The Hindu Business Line : Telecom operators upbeat on zero rental schemes

AFTER the success of what the telecom industry refers to as `Formula 99', with sub-Rs 100 rentals per month, various telecom operators — both GSM and CDMA — are now latching on to the zero rental plans.

Early indicators reflect that this scheme has the potential to ring in big numbers, while tapping new user segments and entry-level customers.

Speaking to Business Line, the Chief Executive Officer of Reliance Infocomm Ltd, in Andhra Pradesh, Mr R. Balachandran, said the zero rental option is certain to open up untapped segments and particularly benefit those who make few outgoing calls, but use their mobile phone to receive calls.

Echoing a similar view, the CEO of Bharti Cellular Ltd, Andhra Pradesh circle, Mr T. Elango, said cellular telephone tariffs have nosedived from the early heady days and have more or less come down to the level of the basic fixed phone rates. In fact, some tariff options are lower than those of the basic phone.

The zero rental scheme is an attractive option for first-time mobile phone users who have used only a landline. They will have the additional advantage of acquiring a cellular phone, while not having to bother about rental issues.

In fact, this is like upgrading from landline to cellular service.

"The best thing about this zero rental offering is that it addresses the important monthly rental issue. Often, monthly rental acts as a psychological barrier to a potential customer. Thousands of potential users, who would actually like to use a phone do not take one because they feel they will have to pay a rental whether they use it or not. It is here that this new scheme would help," Mr Balachandran said.

"It does not matter who starts such an offer, and in which circle. Operators often do not have a choice but follow one good tariff option rolled out by a competitor. Unless this is done, they will lose. So, within weeks several GSM (Bharti, Hutch) and CDMA players such as Reliance Infocomm, are now offering this option," a spokesperson of one operator said.

Typically, in cases where the usage is high, a subscriber does not mind higher rental with attractive packaging. But when rentals are low, the usage options tend to be higher.

But in cases where people want to use mobile phones mainly for incoming and less for outgoing calls, such plans help, Mr Balachandran said.

"With cheaper handsets for a couple of thousands, the distinction between mobile and landline is blurring. The best part is that the industry would grow while tapping new user segments," Mr Elango said.

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