New entrants in the GSM sector have intensified the competition, sparking a tariff reduction war with no floor yet, reports Manav Chopra
AS THE economy starts to bounce back slowly, it is the telecom sector that has begun to sizzle. New entrants in the GSM game are creating a fiercer competitive environment, both for local subscribers and the national roaming segment of the market. In the process, some of the established telecom companies have indeed been feeling the heat.
All the players in this segment have been dropping prices to woo new customers. The initial trigger was pulled in March, when Reliance Communications (RCOM) entered the GSM market and scooped up more than 11 million subscribers within three months. Tata Teleservices Ltd (TTSL) launched their GSM brand, Tata DoCoMo, in June. In an effort to better RCOM’s new ‘Simply Reliance’ plan, TTSL introduced a seconds plan, finally breaking the price barrier from minutes to seconds. The concept was an instant hit among the subscriber community as the operator “notched up almost 12 million subscribers in the months of August, September and October”, says Tata DoCoMo President Deepak Gulati.
These developments caught the attention of other players in the GSM segment and they, too, have followed suit. Aircel was one operator to introduce the seconds scheme but refused to buy into the price war. Says Shalini Seth of Aircel, “Pay-per-second is not our focus.”
Not long after introducing pay-persecond schemes, the battle soon shifted to the national roaming space. Last week, Airtel introduced a new ‘Turbo’ roaming scheme — essentially, the company slashed roaming rates by as much as 60 percent. Accordingly, roaming rates have dropped to 60 paise-per-minute from Rs 1.50 earlier.
Shortly after, Tata too joined the rate dropping game and, “keeping with its strategy to remove the clutter of complex tariffs, slashed roaming rates to 1 paisa-per-second as well,” says Gulati.
A representative of RCOM, another prominent player in the ongoing tariff war, pointed out that the company had cut roaming rates on November 5 — much ahead of the other big cellular brands. “RCOM is the first to offer roaming charges equal to the local call charges for all tariffs,” he said. The company currently offers three tariffs — 1 paisaper- second, 50 paise-per-minute and Re 1 for 3 minutes. A customer can opt for any of these three and avail of a single tariff for all calls, whether local or roaming.
Due to the new seconds schemes, the last few months have seen established industry players being shaken by newcomers. In the last three months, TTSL has consistently beaten Airtel, the former leader in adding new subscribers to its rolls. While Airtel managed to add only 25 lakh (2.5 million) subscribers, TTSL added 40 lakh (4 million) new subscribers in September. In October, TTSL proceeded to add another 3.4 million new subscribers.