BSNL does away with STD; all calls at local rates

In a move that could spark yet another round in the tariff war, state-run telecom company Bharat Sanchar Nigam Ltd announced on Tuesday that it will treat all long-distance calls from its fixed-line network to landline numbers across the country as local calls.

Seeking to breathe life into its non-mobile business, which continues to be its largest revenue earner, the loss-making BSNL said that from today all 27 million landline customers will no longer pay STD charges when calling any landline in the country, a move that is seen by many industry watchers as the first step towards doing away with a separate slab for long distance tariffs.

An executive of Mahanagar Telephone Nigam Ltd, BSNL's sister company servicing the two metros of Delhi and Mumbai, said the company might follow suit. Private landline operators maintained they were studying BSNL offer.

BSNL has said that in addition to tariffs, the pulse rate will be that of a local call. Put simply, a long distance call will carry a 180-second pulse, unlike the earlier format when STD calls were billed on a per minute basis.

Currently, BSNL's local calls cost between 80 paise and Rs1.20 for three minutes, based on the tariff plan the customer has chosen, and this same pricing will be extended to all landline-to-landline calls, irrespective of distances.

This also works out cheaper than long distance tariffs on mobiles, which currently range from 60 paise to Rs1.50 per minute.

The telecom company has said the facility will be open to all existing customers without having to activate the STD facility on their landlines.

In a bid to lure corporate India to use more of landline services, BSNL is set to launch an ad blitz highlighting the pricing, better voice quality and absence of call drops, executives with the company said.

Ironically, the BSNL scheme kicks off on the day its employees begin a three-day strike, disrupting services, to protest against the telecom company's failure to procure mobile networks in time.

BSNL employee unions are also demanding that the centre meet its commitments and reimburse the licence fee and also compensate the PSU for its social commitments.

As of August, India had 36 million landlines, a figure that has been dropping every month for the last three years. BSNL has a 74 per cent market share, followed by MTNL, which commands 10 per cent, Bharti Airtel with 9 per cent, and Reliance Communications and Tata Teleservices with 3.4 per cent share each.

At the same time, the country has over 700 million mobile connections.

BSNL executives admit that the plan was aimed at improving its sliding revenues.

The company, once a monopoly in domestic telephony, has been deteriorating in financial performance over the years, as it could not expand on time. It could not compete with the nimble-footed private mobile phone firms, such as Bharti Airtel, which were taking decisions quickly.

BSNL saw its overall revenue fall from Rs32,842.30 crore in 2007-08 to Rs30,169.42 crore in 2008-09 and further to Rs27,913.44 crore in 2009-10, and has reported revenues of Rs13,823.96 crore for the first half of the current financial year (2010-11).

BSNL's dizzying fall is best seen in the fact that its annual revenues were over the Rs40,000-crore mark for the year ended March 2006. ''The decline in revenue has been due mainly to a churn of fixed line subscribers and fall in average revenue per user (for mobile),'' minister of state for communications and information technology Sachin Pilot informed the Lok Sabha in a written reply on Tuesday .