Telecommunication Tariff (Sixty Eighth Amendment) Order, 2022

TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART III, SECTION 4

TELECOM REGULATORY AUTHORITY OF INDIA

NOTIFICATION

New Delhi, the 7th April, 2022

F. No. C/(5)/2021-FEA-II ---- In exercise of the powers conferred upon it under sub-section (2) of section 11, read with sub-clause (i) of clause (b) of sub-section (1) of the said section, of the Telecom Regulatory Authority of India Act, 1997 (24 of 1997), the Telecom Regulatory Authority of India hereby makes the following Order further to amend the Telecommunication Tariff Order, 1999, namely:-

THE TELECOMMUNICATION TARIFF (SIXTY EIGHTH AMENDMENT) ORDER, 2022 (No. 3 of 2022)

1. Short title, extent and commencement: (1) This Order may be called the Telecommunication Tariff (Sixty Eighth Amendment) Order, 2022. (2) It shall come into force from the date of its publication in the Official Gazette.

2. In Schedule II to the Telecommunication Tariff Order, 1999, under item (8), for sub-item (8.a), the following sub-item and entry relating thereto shall be substituted, namely: -

(Dr. M.P. Tangirala) Pr. Advisor (F&EA)

Note 1 – The Telecommunication Tariff Order, 1999 was published in the Gazette of India, Extraordinary, Part III, Section 4 under notification No. 99/3 dated 9th March, 1999, and subsequently amended as given below: -

Note 2 – The Explanatory Memorandum explains the objects and reasons for the Telecommunication Tariff (Sixty Eighth Amendment) Order, 2022.

EXPLANATORY MEMORANDUM

1. The Telecom Regulatory Authority of India (hereinafter referred to as the Authority) is established under the Telecom Regulatory Authority of India Act, 1997 (TRAI Act). Section 11(2) of the TRAI Act inter alia states: “Notwithstanding anything contained in the Indian Telegraph Act, 1885 (13 of 1885), the Authority may, from time to time, by order, notify in the Official Gazette the rates at which the telecommunication services within India and outside India shall be provided under this Act including the rates at which messages shall be transmitted to any country outside India” thereby empowering the Authority to notify rates for various telecommunication services.

2. In exercise of these powers, the Authority has been notifying tariffs for various telecommunication services including Unstructured Supplementary Service Data (USSD) based mobile banking and payment service. The tariffs for USSD based mobile banking and payment service have been regulated in the form of ceiling tariffs prescribed by the Authority under item (8) of Schedule II of the Telecommunication Tariff Order 1999, as amended from time to time. The purpose of the present amendment to the TTO is to revise the framework for USSD based mobile banking and payment services. This explanatory memorandum aims to provide the rationale and reasons for issuing this amendment.

3. In December, 2011, Department of Financial Services (DFS) was allocated USSD code *99# by the Department of Telecommunication (DoT) for mobile banking services through the USSD gateway of National Payment Corporation of India (NPCI). In April, 2012, TRAI mandated that every Telecom Service Provider (TSP) should facilitate the banks to use USSD to provide banking services to its customers in not more than two stage entry of options in the case of USSD. In November, 2012, NPCI launched a USSD Gateway (National Unified USSD Platform) for enabling mobile banking through the USSD channel. In 2013, the Authority through the Mobile Banking (Quality of Service) (Amendment) Regulations, 2013, increased the maximum number of stages for completing a mobile banking transaction from two to five, primarily to increase the number of banking services available to USSD consumers.

4. The Authority through Telecommunication Tariff (Fifty Sixth Amendment) Order, 2013, prescribed a ceiling tariff of Rs. 1.50 per USSD session for USSD-based mobile banking service and established a framework to facilitate the agents of the banks to interface with the access service providers for use of USSD to provide mobile banking services. Further, with a view to facilitate mobile banking through USSD for financial inclusion, the Authority reduced the USSD- based ceiling tariff for banking and payment services from Rs. 1.50 to Rs. 0.50 per session through the Telecommunication Tariff (Sixty First Amendment) Order, 2016 and increased the number of stages from five to eight stages per USSD session through the Mobile Banking (Quality of Service) (Second Amendment) Regulations, 2016. The Authority also suggested various mechanisms viz., improvement in software features, design of user-friendly menu, increase in consumer awareness, developing Unified USSD platform to support transactions across all payment platforms to the NPCI/Banks to increase usage and popularity of this service.

Table: Average tariffs for wireless service for the quarter ended September, 2021

Note: The above figures are based on data submitted by the TSPs to the Authority

12. The above table clearly indicates that the present ceiling tariff of Rs. 0.50 for each USSD session for mobile banking is quite high as compared to the average tariff for one minute of outgoing voice call as well as for one outgoing SMS.

13. Also, in terms of revenue, the total revenue generated through USSD mobile banking sessions is quite small at approximately 0.00007% of the total revenue of the industry.

14. It is also pertinent to note that the information furnished for two consecutive quarters of F.Y 2021-22 by the TSPs providing this service indicates that the USSD sessions for self-care service[1] constitute 99.5% of the total USSD sessions and the remaining miniscule share of 0.5% pertains to USSD sessions for mobile banking and payment services.

15. It is logical to assume that the network cost involved in handling USSD self-care service session is the same as the cost for USSD mobile banking and payment session. Still these self-care USSD sessions are available without any charge to the end-users whereas USSD mobile banking and payment services are being charged at the ceiling tariff.

16. Further, one operator is providing USSD non-self-care service free of charge at present whereas, other operators are charging at the ceiling tariff of Rs. 0.50 per session. On analysis of the information available, it is observed that the number of USSD mobile banking and payment sessions, for the operator that doesn’t charge, is four times the number of sessions initiated at ceiling tariff. Thus, it can be assumed that the users prefer the operator providing this service free of charge. This substantiates the analysis of the Authority that a reduction in charge for this service may help popularize this service and increase its adoption.

17. The Authority is of the view that since the USSD target users are generally low income rural population who are still using feature phones, imposing no charge for USSD service can have a positive impact on number of USSD transactions, which will be a significant step towards achieving digital financial inclusion. It will also not impact the revenues of the industry substantially, especially when similar transactions for self-care services are being provided free by the service providers. Therefore, the Authority has decided to do away with the charges prescribed for USSD for mobile banking and payment service, while keeping the remaining aspects unchanged. The Authority will continue to keep a watch on the progress of service and may review the charge after a period of two years.

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[1] USSD based self-care service refers to the self-care/ self-help/ self-support services offered by the telecom service providers to their subscribers through the use of USSD. This service is used by USSD subscribers to seek information on pre-paid balance, validity period, details of tariff plan etc. by dialing a USSD code.