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Airtel,Vodafone & Idea joins "1 paisa per second" tariff war

Created by : Sonal Singh, Project Manager, Nortel Networks  | 11 03 2009 06:58:28 +0000
Industry : Telecom/ISPFunctional Area : Strategy Execution(Strategy & Execution)
Keywords : idea airtel vodafone bsnl telecom providers tata docomo spice aircel docomo one second billing tariff war
Activity:  3947 views;  last activity : 07 06 2010 20:18:09 +0000

I guess this is really a good news for the consumer as other telecom providers, like, Airtel,Vodafone & Idea are also going for One second billing in coming days. Certainly the tariff war is turning the heat on telecom operators to respond to any competitive pricing introduced in the sector. Airtel and Idea seem to be the latest entrant to join the race for ‘One second billing’.

  http://www.watblog.com/wp-content/uploads/2009/09/mobile-tariff.jpg

Bharti Airtel has launched one second billing plan named "freedom plan" wherein subscribers would be charged 1 paisa per second for all local and STD calls to Airtel network and 1.2 paise/second for all calls to other networks.

The per second billing which was first introduced by TATA DoCoMo seems to have made others to change their strategy which had to respond as Tata telecommunications benefited immensely from this tariff plan.

What do you think guys, is this the right strategy by other Telecom providers who are jumping the bandwagon of One second billing?  Do share your views on this.

  
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It would be hard to understand the strategy behind the everybody going for one second billing, may be it was because earlier the telecom minister scared them that Indian telecom subscribers would avail STD at 0.25 paise and local calls at 0.10 paise in future. Which will completely erode money from these telecom providers, so I think this was a smart move from telecos. This intelligent move by telcos may see their margins eroded to an extent but is better than going into ultra low cost pricing structure as advised by telecom minister. So this strategy applied by them is good, but then than jumping on to the bandwagon of one second billing can there be something else which can be done and a different strategy applied? would like to know what others think on this.
By Sonal Singh, Project Manager, Nortel Networks  11 03 2009 07:04:31 +0000
 
Top Argument
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For those who know the telephone traffic theory, these daily ,

changing charging plans are nothing but mere gimmics of

the service providers to somehow enhance market share by

hoodwinking the public instead of really bringing down the cost.

The average talk time is about 150 seconds. At 1 paisa per second

the average cost of a local call will be 150 paise.

Compare this with the Per Minute Charging at 50 paise per minute charging plan. 

In the universally accepted charging method according to Carlson's revised

charging plan, the call charge will be:-

Answer fee  + ( Talk time / periodic charging duration, the end fraction ignored)

= 50 paise + 2 x 50 paise = 150 paise.  So neither the Service Provider loose

anything nor the customer gain much.

However, compare this with the local call charge in a wired line net work which

is only Re. 1 per 3 minutes talk time.

According to standard method of charging, a local call of upto 180 seconds in the

fixed line network will be only Re. 1 whereas this will Re. 1.50 on an average

in a mobile network with one paise per second charging.

The cost of the end link in a wired line network being much higher than the wireless

connectivity in the Mobile system, the cost of Mobile call is still much high in local call

which will be about 65 percent of the total outgoing call from any phone.

The higher call charge in Mobile communication is justifiable for the mobility factor.

However, as the Mobile phone percentage becoming predominent, the mobile call

charge has scope for further reduction making it equal to  land line call charge.

It would be wise for the regulator and the service providers to stick to standard

charging methods without confusing the users with umpteen charging plans.   

Ultimately, the Service Provider that can offer good quality service across the

country will be the winner. Many of these companies indulging in so called

price wars do not qualify to that level. 


By P. Abraham Paul, MD FCOMNET  12 01 2009 18:45:24 +0000
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Hey, more good news for MTNL Mumbai and Delhi users. It's 1 paise per 2 seconds, i.e. half paise!

It's interesting to see if they can come up with 1 paisa per hour / day / month /year ....... billing. Sounds funny, isn't it? Will any provider dare to give it for free in 10 years down the line?
By Ganesh Pavale, Information Systems(MIS)-Manager, Dolphin EMT Pvt. Ltd.  | 12 17 2009 14:21:22 +0000
2
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YES, it is beneficial from the point of view of customers. But at the same time they should expect more promotional calls.

The war started by TRAI taken up by Docomo . But there remains to questions

1) What was the profit margin these companies were reaping before this ?

2) What is the strategy they are adopting to keep the profitability

Answer for this is only two 1) Increase customer base 2) increase promotional

revenue. 

Anyway let us forget the advertisements , look at our pockets
By VENUGOPALAKRISHNAN P K, ACCOUNTS EXECUTIVE, EUREKA FORBES LTD  | 11 13 2009 14:50:57 +0000
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YES , This strategy is good from the point of view of users. They can save money. But the other side of it is expect more promotional calls on your mobile.

Today I come home seeing a new advertisement on the road side. It is from Reliance . Only 33 paise per minute from Karnataka to anywhere in India.

