The country?s mobile telephony sector, which already offers among the cheapest tariffs in the world, could soon witness another round of rate wars. Firing the first salvo is Tata Teleservices Ltd (TTSL), which has replaced the one-minute pulse rate with a flat charge for both local and STD calls for its prepaid CDMA customers.
The announcement, which was made on Friday by the country?s sixth-largest mobile operator, means a TTSL subscriber can talk for an unlimited length of time by paying just Re 1 for a local and Rs 3 for an STD call. These calls can be made to the networks of any service provider. Ordinarily, operators charge a tariff that is scaled up with the passage of every minute.
Though other mobile operators declined to respond to FE?s queries on whether they would offer similar plans, analysts said rivals would probably follow suit. ?Moves like this would bring down the average revenue per user by around 18-20%,? said Crisil?s Manoj Mohta.
Commenting on the new tariff plan, TTSL managing director Anil Sardana said, ?Pay-per-call will change the pricing paradigm in the telecom space.? He added that the company stands to add valuable customers without any loss of revenue.
Analysts confirm that the package is smartly conceived. The company has a pan-India network, but not a very high subscriber base?just under 40 million?resulting in the least congested network. This gives the company headroom to add more subscribers without compromising on service quality.
Furthermore, industry data shows that customers on average do not speak for more than two minutes, and that figure was unlikely to change with the flat charge. Moreover, by restricting the offer to only prepaid subscribers, its bottomline would be unaffected as recharge and top-ups would have to be made irrespective of usage.
Tariff wars are common in India?s hugely competitive mobile market. They first began in 2003 when the then Reliance Infocomm unveiled a monsoon package, which provided a handset bundled with a mobile connection for a mere Rs 500. The next major move came in 2006 when state-owned BSNL introduced its One-India plan, under which the rate distinction between local and STD calls were removed with both starting at Re 1.
Operators have in the past described such tariff packages as ?predatory? as they are clearly aimed at inducing migration from other networks. But with operators gearing up for the much-awaited?and much-delayed?number portability regime now scheduled for January next year, subscribers can look forward to a barrage of new plans like that of TTSL in the months ahead.