Ringing In The New Year With A Tariff Cut
Subscribers will have the last laugh as cellular operators take on WLL rates
financialexpress.com
Every summer, Indians are audience to the cola wars when the two cola giants fight each other on just about every possible front. Another segment, which seems to be taking a similar shape, is the telecom sector, particularly if one were to consider the events of the last seven days.
The week started in the backdrop of the Reliance Infocomm’s launch of limited mobility services. The company launched its code division multiple access (CDMA) based services with rock-bottom prices. The calls were priced at 40 paise per minute with a 15-second pulse. Even for national long distance calls, Reliance created a furore by announcing rates of 40 paisa per minute on the its network.
With Reliance having launched the attack and having hit the cellular players where it hurts the most—prices—all eyes turned to the cellular camp. What was their plan of action to hit back at the ‘R’ rates? How would they hold on to their market?
The cellular players didn’t take long to react. Less than a week after the Reliance launch, on January 2, 2003, they got together and hit back in the form of what they termed as their ‘New Year Gift’ to subscribers.
The private cellular service providers called a joint press conference on Thursday and announced a huge rate cut to bring down mobile-to-mobile long distance tariffs to Rs 2.99 per minute from the peak rate of Rs 9 per minute. The rates exclude the airtime rates of Rs 1 to Rs 2.40 per minute, which are charged over and above the tariffs depending on the scheme and the operator subscribers have chosen. And the users will be paying more for calls made in the 50 to 200 km range.
The new rates took effect Thursday midnight. Earlier, mobile users had to pay different tariffs depending on the distance. They paid Rs 1.20 per minute for calls made within a distance of 50 km; Rs 2.40 for distance between 50 km and 200 km; Rs 4.80 for distance between 200 km and 500 km, and Rs 9 for distances beyond 500 km.
It, however, does not end with the revised rates. It looks like a lot is in store for the customers. As Union communications minister Pramod Mahajan remarked at the conference, “This is the first installment of surprises that cellular service providers plan to announce.” The cellular industry would announce many more concessions on a weekly basis, he said.
According to cellular industry officials, some of the other areas where one can expect more rebates are inter-operator free incoming calls, reduced SMS rates, etc. In fact when asked about allowing free incoming calls from fixed line phone subscribers to cellphone users, Hutchison managing director Asim Ghosh said: “We have already approached the regulator and the international practice is that the fixed line operators also pay for the charges. The issue is under urgent consideration for the past three years.”
However, the above talked about rate cuts have not yet been provided by MTNL and BSNL, who offer cellular mobile service under the brand names Dolphin (in Delhi and Mumbai) and CellOne (across India, except for the two metros) respectively. Mr Mahajan said these two public sector units would soon announce a cut in long distance rates, but refused to say by how much. This was also confirmed by BSNL chairman and managing director Prithipal Singh, who said that they would be getting their new rates cleared by the regulator before announcing the new rates. So do watch out for reduced rates of these PSUs.
The cellular players, on their part, asked the government to make available “a level playing field” to them. They urged the government to consider their demands, which include increased availability of spectrum, fall in access charges and interconnection between operators of different types of services. Spicecorp chief executive officer Dilip Modi pointed out that while in most of the places in world each cellular operator gets around 14 M Hz band, Indian cellular operators get some 5 M Hz band. Reacting to these demands, Mr Mahajan said government was aware of the problems and would like to resolve them in a cordial manner.
On increasing spectrum availability to cellular players, Mr Mahajan said: “We shall not allow any cellular operator to become a loss making entity due to shortage of spectrum.” He added that a separate committee would be formed to look into the issues and formulate a policy, according to which an increase in the number of subscribers will automatically make additional spectrum available to an operator.
Taking a deeper look at the price cuts, there are three parties who made it possible and whose revenues would be affected. Now, for any long distance mobile to mobile call, there can be up to three parties that come into the picture—the originator, carrier, which is the long distance network provider, and terminator. While the originator and the terminator in the context of the new long distance tariffs are the cellular service providers, the carrier in this context is the player on whose long distance network the call is carried. In order to be able to offer lower rates to the subscriber, either or all of the three players need to take a lower charge for their services. The long distance network provider could be Bharti Telesonic or BSNL among others.
Some cellular providers said they are able to offer the present mobile to mobile long distance rates of Rs 2.99 per minute only because Bharti Telesonic Limited’s long distance network IndiaOne agreed to take a lower share in the revenue.
Bharti Telesonic’s chief executive officer N Arjun said that with these cuts, they expect the mobile-to-mobile traffic to go up by 60 per cent by the next two months.
At the end of it all, we move in to the next week with some happiness, some questions and some expectations. No doubt the subscribers are happy. STD calls have become much cheaper, even if it’s a good news only for those Indians who are subscribers of private cellular operators. Yet the pending question is when would the interconnect agreement be signed between the private limited mobility players and private cellular operators? Because till that is done, it doesn’t appear that customers of these two camps can talk to each other. Expectations are many. What have the cellular players in store for the subscribers? What are the ‘weekly installments’ that Mr Mahajan talked about? When would MTNL and BSNL slash their rates? Only time will tell. |
