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Re 1 call: Not really for the common man
Surajeet Das Gupta | February 22, 2006
Union Communications Minister Dayanidhi Maran has been publicly talking about his great vision - to ensure the death of distance. So after much dithering, state-owned Bharat Sanchar Nigam Ltd announced an aggressive "One India" plan last fortnight whereby customers will fork out only Re 1 a minute for a long distance call to any part of the country.
At first blush, it's an exciting offer. Your STD tariffs will drop a whopping 140 per cent - from current rates - and you can avail of this offer regardless of whether you have a mobile phone or landline.
Even local call tariffs will be cheaper by 20 per cent. Says a beaming A K Sinha chairman of BSNL: "The new One India tariff will make communications more affordable to the masses. And, of course, grow the Indian market." BSNL points out that while they will make a loss of Rs 600 crore (Rs 6 billion) due to cheap STD calls, this will be more than compensated by a 40 per cent growth in calls, which it anticipates.
However, questions are being raised whether the "One India" offer is really as cheap or affordable as it is made out to be? Private telcos say they don't want to upset the minister's pet scheme and are unwilling to come on record.
Off the record, they tell you that "One India" is not a big deal and what the incumbent telcos have done is some smart tariff rejigging. Says a leading operator: "They wanted to create a noise and give the impression that they were the first to bring in "One India". If the Interconnect User Charges regime is changed as the regulator has said there is no reason why we cant offer the same tariffs. So it is nothing to do with vision."
Under the interconnect regime, the regulator is expected to cut access deficit charges which are paid by private operators to the incumbent for subsidising local calls, dramatically reducing the floor restriction whereby private operators have to pay a minimum of Rs 1.10 per call to the NLD operator as carriage fees (this has to be reduced as cost of carrying a call for NLD operators is as low as 30 paisa).
However, to be fair, all of them admit that the STD tariffs would make sense for high long-distance callers - the premium customers. Says a senior executive of a leading private sector telco: "In the fixed line tariff, they have reduced STD tariffs by increasing the rentals as well as removing the free calls. And in the mobile space they have again hiked the initial commitment that customers have to put up with."
Now let us compare the Rs 299 One India plan with its tariff plan of Rs 180 rental - which most of us use. The Rs 180 scheme consists of 50 free calls (which is valued at Rs 60 if all of them are used to make local calls) - so effectively your rental comes down to Rs 120.
Compare that with the Rs 299 One India plan. You effectively pay Rs 179 extra compared to the older scheme. If you are a customer who does not make STD calls of more than 90 minutes get, there is not much for you in the new tariff plan. That is because over and above the free calls, customers also have to pay for the next 300 calls only Re 1 for a three-minute call and Rs 2 for an STD.
The scenario is similar in the pre-paid mobile space. Again the commitment, which the pre-paid mobile customers have to pay upfront surely does not cater to the common man. It is again geared to benefit the premium customer - whose 30-40 per cent calls are STD.
Private mobile operators say while 70 per cent of the mobile market is based on pre-paid customers, the average revenue per user is Rs 200. These customers are looking for more local calls and minimum upfront costs. But the One India plan is based on a large upfront commitment - you have to fork out an upfront payment of Rs 799 (with a talk time of Rs 550) to get the cheap STD benefit.
In the post-paid arena, for instance, another closer look is warranted. While the Rs 299 post-paid offer provides STD calls at Re 1, there is no reason for you to change in case you are a customer who makes most of your STD calls to other mobile numbers.
For instance, Tata Indicom on its Rs 399 scheme already offer STD all across the country for Re 1. On top of it you get 100 SMS's free (that is valued between Rs 100 to Rs 200 depending on whether you are sending messages locally or in other locations in India), a much cheaper local mobile to mobile and mobile to fixed call rates - which are half of that offered by the incumbent in the new plan.The message is clear, there are no free lunches. And while the Re 1 OneIndia offer is a bonanza for heavy STD users, it might not be that attractive for wooing new users.