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This article written by Nikhil Pahwa first appeared on MediaNama.
Airtel sent us a statement explaining the rationale for its net neutrality violation, wherein it started differential rates for Internet Telephony (VoIP), as opposed to other Internet services. As we explained earlier, a COAI paper mentions what the industry association refers to as 'OTT', which it believes eats into telecom operator revenues: VoIP, Instant Messaging (IM), Applications (Apps), Cloud Services, Internet Television, IPTV, M2M - Machine to Machine (M2M) communications, Social Networking. So, all digital services are under threat of being carved out as separate packs.
Airtel believes that what it is doing is right, so we decided to 'fisk' it's statement, backed by data:
Airtel: "Over the last twenty years, we have invested over Rs. 140, 000 crores in rolling out telecommunications services in every nook and corner of the country. In addition, we have paid over Rs. 50, 000 crore in terms of government levies in just 5 years. "
1. On investment made in telecom: In just the last two and a half years, Airtel has earned Rs 141,545 crore in revenues, and Rs 16,211 crore in profit. Over 20 years, they've substantially more money, which is great return on their investment. They've invested for the return they've gotten.
2. On government fees: They were able to build their business because instead of a fixed license fee, the government reduced their initial costs by allowing them to pay a revenue share. When they earn more money, they pay more government levies. When they earn less money, they pay less levies. Nothing wrong with that: they've built a great business, and earned money for their shareholders, but it's not that Airtel invested this money for philanthropy or for contributing to the government exchequer.
Airtel: "Going forward, we are committed to rolling out data networks across the country. In order to ensure this, our business must be viable and sustainable. Our voice services that are enjoyed by every one of our customers provides us the capacity to continuously invest in and upgrade our networks on an ongoing basis. We, therefore, believe that VoIP services in their current form are not tenable for us as a business. As a result, we will charge separately for VoIP services."
1. Airtel or Infratel? Correct me if I'm wrong, but networks are going to be rolled out by Bharti Infratel, not Bharti Airtel. Bharti Airtel provides consumer services, while Bharti Infratel provides tower services to telecom operators, and will invest in networks. Bharti Airtel will not be directly investing in networks, so how is cost of networks a Bharti Airtel consideration?
2. VoIP is not Airtel's business, access to the Internet is: Airtel is an access service provider, it has a Universal Access Services License. It's business is to provide consumers with access to voice services over PSTN, and VAS, which includes content services over PSTN networks, SMS and the Internet. The Internet is an access service, for which consumers pay Airtel, and VoIP is a service that consumers use via the Internet. What is provided over the Internet should be none of Airtel's concern, providing the Internet should be. What Airtel is doing is slicing up the Internet into types of services, and charging for those separately. Which means, and this is a privacy issue, it checks what you are doing online.
3. Data has contributed to growth in telecom revenues, not taken away from it. Last quarter, Airtel reported Rs 1,805 crore of Mobile data revenue, up 73.8% Y-o-Y in India.Data was 14.5% of Airtel's revenues for the three month period ending September 2014, compared with 5.2% at the end of September 2012. Its data customer base has increased by 43.0% and higher usage per customer by 31.2%. Not counting accidental usage, Airtel has 40.1 mobile Internet connections active. Data consumption has increased to 40.1 billion MB from 15.87 billion MB in Q2-FY15. If you just look at 2G data rates, Airtel now charges Rs 249 per month for what it used to charge Rs 99 a couple of years ago.
So, when it comes to the Mobile Internet, users have increased, usage has increased, rates have increased and revenues have increased.
4. On eating into telecom services revenues: SMS and VAS revenue has declined, but data revenue has increased. Take Idea Cellular, for example, based on our calculations with Idea Cellular earnings data:
This is Idea Cellular, with 30.92 mobile Internet connections active by the end of September 2014 (Q2-FY15). Airtel has more data, more consumption, more revenues.
Airtel: However, in line with our philosophy of putting our customers above all else - we are committed to making VoIP services extremely affordable and attractive by ensuring adequate minutes for a very small charge on VoIP.
As a result, in line with the recent announcement of our VoIP (Voice over internet protocol) pack, Airtel would like to clarify the following:
· Our Customers can enjoy a superior VoIP calling experience on Airtel's network by choosing from a range of new VoIP specific data packs that will soon be launched. For prepaid users, the VoIP exclusive pack will be priced at Rs. 75 for 75MB with a validity of 28 days. This will allow customers to make between 200 and 250 minutes of calling. Similarly, affordable VoIP plans will soon be launched for postpaid customers. There would be no other charges in respective of VoIP calls.
1. VoIP is becoming more expensive, not cheaper: We did the math, by taking the Rs 249 and 449 data pack rates from Airtel's own site. VoIP calls are becoming 311% more expensive if you take the Rs 249 data pack, and 470% more expensive if you take the Rs 449 data pack (2.5 GB).
I just got an SMS from MTNL, offering 100 GB of data for Rs 5000 per year.
That is Rs 50 per GB, or Rs 0.049 per MB. Airtel VoIP is 1948% more expensive.
2. Shows how expensive regular calls are in comparison with Internet Telephony: Also note how Airtel tried to put a spin on it by comparing VoIP with actual phone calls, by changing the vocabulary from "MB's" to minutes of usage. Imagine if you were being charged for watching YouTube on the basis of minutes of videos viewed or type of content watched. If there's one thing this change in vocabulary indicates, it is that phone calls are actually priced exorbitantly high. Technology advancement makes calling cheaper, and Airtel is trying to make more money of it, by increasing the cost by 470%. Should we really allow the cost of outdated technology to determine the cost of newer, more efficient technology?
· The VoIP update is not applicable with immediate effect. This change will be implemented in a phased manner over the next few weeks. In all cases, our customers will proactively be informed about these VoIP charges in advance through the company's standard communication channels like SMS, USSD pop-up, email etc.
· Prepaid customers who have purchased data plans before 24th December 2014 are entitled to use all services opted-for till their packs are consumed or expire, following which, the new terms & conditions on VoIP usage will apply.
- Customers are not informed, consent is not taken: To this, all I have to say is that the last two times my data pack charges have been increased by Airtel, I have neither been informed, nor has my consent been taken in order to subscribe to a more expensive plan. In fact, I found out about the latest increase a couple of days ago, when I called up Airtel customer care to confirm this anti-net neutrality move. They say they sent me a message on November 7th, but I've never received it. Tomorrow, Airtel can increase rates by 10 times, and I would only find out via my post-paid bill. Really, the TRAI should ensure that telecom operators take customer consent before subscribing them to higher cost plans. I've now discontinued the data plans on Airtel altogether, and am looking to port out.