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Private firms protest BSNL's competitive tariffs
Tuesday, 22 October 2002, 19:30 IST |
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NEW DELHI: The entry of state-run telecom giant Bharat Sanchar Nigam Ltd. (BSNL) into India's rapidly growing mobile phone business is posing a virtual survival challenge to private operators.
Private operators, struggling to increase their stake in a mobile phone market expected to be one of the world's fastest growing this decade, have accused BSNL of leveraging its mammoth infrastructure across India to shatter competition.
The aggressive tariff package of BSNL includes free incoming calls on its mobile phones and waiver off of airtime on long distance calls. These services are currently not provided by the private operators in the country.
"The BSNL tariff plan is absolutely unfair to other private operators in the country," said P.K. Sandell, advisor (telecom committee) of the Associated Chambers of Commerce and Industry of India (Assocham).
"BSNL is taking advantage of its size to sweep out the private operators. There is an element of dumping in BSNL's tariff strategy. They want to bring down the rates drastically low so that competition in the sector is completely eroded.
"This is not correct. I think TRAI (Telecom Regulatory Authority of India) should step in to ensure a level-playing field is maintained," Sandell said.
BSNL, India's largest telecom firm, Saturday made its foray into the country's booming mobile phone market under the 'CellOne' brand at tariffs that are being termed by the rival companies as "anti-competitive".
Indian mobile phone companies charge on an average Rs 2.40 per minute for an outgoing and an incoming call each.
Minister for Communications and IT Pramod Mahajan, however, sought to play down the criticism, saying the tariff offered by BSNL was approved by the telecom watchdog TRAI keeping in view the "competitive market" scenario.
"As far as cellular tariff is concerned, it has been decided by BSNL and not by the government. To best of my knowledge, they have taken the permission of TRAI to offer this package. I am only interested to see that customers pay less and less."
BSNL has said it would offer free incoming calls to CellOne customers if the call were made from any of its 37 million fixed-line phones or from other CellOne users across the country.
Compared to this, private operators like Bharti TeleVentures and Essar Hutchinson, a group company of Hong Kong-based Hutchinson Whampoa, offer free incoming calls only from a subscriber on the same mobile network.
Private companies argue that more than 70 percent of the calls made to a cellular telephone is on fixed-line network. Since BSNL owns 90 percent share in the fixed-line market in India, it can afford to offer free incoming calls.
BSNL, formed in October 2000 after the government corporatised the state-owned telecom department, provides fixed-line telephone services across India except in the two main cities of New Delhi and Mumbai.
The company will compete with three other private companies in most of the 22-telecom zones.
The second objection raised by private cellular companies is that BSNL has waived off the airtime on long-distance calls.
This means a CellOne subscriber will pay only the long-distance component of the call, while the subscribers of other operators pay the long-distance component as well as the respective airtime tariff.
"Its completely anti-competitive. BSNL has massive cash flow and their profit is huge so they can afford to do that," said a senior official of a private cellular service provider.
"The private players by an chance would not be able to match BSNL's resources and leverage it to offer mobile services at sharply lower rates. This is a move to ensure the private operators don't get any business," the official alleged.
The entry of BSNL into cellular operations comes in the wake of the tapering off growth in the fixed-line telephones business, while the prospects of growth in the cellular service expected to continue for the next five to 10 years.
BSNL is hoping to attract 2.5 million customers through its 'CellOne' brand by the end of the first year of operations. The service will cover 350 cities initially, and rolled out to the rest of the country by December 2003.
India's $5.0-billion mobile phone sector has over eight million users, most of them in big cities but is projected to grow to 20 million by March 2005. India has the second largest mobile user base after China.
Source: IANS
Source: IANS