How ‘free’ roaming will impact the telcos, subscribers in India

So the telecom industry in India is finally responding to the new telecom policy’s call of ‘free roaming.’ Bharti Airtel—the country’s largest operator by subscribers and revenues, and Idea Cellular—the operator with the highest visitor location register (VLR) ratio were the first to come out with their respective plans in this regard.

While Airtel and Idea made their announcements on July 1, Vodafone followed suit on July 4. The plans have come out within two weeks of Telecom Regulatory Authority of India (TRAI) okaying a partially free roaming as against an earlier proposal to completely abolish roaming, which had been opposed by a body of telcos.

The plans show telcos willingness of going extra miles and devising innovative approaches that enable them to achieve a balance between policy demands and investor aspirations. OSS/BSS systems for next-generation networks are giving them the required flexibility.

Let’s take Airtel’s plans for prepaid users for example (a plan for postpaid users is yet to be out). The telco either charges Rs 5 per day or offers a 30-day voucher for Rs 79 for free incoming calls on national roaming.

This sounds like a win-win for both the provider and the user.

There are a good number of users out there who frequent between their cities of work and their home towns or villages, often separated by two discrete telecom service areas aka circles. It is quite common for them to use two different subscriptions, one each for a circle.

Idea has come out with two plan options of Rs 230-240 and Rs 35-40. While the former plan will enable free incoming while roaming, the latter would require a charge of 75 paise per minute on incoming calls.

Vodafone, which announced its ‘free’ roaming plans three days later, is also offering plans similar to Airtel and Idea, with the added differentiation of a plan for postpaid users too. Among other plans, Vodafone offers free incoming on national roaming for a monthly charge of Rs 75.

The ‘free’ roaming plans potentially do away the hassle—and the extra cost—of keeping two subscriptions in such and other cases. For the service provider, the benefits are two-fold. One, it removes the likelihood that the user would be subscribing to some other service provider in other circles—this also means that the user is less likely to churn. Two, this also helps improve the VLR ratio and leads to greater utilization and efficiency of the network.

Going forward, this would lead to a further consolidation in subscriber base, which would potentially offset the new subscriber additions to an extent. BusinessandMarket had estimated in October 2012 that “there already is a 10 percent to 12 percent redundancy in the form of inactive subscribers, which would be further increased by another six to eight percent when the free-roaming regime sets in, expectedly around January 2013. Consequently, between 160 and 180 million subscription could become eligible for de-activation.” (See release for details)

Given that the ‘free’ roaming being offered by telcos now is only partial, the impact will be significantly diminished.