Regulatory mandate for forceful 2G/3G shutdown could widen digital divide: Vodafone Idea to Trai

Vodafone Idea

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26 Aug, 2025 12:21

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Vodafone Idea said that any forceful 2G/3G shutdown through regulatory mandate will lead to low-income and marginal consumers being forced out of accessing essential telecom services, thus increasing the digital divide.

The telco said that such a move would also impact the financial inclusion of rural and marginal consumers.

Any regulatory mandate of shutting down any particular technology would directly conflict with the auction norms as they provide technology neural spectrum, the telco said in its counter comments on Trai's consultation paper on promoting 5G transformation.

"...there are huge numbers of consumers who are using 2G networks, despite having extensive 4G coverage available. The primary reason can be attributed to the cost of migration from feature phone to smartphone as the consumers using 2G networks would largely be in the lower income bracket," Vodafone Idea said in its counter comments.

The telco said that it is a settled economic principle that regulatory mandates discourage the organic growth of the sector and can bring inefficiencies into the ecosystem. "the phased shutdown of the 3G network being carried out by telcos establishes the role already being played by market forces."

"The contention raised for 2G/3G shutdown in said comments of the stakeholders to avoid unnecessary network costs disregards the very important factor of public interest…there is larger public interest which is being fulfilled through the continuation of such older technologies. Any decision to shut down older technologies must be taken after keeping in mind the interest of consumers, as is being done in the case of 3G," it said.

Vodafone Idea urged the TRAl to disregard "rhetoric comments" of sunset date for legacy technologies.

Bharti Airtel's managing director, Gopal Vittal, on February 7's analyst call, said that a substantial amount of its 2G customers will disappear in the next few years. He said that 2G technology’s contribution to Airtel’s business has become relatively small and is in the ballpark of around 17 percent.

“In markets like Gujarat, Maharashtra, Kerala, Mumbai and Delhi, they are in single digits. But you still see reasonably high contributions in markets like Bihar, UP, MP, Chhattisgarh, etc. In my sense, in the next few years, you should start seeing substantial, almost disappearing, use of 2G. We can decide what we do then,” Vittal said.

The cash-strapped telecom operator, in its counter comments, suggested a central and pan-India-based handset subsidy scheme, supporting the migration of feature phones to smartphones through the respective operator instead of any regulatory mandate for shutting any particular technology.

This scheme can be funded through the existing USOF corpus, now renamed Digital Bharat Nidhi. It would also meet the objective of Universal connectivity for low-income consumers.

"...such subsidy will fuel up organic migration of customers to next generation technologies over a period of time and thereafter, the relevance of network of older technology would diminish," the telco said in its counter comments.

The telco had, in its January 22, 2023 comments to the Trai paper, urged the authorities to bring an incentive mechanism for identifying innovative 5G use cases, saying that a high regulatory burden leads to higher pricing for customers, including enterprises, which potentially discourages the enterprises from developing new 5G use cases.

The telco also said that there are still no substantial 5G use cases available in the market, indicating a need for more efforts on cross-sector collaboration so sector-specific entities can launch specific use cases.

The telco recently said it plans to offer 5G services in six to seven months after securing funding.

Vodafone Idea CEO Akshaya Moondra, during the company's earnings calls on January 30, said that monetisation is not happening in the market despite significant investments by telcos. "I think the industry does need to see some movement towards monetisation. Let's say if we are launching 5G probably in the next 6-7 months, then we will have a better idea what is happening on the monetisation front," he said.