Processing .....please wait.. 
The article has been forwarded.... 
News >> Technology >>
Tariff war to hot up again in India's mobile phone industry
Thursday, 02 January 2003, 20:30 IST
NEW DELHI: Cellular phone operators in India are bracing for another round of fierce tariff war following the launch of Reliance Infocomm's limited radius mobility services at sharply lower rates.
Analysts say the entry of Reliance Infocomm, a unit of India's largest private business conglomerate, will force cellular firms to reduce their call charges to retain existing users.
India, one of the fastest growing telecom markets globally, has seen a sharp decline in cellular airtime tariffs and mobile handset prices in the last couple of years as competition soared with the entry of new players.
"The cellular tariffs are definitely going to go down in the short term. I think tariff will be a major factor in increasing market share," said Vineet Nigam, a telecom sector analyst with credit rating firm ICRA India Ltd.
"The prices Reliance is planning to offer for limited mobility services across the country will hit its rivals if they don't revise their tariffs," Nigam told IANS.
Reliance Infocomm Ltd., which is 45 percent owned by Reliance Industries Ltd., announced the launch of its wireless telephone operations, or wireless in local loop services, on December 27 in 18 states at huge discounts.
Reliance plans to offer its subscribers a promotional three-year membership at 
3,000, a free handset and a monthly payment of 600, which includes 400 minutes of talk time at 40 paise a minute.
The company is expected to commercially launch its services in different parts of the country in March.
Incoming calls, voicemail, text messaging and Internet access would all be free on the Reliance network. Reliance hopes to grab a 15 to 20-percent share of India's mobile market by the end of 2004 due to its attractive pricing strategy.
India's cellular companies, on the other hand, currently charge a rupee a minute on an average for an outgoing call. The incoming calls are also charged.
Reliance uses cheaper code division multiple access (CDMA) technology for offering mobile services within city limits. Other cellular operators offering unlimited mobility work on the rival global system for mobile communications (GSM) platform.
Unlike cellular services on the GSM platform that can be used by customers when travelling, wireless in local loop services on the CDMA platform are limited to a certain region, usually within the city area.
The government has allowed CDMA-based wireless services despite stiff resistance put up by the existing mobile phone firms to give a boost to telephone density in India.
"The fact that the existing cellular operators offer unlimited mobility at higher tariffs will not help them retain their customers, as currently most of the subscribers use mobile phones within the city limits only," said Nigam.
"So, the competition among the players will clearly be on the price front. I won't be surprised if the prices are lowered by 25 to 30 percent in the next round of tariff adjustment."
T.V. Ramchandran, director general of Cellular Operators Association of India, however, tried to play down the impact of Reliance's lower tariff on existing mobile firms, saying sustainability of sharply lower prices would be crucial.
"Any pricing strategy that is sustainable is good for consumer. We have to wait and see how sustainable it (Reliance's lower tariffs) is going to be in the long run," he said.
But Ramchandran admitted that the existing mobile services would soon meet to work out modalities of reducing prices.
Sunil Bharti Mittal, chairman of Bharti Tele-Ventures, India's largest mobile phone service provider, said the company would revise its tariffs by the middle of next month.
The Indian cellular market has for the last few years, been the most dynamic segment of the telecom industry and amongst the fastest growing.
The country has about 10.5 million mobile phone users now and it is forecast to grow by a compounded 52.5 percent to 30.9 million subscribers through 2005.
Source: IANS
3,000, a free handset and a monthly payment of 600, which includes 400 minutes of talk time at 40 paise a minute.
The company is expected to commercially launch its services in different parts of the country in March.
Incoming calls, voicemail, text messaging and Internet access would all be free on the Reliance network. Reliance hopes to grab a 15 to 20-percent share of India's mobile market by the end of 2004 due to its attractive pricing strategy.
India's cellular companies, on the other hand, currently charge a rupee a minute on an average for an outgoing call. The incoming calls are also charged.
Reliance uses cheaper code division multiple access (CDMA) technology for offering mobile services within city limits. Other cellular operators offering unlimited mobility work on the rival global system for mobile communications (GSM) platform.
Unlike cellular services on the GSM platform that can be used by customers when travelling, wireless in local loop services on the CDMA platform are limited to a certain region, usually within the city area.
The government has allowed CDMA-based wireless services despite stiff resistance put up by the existing mobile phone firms to give a boost to telephone density in India.
"The fact that the existing cellular operators offer unlimited mobility at higher tariffs will not help them retain their customers, as currently most of the subscribers use mobile phones within the city limits only," said Nigam.
"So, the competition among the players will clearly be on the price front. I won't be surprised if the prices are lowered by 25 to 30 percent in the next round of tariff adjustment."
T.V. Ramchandran, director general of Cellular Operators Association of India, however, tried to play down the impact of Reliance's lower tariff on existing mobile firms, saying sustainability of sharply lower prices would be crucial.
"Any pricing strategy that is sustainable is good for consumer. We have to wait and see how sustainable it (Reliance's lower tariffs) is going to be in the long run," he said.
But Ramchandran admitted that the existing mobile services would soon meet to work out modalities of reducing prices.
Sunil Bharti Mittal, chairman of Bharti Tele-Ventures, India's largest mobile phone service provider, said the company would revise its tariffs by the middle of next month.
The Indian cellular market has for the last few years, been the most dynamic segment of the telecom industry and amongst the fastest growing.
The country has about 10.5 million mobile phone users now and it is forecast to grow by a compounded 52.5 percent to 30.9 million subscribers through 2005.
Source: IANS