TRAI, India’s telecoms regulator, has introduced new regulations to prohibit the use of zero-rated and differentially priced data plans. The new regulations:
- Prohibit operators from setting different data tariffs for different apps and services.
- Allow for reduced tariffs for emergency services.
- Impose fines for those contravening the new regulations.
- Are in place for two years but will be subject to review.
- Do not affect already purchased active data plans for a period of six months.
This is not just about Facebook’s Free Basics
Widely reported as a move against Facebook’s Free Basics, the new regulations cover all zero-rated and differentially priced plans which include other services such as Airtel’s Airtel Zero sponsored data plans. Mobile operators in India had also looked to provide specific data plans for over the top messaging apps to mitigate the impact of declining SMS revenues, differentiate from competitors and drive adoption of mobile data plans.
Mobile data usage in India needs a boost
The adoption of mobile internet and data services in India remains low. Despite a mobile subscription base of around 1bn, India’s 3G (and above) penetration rate was just 14% of mobile subscriptions in 2015 according to IHS data. This compares with 62% in fast- growing markets such as China and 100% in the most advanced markets such as Japan. Differentially priced plans have been a useful tool for operators to get low-income users, which account for the vast majority of India’s prepay base, onto mobile internet plans. They will now need rely more on flexible time-based packages as well as differentiate in terms of devices, 3G and 4G coverage to develop their mobile internet customer base. There are also a significant number of 2G mobile data users in India; Bharti Airtel had 49.5 million data users out of 230.6 m subs, 21.4 million on 3G.
Facebook will remain committed to growing its audience in emerging markets
Facebook claimed it was “disappointed” in a statement following the ruling in which it maintains its commitment to Free Basics. Facebook has also faced restrictions in Egypt as it looks to promote its offer in emerging markets. Facebook may dress up its commitment to offering free data services in altruistic language, but there is a clear business case behind its strategy. Facebook penetration in many Western markets is approaching saturation, but there is still room for growth in emerging markets where mobile data adoption remains low and mobile is the primary internet connection. Facebook also offers a range of other low-data “lite” apps and services in markets in which data usage is limited. Facebook’s investment in emerging markets is part of long-term strategy monetisation strategy not immediate revenues. Facebook’s Q4 North American ARPU was $13.54 compared with $1.59 in Asia-Pacific and $1.22 in the Rest of the World (outside Europe).