India’s third-largest service provider, Vodafone Idea, is up in arms against the country’s top two telcos, Reliance Jio and Bharti Airtel, for predatory pricing. It has complained to the Telecom Regulatory Authority of India (TRAI) regarding the 5G rates of Airtel and Jio, according to media reports.
Vodafone Idea alleges predatory pricing since both Jio and Airtel continue to offer 5G services at 4G rates. While Vodafone Idea is yet to launch 5G services, Airtel and Jio offer unlimited data in their 5G plans. However, since both offer unlimited data, the rates are not in keeping with the principles of the Fair Use Policy (FUP).
Indian telcos acquired 5G spectrum last year and launched 5G services in October 2022. While Jio’s 5G services are available in 406 cities, Airtel recently announced that its 5G services are now live in 500 cities. Together, Jio and Airtel are believed to have around 50 million subscribers.
The 4G subscribers of Jio and Airtel can access 5G services if they have 5G-enabled devices. However, since the telcos want the subscribers to experience 5G speed, they are not curtailing the speed once the users reach their data limit, as is typically the case in 4G. This is where the problem lies. Vodafone Idea alleges that 5G telcos must reduce the speed once the customers hit the data cap.
Vodafone Idea's diminishing subscriber base
At the end of September 2022, just before 5G was launched in early October, Vodafone Idea had 249 million subscribers and by January 2023, it was down to 239 million subscribers, as per the latest TRAI data. It is fair to assume that it would have lost more in the time period between February 2023 to April 2023 as the competing telcos expanded their 5G networks.
The debt-ridden Vodafone Idea has been losing subscribers for quite some time now, and the launch of 5G services by its rivals has accelerated subscriber churn. In fact, Vodafone Idea lost more subscribers in the four months preceding the launch of 5G services. Its subscriber base was reduced by seven million, from 256 million subscribers in June 2022 to 249 million in September 2022. However, Vodafone Idea launched 10 million subscribers in a four-month period after the launch of 5G.
Media reports suggest that TRAI is likely to direct Airtel and Jio to curtail the speed once the subscriber hits the data cap in 5G. Ironically, TRAI is also believed to be investigating unlimited data packages offered by the complainant Vodafone Idea and BSNL, as per media reports. Vodafone Idea offers an INR 2,999 ($36.64) plan with 365-day validity and no daily data usage limit. On the other hand, BSNL is offering an INR 397 ($4.85) plan with no limit on voice calls.
Possibly the biggest case of predatory pricing in the Indian telecom industry is Jio offering free and unlimited 4G services for the first six months of the launch of services in September 2016. At the time, Airtel had complained to the Competition Commission of India (CCI) against Jio. CCI passed an order in June 2017 clearing Jio of all charges primarily because Jio didn’t have a dominant position in the market.
Vodafone Idea now alleges that Airtel and Jio have more than 30% market share in most circles (service areas) and so do have dominant market position and thus should be punished for predatory pricing.