Wednesday, January 1, 2003, Chandigarh, India


M A I N   N E W S

Mobile telephony price war hots up
A.S. Prashar
Tribune News Service

Chandigarh, December 31
As the New Year dawns, the customer is set to become an even bigger king of all he surveys in the field of mobile telephony. With Spice, Airtel, Connect, BSNL’s Excel and Cellone, Reliance Infocomm with Tata Indicom too looming large on the horizon, a fierce tariff war has broken out among the mobile telecom players, the like of which has not been seen in the country before.

In a bid to woo the customer, the mobile telecom companies are dropping call tariffs and are offering value-added services such as free incoming calls from the same service provider, SMS, call wait, call hold, call forward, call barring not to mention incentives like gold coins, ACs, trips abroad to exotic destinations if he happens to win in any of the numerous promotional schemes offered by them.

Gone are the days, hopefully forever, when each outgoing call was charged at the rate of Rs 16 per minute. Now the charges vary between as low as Rs 1.20 per 30 seconds and Rs 1.50 per 30 seconds. And they are expected to continue to drop further in the coming days.

When cellphone first made its appearance in Punjab in 1996, it was seen as a luxury and a rich man’s plaything. During the intervening period, its image has undergone a change. It is no longer regarded as a luxury but has transformed itself into a necessity for almost all sections of society.

Little wonder, the growth of mobile telephony in this part of the country has been phenomenal. As a matter of fact, other than Delhi and Mumbai, Punjab has the highest cellphone penetration in the country. “This is because Punjab is among the richest states in the country. I think, this has also something to do with the Punjabi psyche for doing everything possible for life-style enhancement”, observes Mr Vinod Sahni, Chief Executive Officer, Airtel.

“When we came in the market in 1996, it was seen as a rich man’s toy”, says Mr Ashok Goyal, Chief Executive Officer, Spice Telecom. “Now we are being compared with fixed line telephones. In Mumbai, mobile phones have already overtaken the fixed line connections whose number has begun to shrink. Rates have become more and more affordable and the market is expanding with each passing day. It is no longer seen as the toy of the elite. It has become a common man’s necessity”.

Interestingly, the entry of more mobile telecom operators has not affected the growth of the cellphone industry. If anything, it has only further opened up the market for them. There is thus room for everybody.

Spice has been on the scene in Punjab for more than five years. It now boasts of a subscriber base of more than 4.30 lakh across 100 towns and cities of Punjab. Its growth trajectory has been very interesting. In the first year of its operation, it secured just 30-40,000 connections. It took the company two to three years to cross the one-lakh figure. The second lakh came in 18 months. The third lakh came in a year while the four lakh-mark was crossed in just six months.

Airtel, on the other hand, has been on the scene for just four-five months and it claims to have already enrolled as many as two lakh customers. Connect, a limited mobile service provider in the Punjab circle, has also crossed the one lakh mark in subscriber base, according to Mr Vijay Kaul, Vice-President, Connect. BSNL which came on the scene only a couple of months ago has also enrolled a few thousand subscribers.

Currently, the Indian telecom market is among the most competitive markets in the world. Consequently, tariffs for cellular mobile services in India are among the lowest. However, another round of price war in mobile services seems inevitable. The cellular industry plans to bring down tariffs in view of the low tariffs announced by Reliance Infocomm for its limited mobile services.

Reliance is offering 400 minutes of outgoing calls free at a monthly rental of Rs 400. Incoming calls are free and the pulse rate for outgoing calls is 15 seconds. A 15-second pulse has been priced at 10 paise. Moreover, Reliance to Reliance STD calls are free for the first 400 minutes of outgoing calls.

The cellular operators are already under pressure due to intense competition among themselves. The entry of Reliance will definitely put pressure on their revenues. They have some hopes of succour, however, from the Supreme Court direction to the TDSAT to ensure a level playing field between cellular and WLL service providers.


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