The Telegraph
Since 1st March, 1999
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Reliance plugs into loopholes for WiLL headstart

New Delhi, Nov. 29: Reliance Infocom is preparing to take advantage of a proviso in the revised tariff notification issued by Telecom Regulatory Authority of India (Trai) on limited mobility to be able to offer what its executives claim will be the lowest tariff in telecom services.

Akhil Gupta, chief executive officer (corporate development) of the Reliance Group, had recently claimed, “Reliance Infocom will offer the cheapest telecom services available.” Reliance is due to launch its WiLL service on December 28, Dhirubhai Ambani’s birthday.

Reliance has proposed to offer a 60-second call for 20 paise. Trai’s consultation paper has calculated that a 60-second call will cost 70 paise and Bharat Sanchar Nigam (BSNL) has estimated that the 60-second call will cost about 90 paise.

“If Reliance is to offer the WiLL service at a cost of 60 paise for a three-minute call (180 seconds), it will be a death-knell for BSNL. We have already made a presentation to the communications minister and telecom commission about the annual recurring expenditure of Rs 8,000 crore since we are bound to lose customers even if we were to offer at the rate of Rs 1.20,” said a senior BSNL official.

Trai’s revised notification on monthly rentals for Wireless In Local Loop (WiLL) with limited mobility service was issued in July this year. It allowed the service provider to offer alternative tariff packages similar to other tariffs of basic services and all other telecom services provided in the market.

“The Authority has considered it desirable not to prescribe any floor and allow the efficient competitors in the market to compete effectively, especially in the context of a declining trend for costs,” states the Trai notification.

“Market competition is much more established now and this may give further impetus to efficiency increases and tariff packages being developed to encourage access and usage. Against this background, the authority is of the view that allowing the use of alternative tariff packages (including combination of different rental and call charge regimes) would be appropriate and would serve the objectives of facilitating consumer interest and competition in the market,” states Trai.

In the same notification, the regulator has specified a monthly rental of Rs 200 per month in the standard tariff package as against the rentals fixed last year which gave a range of Rs 450-550 per month as floor and ceiling respectively. The notification also provides for bundling of the handset with the tariff package.

“If the handset is provided by the service provider, then the payment for that handset can be taken either as a refundable deposit with a ceiling of Rs 6,000,or an additional monthly rental ceiling amount of Rs 50,” states the notification.

According to a telecom industry observer, “This is a clear indication that the stage is set for low tariffs from Reliance Infocom. The regulator has clearly stated that a WiLL service provider can alter the WiLL tariff upwards or downwards when it states that in addition to the standard tariff package the service provider will be able to offer alternative tariff packages similar to all other telecom services provided in the market.”

“And they (Reliance Infocom) will be legally correct to offer any kind of tariff and the regulator will have to accept it. There is a move to offer a no-rentals and only call cost packages. That itself will bring down the total cost to be paid by the subscriber.”

Sources said even if the reported tariff package of one-time payment of Rs 15,000 for three years and unlimited use is offered, the regulator will have to approve it. A senior Trai official defending the notification said, “We can always decline a tariff package if we find that it may result in predatory pricing. In the same notification that is being referred to, we had also specified that regulator will conduct annual reviews for each of the next three years to ascertain and specify any changes in the monthly rentals and tariffs.”

“We have not yet received any proposal from Reliance Infocom or any of its companies that offers telecom services,” the official added.

What does Reliance Infocom get if it is to offer a package of one-time payment of Rs 15,000 for three years and unlimited use'

“It is a game plan to show the customers that the tariffs are low. Even if an operator offers Rs 1.19 then also it is a lower tariff than the existing one (Rs 1.20). Even if the pulse is increased from 180 seconds to 181 seconds then also its is a low tariff, since you get to talk more for the same amount (Rs 120),” said a senior executive of a company that will be a competitor to Reliance in WiLL services.

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