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Monday, October 7, 2002

BSNL’s late entry makes present players happy
Manoj Kumar

PRIVATE telecom operators are once again happy over the delay in the launch of BSNL’s cellular services. Spice and Bharti telecom have doubled their efforts over the past few days to capture the exponentially growing market of cellular services in Punjab and Chandigarh. They want to capture a sizeable chunk of the market before the entry of telecom giants — BSNL and Reliance.

Market potential

The telecom operators have found Punjab and Chandigarh as the most lucrative market, second only to Delhi and other metros. According to the estimates of the Cellular Operators Association of India, "The teledensity in the region is much higher as compared to the other states. During the past eight months, the market has doubled, from 2.36 lakh to over 5 lakh connections, and in the next five years, the cellular penetration in Punjab is expected to cross 10 per cent."

Market experts agree that the market has not expanded due to high tariff and limited infrastructure. It is not the lack of demand but the lack of infrastructure and suitable packages that is affecting the growth. At present there are around five lakh cellular connections in Punjab and Chandigarh, they say, against a demand of over 16 lakh connections.

Shift in market

Vijay Kaul, Chief Marketing Officer, HFCL, Connect Telecom, avers that the regional telecom market is witnessing a shift from landline phones to WiLL and cellular phones. He says: "The cities like Ludhiana and Jalandhar, where a section of population needs mobile service in the limited area, are opting for limited mobility phones. However, those who want services for wider area, are shifting towards cellular services." He adds that his company now plans to penetrate the interior areas.

BSNL officials also admit that the growth rate of new landline connections over the past one year has slowed down as compared to the cellular and WiLL phones. Perhaps that was the reason to enter into cellular market. Reliance is also expected to tap the WiLL market.

Fall in tariff rates

A large section of potential subscribers are still waiting for the launch of BSNL cellular services and are expecting free incoming calls though Prithpal Singh, Chairman and MD of the BSNL is tight-lipped about their tariff plan. He says that BSNL cannot disclose the tariff plan at this stage. Officials claim in case BSNL made the tariff plan public, other operators would implement it even before the new service is launched. However, officials claim that BSNL would certainly offer better rates to the consumers, since it would be difficult for the public sector operator to compete in the field of customer care service and billing packages, at least for the first six months.

Vinod Sawhney, CEO, AirTel, Punjab, Haryana, HP and Chandigarh, is optimistic about the growth of market. He says that the STD and ILD rates have already declined by more than 50 per cent over the past few years. The rate could further decline provided government is ready to revise the licence fee of the operators. Regarding the possibility of free incoming calls from BSNL Swaran Bajaj, DGM (marketing), Spice Telecom, says, "We are ready for any new tariff plan, and would offer the subscribers competitive rates to maintain our edge in the market."

At present, Spice and Airtel are offering almost the same tariff. Both are offering two kinds of billing options. One, at Rs 249 monthly rent the competitive rates are 75 paise per 30 second up to 250 minutes in a month for outgoing calls, 60 paise per 30 second for 500 to 750 minutes and 50 paise per 30 second call rates for above 750 minute bills. The incoming call rates under that category is Rs 1.20 per 30 seconds. Under the second scheme, mostly taken by bulk users, the monthly rent is Rs 349 per month but the call rates are substantially lower— Rs 1.49 per 30 second for outgoing calls and 49 paise per 30 second for incoming calls. However, the customers can also avail free incoming calls facility by depositing Rs 6,000 as non-refundable fees in advance. The customers can take roaming facility at Rs 3 per minute.

BSNL’s readiness

The BSNL officials, responsible for the launch of mobile service in Punjab, say, "We plan to beat other service providers by offering better service at lower rate, with wider coverage of areas and stress on marketing in lower segments. Our focus would be to tap the unexplored rural market and lower income groups, besides other segments."

Another official requesting anonymity says, "We have already installed more than 160 roof-top towers in Punjab and Chandigarh and are fully geared up to launch the service. The trials have been already started in the department. In the first phase, the service would be available in 51 towns of the state with an installed capacity of 1,10,000 lines. In the next phase, the service would be extended to other 11 towns of the state.’’

New handsets

With the slashing of sales tax on handsets to 4.4 per cent in Chandigarh, the grey market has declined drastically during the past few months. Kapil Dev Sharma, Customer Care Executive, Agrani Convergence Limited, here, says, "New models of handsets are coming everyday, and the competition will further hot up with the entry of BSNL and Reliance. The companies like Nokia, Sony-Ericsson, Philips, Samsung, Alcatel and Siemens are in this expanding market. The handsets are available within a range of Rs 4,000 to Rs 20,000 with various features. One can have a Nokia-3315 set (Rs 6,699), Alcatel- 311 (Rs 6595), Samsung- R 220 (Rs 9,000) and Sony Ericssion- 3618 (Rs 6400). The rates may further fall down with the decrease in sales tax in Punjab, currently pegged at 13.5 per cent.’’

He adds that cellular services are going to witness unexpected changes in the coming years, with the change in technology. The changes would depend upon the growth of state economy, launching of new products and further fall in the cost of utility services.