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STD rate cut forces pvt sector to rethink pricing strategy

BS Bureaux

Public sector telecom companies have forced the private sector to rethink their pricing strategy. Even as BSNL's revised STD tariff came into effect from Monday, Bharti and private cellular operators are re-negotiating the deal to route cell-to-cell STD calls through Bharti's NLD network announced in December.

Cellular operators plan to offer cell-to-cell STD calls at Rs 12 per minute at peak time from January 26 has been made redundant by BSNL's tariff reduction.

Discussion are now on between the cellular operators and Bharti to bring it down further by another Rs 3 to Rs 9 per minute. The moot point of the discussion is who will take a cut in their revenues.

Says Manoj Kohli, chief executive officer, Escotel mobile: "Discussions are on between cellular operators and Bharti and it is proceeding positively. There is no reason why we cannot further lower the tariffs."

For the customer, however, all this does not make a difference. All telecom users irrespective of being a cellular subscriber or a customer of a private basic telephone operator will get the benefits of the tariffs announced by BSNL.

Anil Nayyar, president of Bharti's cellular operations, said: "We will give the best price to our customers irrespective of who the NLD operator is. Anyway, after a while the freedom to choose an NLD operator will be with the final customer and not the cellular operators."

Meanwhile, BSNL is expecting an initial growth of around 25 per cent in STD traffic.

"Going by today's response in major markets, there are indication that telecom traffic will grow by around 25 per cent. The substantial growth will nullify the reduction of around 60 per cent in STD rates. However, we will be able to put an exact figure only after a week's time," a top BSNL official said.

A large chunk of the growth will come from markets like Delhi and Mumbai. At present, Mumbai accounts for more than a 10 per cent share of the STD market. Households in Kerala, Gujarat and Punjab will see a substantial increase in traffic thanks to the fall in tariffs.

However, there was some confusion among users in Mumbai, since Hughes Tele.com, the basic telecom operators, did not make any official announcement on the rate cut available to their users.

Prakash Bajpai, president and CEO of Hughes Tele.com, clarified that the cut in long distance tariffs will benefit customers, operators and the overall economy and will lead to higher telecom usage.

"Corresponding to the decline in long distance rates, we expect the regulator to announce higher cost-based tariffs for line rentals and local calls," he added.

While retail consumers have welcomed the STD tariff cut, several corporates which had tightened the usage of STD calls due to the industrial slowdown in the country, is still adopting a wait and watch policy.

A top executive at a multinational firm said: "As economic conditions are still uncertain, we will take a wait and watch approach regarding our spending on telecommunications".

Owners of PCO booths are also not very happy about the cut in STD tariffs as it translates into reduced commission for them.

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