STD, ISD to get cheaper by prepaid calling cards
The Department of Telecom (DoT) has allowed all long-distance license holders in the country to market their products directly to consumers in the form of prepaid packages or through calling cards, which will bring down international call rates by half.
The companies will also be allowed to sell the product online.
For instance, a Vodafone Essar subscriber can purchase a package from Verizon, which offers the cheapest ISD tariff. The user can feed a set of numbers specified in the package to get onto the Verizon network and make the calls. The same apply for STD calls also.
There are 25 long distance license holders in the country, which include PowerGrid, RailTel, Gail, Sify, AT&T, British Telecom, Cable and Wireless, SingTel, Verizon, France Telecom (Orange) and Tulip Telecom.
Tata Communications (formerly VSNL) and BSNL have welcomed the move, describing that it will reduce ISD rates dramatically while STD rates may not be impacted much as they are already highly competitive.
"Customers will finally have a choice of long-distance providers. I expect ISD rates to come down significantly due to true competition," said Srinivas Addepallim, Senior Vice President, Corporate Strategy, Tata Communications. Tata Communications has said to offer ISD tariffs at 50 percent of the existing rates to several international destinations if calling cards were allowed.
Long distance tariffs have fallen 20-53 percent globally after customers were allowed to choose their operator. As the ISD contributes only three percent of the revenues, it will not impact the companies.
The service providers generate around 10-20 percent of the total income service providers' revenues and ISD accounts a mere 15 percent.
"We are exploring and examining all opportunities that would come in its way due to this regulation change," said Atul Bindal, President, Bharti Airtel, which is India's largest long-distance provider in terms of revenues.
Calling cards is a multi-billion-dollar business, as the country specific cards are very popular in markets like the U.S. In fact, many Indian companies sell calling cards to NRIs settled in the U.S. and elsewhere.
Indian foreign carriers are concerned about the DoT move now, after the delay in implementation of this service earlier. "The government should have taken this step a few years ago and it would have made huge difference to the consumer. The impact will be marginal now," said SN Zindal, Director General, Association of Competitive Telecom Operators (ACTO), which represents foreign carriers such as AT&T, BT, Cable and Wireless, France Telecom (Orange) and Verizon in India.
"Calls rates to leading countries like the U.S. are competitive, but it can bring down tariffs to some of the other countries," added Zindal.
The call rates to Europe, Australia and Gulf countries may go down with this move. "Calls to the U.S. are priced at about 5 per minute by most operators, but calls to Australia cost about 10 per minute. The distance from India to the U.S. and Australia is almost the same. The big change will be that rates to many regions, especially Europe and the Persian Gulf will become very competitive," commented V Sridar, Research Fellow, Sasken Communication Technologies.
The Telecom Regulatory Authority of India (TRAI) had recommended this service of long distance calling cards in August 2008. But, the DoT has taken a year to clear the TRAI proposal.
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