Friday, 28 February 2020

Advantage Customer!

Updated: January 2, 2010 4:25 pm

This is one story the Indian middle class would never tire to enjoy. They just love it! The talk is on about the ever-falling talk-time rates in the country. As India moves to newer and newer talk time formats by the minute, consumers lap up an unbelievable story this part of the world: from Rs 16 per minute about a decade ago to half a paisa per second call rate under the pay-per-second plan.

Is this the last we heard of the raging talk-time tariff war? Not really! With each new player, about five of them are yet to launch their services, the consumer might well talk his way to the bank, literally!

India is set to clock 500 million wireless connections by the end of the year, achieving about 97 per cent tele-density in urban centres. Split over 22 circles, India has about 14 operators today offering mobile services to consumers across the length and breadth of the country.

Telecom consumers await the other five players set to join the tariff war as they launch their services in the country. With about half of India yet to connect to the wireless story, foreign telecom companies are so keen to enter India despite the tariff levels touching a new low. Most western countries have already reached the saturation point in terms of phone subscriber numbers, with very little room for further growth.

Uninor, the telecom service from the joint venture company between Unitech and Telenor, launched its GSM mobile telecom service across seven circles early December in an already crowded market. It’s the14th telco of India, perhaps the only country with those many players. Many more players are waiting to launch their services shortly.

Uninor, the latest entrant (December

03), too came into the fray on the tariif plank. It though was keen to asert that tariff was not the only feature to attract subscribers. Uninor too is offering “value for money” schemes. It has not just copied the existing per-second billing format but invented a new format, that added a new dimension to the tariff war. It has put on offer a 29 paise per minute (less than half-a-paisa per second) plan, and by charging less for talking more etc!

“Per-second billing is not the only feature that subscribers are looking at,” president and CEO of the Telenor group Jon Fredrik Baksaas told a news conference during the launch. But the company has focussed on varied tariffs for different needs, for instance talking longer, and making many calls. The two tariff plans are called “talkmore@29p” and “callmore@29p”.

Talkmore offers customers local calls at 29 paise per minute and STD at 49 paise per minute, with a call setup fee of 39 paise. Callmore offers locals calls at 29 paise and STD at 49 paise per minute, with a daily rental of Rs 2. Uninor, which was launched in Tamil Nadu, Kerala, Uttar Pradesh East and West, Karnataka, Andhra Pradesh and Bihar, has a pan-India licence, and wants to cover several other circles next year. The next big launch is expected in March. Uninor said the company would be Ebitda breakeven in three years and operational cash-flow breakeven in five years. This is interesting, as the company was launched with perhaps the lowest tariff scheme.

But it is not just the new entrant that is into the tariff slugfest. The tariff war in fact has got everyone—old, new, private and state-owned operators—into the act. First MTNL and then BSNL, both launched earlier this year the per paisa pay per second plan. MTNL offered early December its one-paisa per-second call rate under the pay-per-second plan. This follows Tata DOCOMO that started the per-second pulse game, to be followed by several telecom companies, including Bharti Airtel, Vodafone and new players like MTS have shifted to per second billing.

Under the new billing plan, MTNL subscribers would be charged one paisa per second for local and STD calls across the country on all networks. Voice and video calls made to MTNL Delhi and Mumbai Networks would be charged at 1/2 a paisa per second. MTNL has also slashed SMS rates under this plan to 25 paise for local, Re 1 for national and Rs 2.50 for international SMSes.

BSNL slashed the National Roaming Charges cutting the rates and pegging the talk charges at one paise per second. The company said in a statement that it has brought down the national roaming rates “from Re 1 or Rs 1.50 per minute to 49 paisa per minute”. It further added under per- second planning, the roaming charges would be one paisa per second to calls on its own network and 1.2 paise per second to other networks. Roaming charges are fees charged for calls made to mobiles, which are not in the service provider’s coverage area. “This is an attempt to join the price war scenario currently prevailing in the country,” BSNL chairman and managing director Kuldeep Goyal told media, adding, “our primary aim is to bring the advantage of our network to our customers.”

Both MTNL and BSNL followed other telecom majors like Tata DOCOMO, Idea, AirTel, Relience, Aircel, and Vodofone, which are already locked in a competition offering cheap and innovative tariff schemes to consumers. Operators have been announcing new promotional schemes including reduction in tariffs for voice call, slashing roaming charges and many more such lucrative offers.

Per-second call rate phenomenon brings with it both innovation and imitation. But the end-objective is obvious: to retain market share for existing players and to corner market share among new players. Bharti Airtel and Tata DOCOMO have reduced roaming charges, by almost 60 per cent while Tata DOCOMO implemented per second billing mechanism to roaming.

There are concerns though that this tariff war has given rise to. While the consumer is too happy getting to shell lesser and lesser by the day even as the talk time increases, companies in the telecom sector privately admit that it does hurt the margins. Roaming charges accounts for around 10-12% of operators’ earnings and the recent developments may significantly erode roaming revenue of operators.

Market experts believe that mobile number portability is further going to intensify the competition as operators would be forced to come up with customer friendly schemes for retaining their customer base. But that is another story!

By K Anjna New Delhi

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