I had really thought that Indian Telecom companies are digging their grave by slashing their rates to bare minimum and offering schemes like one second billing to keep their share in Indian Telecom pie
But here is something that has surprised me no end – According to Indian Telecom Minister A. Raja, the rates of telephony need to come down further – Infact so low that local calls should be charged at 10 paise per minute and STD calls at 25 paise per minute. He thinks its very much possible.
And if he says it, it must surely be possible !
Here is what Mr. A. Raja had to say (source)
“I have requested all operators to reduce the termination charge by 2010, and this will help to lower the tariffs further. Local call charges can come down to as low as 10 paise a minute and STD charges to just 25 paise, if this happens.” The termination charge is the levy paid by one operator to another on whose network the call ends.
Mr. Raja said operators were also asked to make optimum use of the Universal Service Obligation Fund to build telecom infrastructure in rural areas. The Centre was further simplifying the rules for the operators to get money from the Fund to boost rural telephony. The Fund has more than Rs.16,000 crore collected from all operators.
India already has lowest mobile call rates in the world and cutting them further nearly 5 times – Local calls at 10 paise per minute !!!! beats me ! speak on your mobile for half hour and you end up paying 3 rupees…
Do you think we can see that sort of rates?
bahot acha plan hai please start kijiy.
hi
As an investor I wouldn’t want to bet a dime on any telecom company given the pricing war and the level of regulatory intervention. So, I don’t see any sense in Singtel increasing their share in Bharti unless they want to make up in volume what they have lost in margin.
As evidently basic telephone call has become a commodity I guess the other area of competition or differentiation that telecom companies could be focussing is on VAS. Arun, would you want to do post on the VAS services and across telecom companies in India?
I agree with Pooja that whenever there is competition among companies (suppliers), the customer (buyer) stands to gain.
Some questions on my mind are:
– At what cost will this price slashing come? What services will be made ala carte?
– What customer support can a company offer if they are making less than peanuts?
– For companies to be profitable or provide a certain pricing, would they then tie to a basic monthly usage (revenue) or resort to menacing advertising (like a 10 second audio ad before for each call you make?)
– If everybody over uses their mobile phones what will be the burden on the telecom traffic and thus fall in quality of service?
May be my thoughts are just random… what do you think?
I like the idea of 10-second Audio Ad, but in case of emergency calls where one need to get connected quickly, it will be very frustrating.
Companies have to come-up with some innovative steps to generate profits to survive in this very-competitive industry.
Its really surprising that A Raja is still thinking of these call rates (10p and 25p) as already the current call rates ( per second billing (introduced by Docomo)) is lowest. I am really interested in knowing from where the profits will come up for these telecom companies. Already the Call rates are the lowest in the world and avg. ARPU is also very less, its a question that whether these companies will be able to survive or not..??
A popular economist rule – consumers benefit the most in a purely competitive market. Telecom sector surely stands by this rule.
after a lot of blood letting the weaker ones will collapse and be taken over. A consolidation is necessary for the industry and it will come soon.
Till then, this price madness will continue. I see more madness post the 3G spectrum auction (as and when it happens).