The Hindu Business Line : Ringing in a `national' village

Already, since March 1, international long distance tariffs are down by more than 50 per cent, domestic long distance calls tariff rates have been revised downwards by nearly 60 per cent and local calls are lower by 17 per cent and the good news for consumers is that there's more in store. At stake is the booming Indian telecom market, which is growing at over 4 million new users every month. Unlike the earlier rounds of tariff battle, this time the first salvo was fired by the state-owned Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd by reducing STD rates to Re 1 a minute from the average existing rate of Rs 2.40 a minute.

In response, private operators, including Airtel, Hutch, Reliance Infocomm, Tata Teleservices and Idea cellular, have been falling over each other introducing similar STD tariffs. What's triggered off this steep reduction is the recent policy announcement made by the Telecom Regulatory Authority of India (TRAI) on Access Deficit Charges (ADC).

For the uninitiated, ADC is a levy imposed by the telecom regulator to fund rollout of telecom network in rural areas. The charge, imposed in 2003, was being collected from telecom consumers and passed on to BSNL for rolling out rural telephony.

This year, TRAI made some significant changes in the ADC regime that have enabled operators to pass on the benefits to the consumer.

For instance, the telecom regulator has brought down the total quantum collected as ADC from over Rs 5,000 crore to Rs 3,335 crore. This means that the burden on operators and consumers, as a result of the subsidy, has been reduced by almost Rs 1,700 crore in one shot.

The second important change brought about is in the way the ADC was being charged. Until now, the charge was being levied on every call that a consumer was making. The charge varied from 30 paise to 50 paise a minute for STD calls and Rs 3.25 a minute for outgoing international long distance calls.

So every time a user made a call he had to pay the amount on a per minute basis, which added to the total tariff. But now, for domestic calls, TRAI has introduced a new system of collecting ADC as a revenue share whereby operators pay 1.5 per cent of their annual revenues from domestic calls instead of it being charged on a per minute basis.

The third big initiative by TRAI is fixing a ceiling for carriage charge of 65 paise a minute, irrespective of distance. Carriage charge is the fee taken by the long distance operator from cellular and fixed line operators for carrying their calls from one part of the country to another.

In the earlier regime, long distance operators charged a maximum of Re 1 a minute for carriage. These relief measures triggered off the competition in the domestic long distance segment with all the operators jumping in with their version of the One India plan, which allows subscribers to make calls anywhere in the country at Re 1.Airtel announced two plans for its post-paid customers. India Home, at a Rs 299-rental, offering Airtel-to-Airtel local calls at Re 1 for two minutes and all other calls and SMS across India is at Re 1 per minute.

Another plan called `India Roam' is specially created for the roaming user and offers roaming calls at just Re 1 per minute for a monthly fee of Rs 499. Hutch and Idea Cellular have announced their versions of One India plan, which offers STD rates at Re 1 a minute. Hutch subscribers can avail themselves of the offer by paying an additional charge of Rs 250 a month over and above what they are already paying. The plan is being offered to both post-paid and prepaid customers. For its pre-paid customers, Airtel has introduced a Rs 899-Recharge plan wherein all local calls, STD calls and all SMS will be charged at Re 1. Idea Cellular's offer for post-paid users is similar to that of Airtel's India Home plan. For pre-paid card users, Idea has launched a recharge coupon of Rs 249, which offers all local and STD calls at Re 1.On the international long distance front also the heat is on. If Airtel and Idea dropped their ISD tariffs from Rs 14.24 a minute to Rs 7.20 a minute and Rs 7.50 a minute, respectively, for calls made to the US, the UK and Canada, the state-owned BSNL has gone a step further and dropped the tariffs to Rs 6 a minute. In a bid to become the cheapest service provider in the country, BSNL has also slashed ISD tariffs to Europe, Asia, SAARC to Rs 8 a minute compared to Rs 10 a minute being offered by private operators. In February, these rates were hovering around Rs 19 a minute. Further, ISD calls to other countries will now be available for Rs 10 a minute for a BSNL subscriber, while other private operators are offering the same at Rs 40 a minute. Countering the move, Airtel has dropped ISD tariffs for its fixed line telephone users, where calls to the US are available for Rs 5.99 a minute. Once again the credit for the steep fall in ISD tariffs has to be given to TRAI's new ADC regime. While the charges on domestic calls have been changed to revenue share, levy on outgoing ISD calls has been kept on a per minute basis. However, it has been reduced by more than Rs 1.70 a minute to 80 paise a minute, giving operators ample reasons to effect the reduction in ISD tariffs. In the coming months, even steeper tariff reductions are expected for the rural users with TRAI allowing operators to keep out the revenues from rural connections for the purpose of ADC computation.

While the consumers are having it good, the cut-throat competition between private operators and an aggressive BSNL is causing bad blood to flow on the telecom streets. As soon as BSNL and MTNL announced their One India plan, the Cellular Operators Association of India, which is the industry body representing the interests of the Global System for Mobile (GSM)-based mobile operators, lodged a protest with the public sector company that it was not implementing the new ADC regime in totality. The COAI said this was frustrating private operators'plans to offer lower tariffs. The cellular operator's complaint is that BSNL was still charging ADC on a per minute basis in some areas and second, the PSU is charging ADC for rural areas despite the TRAI guidelines suggesting otherwise. BSNL countered the allegations terming them baseless and out of context. BSNL said that it supported the new ADC regime and therefore there was no question of any violation. While there is no indication of any rollback of the tariffs announced by the private operators so far as a result of this stand off, it is becoming quite clear that operators may not restrict themselves to playing fair, to win this round of telecom tariff war.

tkt@thehindu.co.in

Picture by Bijoy Ghosh