Helping consumers win the telecom wars
A well-functioning market relies on competitive pressures to incentivize producers
Reliance Jio’s launch of what it claims to be the “cheapest tariff plans in the world” has triggered a sharp response from the industry. While questioning the legitimacy of Jio’s plans, other operators have responded with their own rate cuts. Interestingly, the debate on both sides has revolved mainly around the issue of price, while quality of services (QoS), the other crucial determinant of consumer choice, has remained largely ignored. Perhaps because, unlike prices, which are relatively easier to observe, the question of quality is shrouded by a much deeper information asymmetry.
To draw an analogy, a patient visiting a drug store knows little about the ingredients, safety or efficacy of the medicines on display. Choosing one based merely on its price would, however, be unwise. Health regulators must therefore step in to set appropriate drug-safety norms. The Telecom Regulatory Authority of India (Trai) performs a similar function of laying down QoS standards for telecom services and assessing compliance by operators.
A well-functioning market relies on competitive pressures to incentivize producers to constantly better themselves on both prices and quality—failure to do so should cost them customers. This model can work only if two critical components are in place. First, users should have the ability to seamlessly switch from one service provider to another, at a minimal cost. This is the basis for mandating mobile number portability.
Second, consumers need access to appropriate information on which to base their switching decisions and the ability to utilize it. Presently, Trai frames QoS standards for different categories of services based on various technical parameters and service-level norms. It uses audit agencies to monitor compliance with the regulations and releases those audit reports on its website. But is this information sufficient and relevant for consumers to make informed switching decisions? Unfortunately not.
Aggregated QoS data collected for regulatory monitoring purposes is not designed to satisfy the information needs of end users. It generally applies to the service area as a whole and is averaged out over a period of time. On the other hand, a user’s telecom experience varies drastically with her exact location, particularly in case of wireless services. QoS parameters also tend to be defined in highly technical terms, resulting in an information overload for consumers. For example, the latest audit report for the Bihar and Jharkhand circle runs into 279 pages. It is almost impossible for any lay person to comprehend this.
Trai itself has recognized these limitations and consciously moved towards more consumer-friendly mechanisms of information dissemination. Its QoS analytics portal, launched in August, offers operator-wise information about call-drop rates down to the level of each base transceiver station (BTS). It also provides the status of 2G network utilization in different areas. Data for July reveals that the Bihar-Jharkhand circle, along with Rajasthan, West Bengal and Assam, witnessed higher call drops compared to the rest of the country. Users in each state can then zoom in to get detailed information on their nearest stations.
This was preceded by the launch of the MySpeed app that allows users to test their own Internet speeds. Trai pools this data to create a crowd-sourced map of operator and technology-wise speed levels across the country. In parallel, the department of telecommunications is working with the industry on its Tarang Sanchar portal to provide BTS-level data on a host of parameters.
We are certainly moving in the right direction with these new data initiatives. However, three things need to happen for this to really become a game-changer. One, operators should be able to electronically update detailed information on the status of their networks on a real-time basis. This will require technology upgrades both at the end of the service providers and the collecting agency. Two, the information points need to be expanded over time to go beyond call drops and data speeds. The idea should be to capture all types of information that could potentially influence a consumer’s transactional decision on voice, data and broadcasting services. Three, we need an ecosystem of independent third parties—analytics firms, researchers and consumer groups—who will develop innovative solutions that can make the available data more relevant for the needs of consumers.
A third-party ranking mechanism can be one such initiative. Information on tariff plans is readily available on the websites of operators. As more and more data on quality parameters also gets released, developers could use it to put together a tool that ranks the services available in any particular area based on rates as well as network performance.
This assessment can also be customized for the user’s specific needs. For instance, Netflix maintains a speed-ranking index measuring its prime time performance across different Internet service provider (ISP) networks. Multiple ranking mechanisms of this sort, which use the same underlying data, will exercise discipline over one another.
As consumers gain access to granular and localized information about each aspect of an operator’s service, it will help in shaping their purchase and switching decisions. Competitive forces should then kick in to bring about an overall improvement in the quality of services.
Smriti Parsheera is a researcher at the National Institute of Public Finance and Policy, New Delhi.
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