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Deathly ring to rental reduction

New Delhi, Dec. 30: Call it a New Year gift, if you still have a landline phone as Bharat Sanchar Nigam Ltd today dropped its monthly rentals by 28 per cent.

If not, tough luck. Just what BSNL is ruing.

In a desperate move to retain subscribers, the operator cut rentals from Rs 250 a month in urban areas and Rs 210 in rural regions to Rs 180.

In the last three years, over 1.07 crore landline subscribers have returned their phones. In the last quarter of 2004-05, more than 4.5 lakh surrendered their equipment. Worried BSNL officials revealed that in November alone, the company lost two lakh subscribers.

Is the fixed phone dead' It certainly looks to be dying.

A.K Sinha, the chairman and managing director of BSNL, said the operator would take a hit of about Rs 600 crore a year as a result of the decision to cut rentals.

Telecom analysts, however, feel the government-owned company would not be able to stem the flow of landline subscribers to mobile unless it cuts rates and offers more free calls.

Sanjay Mehta, director (telecom analyst), Ernst and Young, said: “BSNL needs to be innovative with its calling tariff and value-added service like bundling broadband and free calls. Just cutting the monthly rentals is unlikely to bring back customers.”

N.K Goyal, AYCA SONIC India Pvt Ltd, a company that analyses telecom trends, said: “The move is good but it (BSNL) should think of the free rentals that mobile phone companies are offering. The prices are falling because of the competition and flexibility of margin available with them. This has to happen in fixed lines. Only then we will see a fall in call rates.”

Shakeel Ahmed, the minister of state for communications, had admitted early this month in Parliament that landline growth had been affected by a preference among customers for wireless services.

Growth of mobile telephony has taken place simultaneously with dropping equipment prices.

A senior telecom analyst in PricewaterhouseCoopers said: “The mobile phone market saw a fall in cost and then the surge in subscriber base. This can be replicated in fixed lines.”

Maybe, maybe not. Maybe, the fixed phone has been fixed forever.

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