Finally, the Minister for Communications Dayanidhi Maran has had his way. His pet project ?? a “one India” tariff that assures a uniform call rate across the country ?? has become a reality.
The “death of distance”, as it is being called, was announced on February 10. After two postponements, state-run telecom companies Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) finally gave in to pressure from the Ministry of Communications and decided to reduce domestic long distance call rates to Re 1 per minute, irrespective of the network (fixed or mobile) or the place. The new tariff package will be effective from March 1.
Under this, local call charges for BSNL and MTNL landline users within their networks will cost Re 1 for three minutes (against the earlier Rs 1.20) while calls to other networks, both landline and mobile, will cost Re 1 per minute within a state (intra-circle). This was earlier Rs 1.20 a minute.
All other calls from BSNL and MTNL landline or mobile phones anywhere in the country would be charged at a flat rate of Re 1 a minute, against the earlier Rs 2.40 a minute. The rental will, however, be slightly higher at Rs 299 a month.
For its mobile services, BSNL’s postpaid users will pay a rental of Rs 299 and Re 0.40 a minute for calls made to other BSNL subscribers within the state (intracircle). Calls to other networks across the country (STD) will cost Re 1 a minute. For BSNL’s prepaid subscribers, however, there is a Rs 799 package, which includes talktime worth Rs 550 for a validity period of 30 days. Under this package, calls made to BSNL subscribers will cost Re 0.60 a minute while for other networks it is Re 1 a minute.
For MTNL cellular subscribers, STD calls will be charged at Re 1 a minute, to MTNL as well as other networks. MTNL mobile calls within Delhi and Mumbai (intra-circle) will be charged at Re 0.40 a minute for calls to BSNL and MTNL postpaid cellular users and Re 0.60 a minute to BSNL and MTNL prepaid users.
The reduction in national long distance tariffs will, no doubt, take the sector that much closer to achieving the ministry’s target of 250 million telephone connections by 2007 from about 130 million now.
On the occasion, BSNL Chairman A.K. Sinha stated: “The new (tariff) plan will enable customers of BSNL and MTNL to make calls from one end of India to the other, from Kashmir to Kanyakumari, at the cost of Re 1 per minute. This will mark the death of distance, and STD will now be history.
The PSUs’ initial reluctance to introduce flat STD tariffs was on account of the fact that their revenues would take a hit. BSNL alone calculated its likely losses to be around Rs 30 billion. This, it felt, would impact the company’s rural rollout.
On second thoughts, however, company officials felt that lowering long distance tariffs would increase traffic volumes by around 30 per cent. Of late, BSNL and MTNL, the country’s leading fixed line operators, have been losing out to mobile connections. With the new tariffs, officials expect the churn from fixed line to mobile phones to stop.
The move is not only aimed at boosting usage, it is also expected to force private operators to follow suit. Already, a similar deal is being offered by rival Reliance Infocomm under its Joy 499 scheme. For a rental of Rs 499, Reliance Infocomm users can make STD calls at Re 1 a minute. With BSNL and MTNL reducing their tariffs, Reliance officials are reported to be considering reducing the monthly rental on this scheme further.
Telecom operators like Bharti and Idea have also indicated that they would drop STD and local tariffs to match the OneIndia scheme. “We will follow the government’s initiative and offer similar tariffs to our subscribers,” says Vikram Mehmi, chief executive officer of Idea Cellular.
Of course, according to private telecom operators, matching the OneIndia tariffs would be so much easier had the access deficit charge (ADC) been reduced. As T.V. Ramachandran, director-general of the Cellular Operators Association of India, says, “Necessary corrections need to be made in the existing regime to address the anomaly of ADC being charged on a call-by-call basis, before the OneIndia tariff comes into effect on March 1, 2006.
Under the current interconnect usage charge (IUC) regime, an operator has to shell out Re 0.30 each for origination, termination and ADC and up to Rs 1.10 as carriage charge (depending on the distance). Given this situation, STD call rates cannot be brought down below Rs 1.85 a minute for a distance of 200-500 km and Rs 2 a minute for calls beyond 500 km. Operators claim that if this is reduced, long distance tariffs can be brought down substantially.
In light of the operator demand and stiff competition, TRAI Chairman Pradip Baijal says: “We will shortly announce the revenue share-based ADC.” This, according to reports, is expected to be 46 per cent of the long distance revenue under the new regime.
