Mobile tariff war shifts to roaming, STD charges

The tariff war in the Indian telecom industry is getting ever fiercer, as the already cut-throat competition is likely to intensify with the scheduled entry of new players in the already saturated field. Having more or less exhausted the possibilities of per-second billing, telecom operators are now turning to roaming and text message rates as the new battlefront.

Reliance Telecom's 1 paisa per SMS tariff announced last week (See: Telecom tariff war enters new frontiers as RCOM cuts charges to 1 paise/SMS) is a pointer to the direction the tariff war is taking. Earlier, both Bharti Airtel and Tata DoCoMo slashed roaming rates. While Airtel has reduced the roaming charges by almost 60 per cent, Tata has extended its per second billing plan to roaming charges as well.

The operators are also striving to retain their market share in the face of number portability scheduled to be introduced early next month – making it possible for customers to change their service provider without changing their phone number.

Telecom experts say that roaming revenue comprises around 10-12 per cent of an operators' earnings. An Airtel official said, ''Of our 115 million customers, 36 per cent travel on the Airtel network. Research has shown that customers need benefits while travelling and are not satisfied with just local call benefits. You would notice that most of the intra- or inter-city or regular outstation travellers are shy of talking on the phone.''

According to a report by HSBC Securities, premium tariffs on roaming services for Airtel accounted for almost 15 per cent of prepaid revenues and about 20 per cent of post-paid revenues.

''We expect the disruption to continue for some more time, as new entrants like Etisalat and Telenor are yet to launch services. This phenomenon will only add to pricing pressures and aggravate investor concerns on industry fragmentation. We view sector consolidation, 3G services, and market-linked 2G spectrum policy as the swing factor for the stock,'' the report adds.