI said it was “addressing the needs of the 15 crore Indians who continue to use feature phones on 2G networks”.

TRAI’s brass were targeting ‘the greater good’ with this order. However, it left telco honchos rubbing their eyes in disbelief. An industry that has taken over 20 years, seen a dozen sudden deaths and thousands of job losses, and invested lakhs of crores to achieve a semblance of future revenue clarity, was suddenly asked to give up part of its goose that laid the golden egg.

Strong Posturing & Vehement Protests From India’s Telcos

With its wafer-thin revenues under threat, operators have vehemently protested this ‘setback’ and ‘retrograde step’ by TRAI. Deriding the regulation to offer voice and SMS-only packs, they claim: “This goes against the practice of offering free voice in bundled data services. The move is a barrier to the Digital India initiative as it limits access to online services for 2G users. TRAI may say the regulation will benefit rural and elderly consumers, but we strongly oppose this.”

Telcos also called TRAI’s new regulation ‘retrograde’, claiming it goes against today’s norm of free voice. “Telcos provide voice services almost free in bundled data packs. But once voice and text-messages-only packs are introduced (as per TRAI’s mandate), voice will get charged for. Packs may also be tweaked to say ‘Voice and SMS’, instead of ‘Data’,” leading telco officials said.

Currently, telecom providers offer data along with ‘Voice+SMS’ packs for users of 2G services, or to dual SIM card-holders. However, many rely on one SIM for data and another for calls and SMS—this means they pay for an expensive recharge plan that covers the two basic services that they need, while they get the third—data services—bundled in most cases.

TRAI Trying To Cut Back Excess Payments By 2G-Users

TRAI’s logic is to scale back the excess payments being made by 15 crore Indians who still use only 2G services such as voice and text messages. The chief of the watchdog espoused this intent himself.

TRAI Chairman Anil Kumar Lahoti said: “India still has subscribers with feature phones. Many Indians do not have Smartphones; some are not even comfortable using one. Such users need to have the option to choose a plan that offers only voice and SMS. That is the objective of the TRAI order. The order and amendment will ensure that all service providers offer at least one such plan.”

That same approach and objective are evident in the extension of the validity period for STVs and CVs from the existing 90 days to 365 days (a year) for the benefit of consumers. Similarly, telcos have been asked to offer at least one top-up voucher of Rs 10. The idea behind the move is crystal clear — it will ensure that even when the balance touches zero, the ‘Incoming Calls’ facility will stay active. As a last resort, a recharge of Rs 10 will ensure the same.

When The Going Gets Tough, Every Drop Counts

TRAI’s new order is one that will benefit just 10 per cent of India’s addressable target audience, people with historically-low ARPUs (Average Revenue Per User). Why then are telcos seeing red?

The reason is the surfeit of red ink already present on the balance sheets of all telcos, without exception. In tough times, every drop (read ‘tariff and recharge voucher purchase’) counts.

Having coughed up hundreds of thousands of crores in license fees and levies, and to set up, maintain and upgrade cash-hungry networks, telecom operators have been running up their borrowings for decades. They have also seen many counterparts becoming part of Indian telecom’s history books.

The first high for Indian telecom operators was 3G services. It turned out to be a nemesis, killing the operations of STel, Videocon Telecom, Etisalat, BPL Mobile, Virgin India Mobile and SingTel. The next wave, 4G services, never hit crest. Instead, it troughed the industry itself, with Tata Docomo, MTS India, Aircel and Reliance Communications downing shutters.

That has left surviving firms in cautious mode. All private telcos — Jio Infocomm, Bharti Airtel and Vodafone-Idea — have heavy debts to finance. All are working on paper-thin margins or are cash-flow and PAT-negative (such as Vi). All have networks that need to be constantly upgraded and maintained, as the latest peak called ‘5G’ beckons. This is a balancing act that needs financial jugglery, even wizardry.

Amid such painful management and planning, any regulatory move is viewed with suspicion. As if the TRAI’s new order on voice and SMS packs were not enough, telcos also have to contend with the likes of Zoom, which bagged a ‘Voice Services’ Licence in 2023 and has since deployed its systems to offer enterprise services in India. Other such players are waiting in the wings.

With one cake on the table and a lot of operator knives queueing to carve it up, further upheaval is likely in Indian telecoms. What remains to be seen is who eats the cake and gets to keep it too.