Here two questions arise. 1) What was the margin these companies where earning

earlier. 2) What is the present strategy to Keep the profit margin ?

From my side the only strategy to keep the profit margin is from the increased revenue from customer base and advertisement/promotional message.

So my answer to the question is in the middle of YES--NO

Stops now

 
By VENUGOPALAKRISHNAN P K, ACCOUNTS EXECUTIVE, EUREKA FORBES LTD  | 11 13 2009 14:28:43 +0000
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It is a good gesture that the Indian telephony has become affordable to common man. But the ground reality behind the price schemes (1 paisa per second) should be more clear. The fact that 1 paisa per second in Airtel is only for same network group and more for other network groups raises doubts for an individual to switch on to the plan. It is a hard reality according to media reports that SMS costs nothing to the company, while they charge Re 1 for each and also swindle money through offering special packages. Hence there is a need to the authorities concerned to direct the mobile company owners to be more transparent.
By B. V. Kishore Kumar, Editor and coordinator, State Resource Centre on Child Labour, Dept of Labour, Govt of Karnataka  | 11 12 2009 05:29:29 +0000
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it is only with the aim of future business
By ali afzal, ensure compliance, government  | 11 12 2009 00:40:44 +0000
0
0

becuse of paying the used second it is good for the customer.
By Reni sebastian, Assistant Engineer, State government of Keralam  | 11 08 2009 16:12:52 +0000
1
0

Yes, Sonal you are absolutly right. This 1p per second war is very very useful for consumer in india but side by side it is more tough for staff like me.......... price war turns on sale war for capture the maximum share of market and it going to tough day by day and  it`s very difficult to survive but it is very true that consumer get benefits with it. Let`s enjoy and happy talking.......................

 

 
By ranjan mittal, service team leader, Vodafone  | 11 03 2009 17:13:19 +0000
0
0

Whether the strategy is right for the company or not - it does provide benefits to the customers.  I would call it a positive move anyway...
By Hari Prasad K, Head - Managed Services & IT Solutions  | 11 03 2009 10:19:00 +0000
0
0

yes it is market stratergy,actuaaly this war started by tata docomo
By girish raghvendra deshpande, technical support engineer, Teltonika wireless solutions india pvt.ltd  | 11 03 2009 07:13:07 +0000
2
0

  my name is c.chellappan,place at madurai,my cell number is 9655506894

send to me detail cell name is vodafone

It would be hard to understand the strategy behind the everybody going for one second billing, may be it was because earlier the telecom minister scared them that Indian telecom subscribers would avail STD at 0.25 paise and local calls at 0.10 paise in future. Which will completely erode money from these telecom providers, so I think this was a smart move from telecos. This intelligent move by telcos may see their margins eroded to an extent but is better than going into ultra low cost pricing structure as advised by telecom minister. So this strategy applied by them is good, but then than jumping on to the bandwagon of one second billing can there be something else which can be done and a different strategy applied? would like to know what others think on this.
By c.chellappan , hotel incharge work you given to me, own company of textile mill  | 11 11 2009 16:52:39 +0000
0
0

1 paisa per sec,60 paisa per min.....more than the other tariff plans.and 1 second tou bahut kam hai baton k liye,i blive dre mst b sm plan k bas once u get ur tariff mae and den free calls to all netwrks,ont evn a paisa
By swarnima kashyap, M.E/M.Tech/MS student, amity institute of nanotecnology  | 11 11 2009 16:51:44 +0000
0
0

 by bringing in such a price  mechanism on one hand we are fuelling price war on one hand (mentioned by rest of debatees) on the other hand slashing margins drastically .but the main point is that such a price strategy should be backed with huge subscriber base to fall back upon.if a telecom company is having comparatively lower no of customer than it should not be apt for them to pursue it. i think TRAI should intervene in such matters 'coz there is possibility of loopholes in such schemes to first lure customer into it TATA DOCOMO have steped i with intention of sweeping off market share with there offer of providing SIM for nominal price could futher stir the price war and force the competitors ot adopte such an practice to retain their mkt share .so telecom price war is further going to heat up...so it would be interesting to see who would be at receiving end...

 
By kawaljit kaur, pgdbm student , Mount Carmel Institute of Management  | 11 08 2009 15:16:54 +0000
0
0

It is more about the dirty game between various telecom players.Who can challenge the billing based on seconds.Also there must be catch in these,like few states where it will be not applicable etc.
By SUMEET DIKSHIT, Real Estate Transactions & Advisory, Real Estate  | 11 08 2009 14:31:19 +0000
0
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I think this is a dirty game between the operators. I'm not sure if this is the end. Per today's news, TATA is going to introduce a new offer with "1 paisa per 5 sec". So,where is the end?Govt. should regularize the charging policy in first place to stop the operator gimmicks. There is a very good insight by Mr.Paul in toostep analyzing the issues in 'per second' plan.Please go through the same once you get time
By Abdul Raheem.Syed, Systems Engineer, Leading CEM vendor  | 11 03 2009 07:56:09 +0000
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