Quality Will Be The Litmus Test

New Delhi, October 19: | Updated: Oct 20 2002, 05:30am hrs
With the launch of BSNLs service, analysts do expect a churning of the customer base but the bigger challenge for the firm, they feel, would lie in retaining the consumers through quality service.

Will BSNL be able to deliver the service quality that the private sector operators provide The track record of another public sector undertaking Mahanagar Telephone Nigam Ltd (MTNL) is less than impressive in the cellular sector. A brand has to be created, maintained and sustained with the backing of quality service. BSNLs ability to do that is suspect at this point in time, telecom analyst at ICRA, Amitabh Saxena told eFE.

Nevertheless, industry pundits are predicting a price war in the 10 million-strong subscriber base as the private sector operators try to match what they claim are unfair advantages that BSNL is offering to its customers by leveraging its huge fixed line network.

Incoming from BSNL fixed phones on BSNL cellular phones is free in one tariff package offered. That is an anti-competitive practice, the director general of Cellular Operators Association of India (COAI), TV Ramachandran said. However, in keeping with the euphoric mood of the launch, he stopped short of saying that the matter would be taken up with the Telecom Regulatory Authority of India (Trai).

There are level playing field issues and the private sector operators are at a disadvantage at this point of time, the head of IDC Indias Internet, communication and convergence group, Munish Myer said. For example, non-BSNL mobile subscribers have to pay an extra Rs 1.20 per local call for calling a BSNL mobile number.

The overall lowering of tariffs would, however, expand the market in terms of number of subscribers though average revenue per user (ARPU) will decline as more and more marginal users come on to the network. ARPUs are going to take a great hit. There will be an increase in overall cellular phone penetration but telecom companies will become sicker than they are, executive director at KPMG Consulting, Rothin Bhattacharya, warned.

He added that depleting margins would make it harder for the telecom companies to raise debt funding and that would be a cause for concern.

The sure winner in the pack will be the consumer who would be wooed by the public and private companies alike with attractive tariffs and value-adds.