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Business News/ Industry / Telecom/  Vodafone seeks subsidy to spur migration to smartphones
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Vodafone seeks subsidy to spur migration to smartphones

It said that any decision to shut down older technologies must be taken after keeping in mind the interest of consumers

The country’s third-largest telecom company is yet to begin 5G services, and has 89 million customers on its 2G network. (Reuters)Premium
The country’s third-largest telecom company is yet to begin 5G services, and has 89 million customers on its 2G network. (Reuters)

New Delhi: Vodafone Idea has asked for the government to create a subsidy scheme to encourage migration of feature phones to smartphones through the respective operators, and disregard demands for shutting down 2G networks that serve poor consumers.

The subsidy can be funded through the Universal Services Obligation Fund or the Digital Bharat Nidhi, Vodafone Idea said in its submission to the Telecom Regulatory Authority of India (Trai) that is holding consultations on digital transformation through the 5G ecosystem. 

The country’s third-largest telecom company is yet to begin 5G services, and has 89 million customers on its 2G network, out of its total subscriber base of 215 million as of December 2023. It said that any decision to shut down older technologies must be taken after keeping in mind the interest of consumers. 

“We urge the Trai to disregard such rhetoric comments of sunset date for legacy technologies and not recommend any regulatory mandate, which otherwise would cause huge inconvenience to the public at large," the carrier said.

“We recommend that instead of any Regulatory mandate for shutting any particular technology, there should be a central and pan-India based handset subsidy scheme, supporting migration of feature phones to smartphones through respective operator," it added.

Its submission to the Telecom Regulatory Authority of India, comes close on the heels of rival Reliance Jio calling for 2G networks to be shutdown, with the government giving a roadmap towards a sunset date.

“The government should come out with a policy and glidepath for closing down the 2G and 3G networks completely so that unnecessary network costs should be avoided, and a/I customers can be migrated to 4G and 5G services. This will also give great impetus to developing ecosystem to SG use cases," Jio said in its submission to the regulator.

Bharti Airtel managing director Gopal Vittal on Tuesday also said that 2G networks would disappear over the next few years, adding that 2G contribution to Airtel’s business was about 17%, and in single digits in markets like Gujarat, Maharashtra, Kerala, Mumbai, and Delhi.

“My sense is that in the next few years, you should start seeing substantial, almost disappearing of 2G," he added.

Vodafone Idea countered, saying that the comments demands were ‘rhetoric in nature’ and ignored the severe impact on existing customers.

“Any forceful shutdown through regulatory mandate, will lead to low income and marginal consumers being forced out of accessing the basic telecom services, thus increasing the digital divide," it said, while adding that it will adversely impact point of sales or PoS and loT devices like ATMs, which may not be able to change the equipment to be capable to latch onto 4G network.

It further argued that 2G networks, that are mostly used by consumers at the bottom of the pyramid, provide coverage primarily to those set of consumers who still have feature phone handsets and cannot migrate to smartphones due to the cost of purchasing new handsets. Financial inclusion of rural and marginal users, many of who use feature phones for doing financial transactions via USSD, would also take a hit, it added.

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ABOUT THE AUTHOR
Gulveen Aulakh
Gulveen Aulakh is Senior Assistant Editor at Mint, serving dual roles covering the disinvestment landscape out of New Delhi, and the telecom & IT sectors as part of the corporate bureau. She had been tracking several government ministries for the last ten years in her previous stint at The Economic Times. An IIM Calcutta alumnus, Gulveen is fluent in French, a keen learner of new languages and avid foodie.
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Published: 07 Feb 2024, 11:06 PM IST
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