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Nath Balakrishnan

WHEN the state-owned telecom giant BSNL (Bharat Sanchar Nigam Limited) is busy ringing in changes by tweaking its tariffs, can mobile operators — on whose territory BSNL has launched an offensive on — be far behind? If the latest round of tariff cuts announced by the mobile players is anything to go by, it appears that they are in no mood to cede any ground to BSNL.

Days after BSNL announced its new tariff plans with incentives to call mobile phones long distance from landlines, mobile operators led by major players, such as Airtel and Hutch, have fired another salvo aimed at preserving the competitiveness of mobile-to-mobile long distance calls.

Prices of mobile-to-mobile STD calls in post-paid plans have been slashed from Rs 2.99 per minute (excluding airtime charges, which will be plan dependent) to a flat rate of Rs 1.99 per minute including the airtime charges.

To just get an idea of how this stacks up vis-à-vis BSNL's new tariff, let us compare the rates announced by mobile operators with BSNL's most attractive long distance plan: Calling mobile phones from landlines for distances more than 500 km.

Such a call will set the subscriber back by Rs 3.30 during peak hours (0900 hrs to 2200 hrs) and cost Rs 2.20 during off-peak hours (2200 hrs to 0900 hrs). The assumption made here is that the subscriber is on BSNL's Special Plan, under which each call is billed at Rs 1.10. Mobile-to-mobile long distance will still cost lower than rates charged by BSNL.

What is more, under the new mobile tariff, calls made to landlines at distances greater than 50 km are competitively priced compared to BSNL landline-to-landline calls over the same distance. BSNL will charge Rs 2.20 a minute for a landline-to-landline inter-circle call for distances between 100 and 200 km; corresponding mobile-to-landline charges for the same distance slab is Rs 1.99.

Consider plain-vanilla local calls to landlines. BSNL will charge Rs 1.10 for a three-minute call, but this charge will be levied even if the call were to last under a minute. A mobile-to-landline local call that lasts under a minute will cost the customer Re 1 (this is, however, plan specific). Mobiles, hence, present a cheaper option for short-duration local calls.

Increasingly, it does appear that having both a landline as well as a mobile is the best option. Using the mobile phone for long distance calls and local cell-to cell calls, and the landline to surf the Net and reach other local landlines could be a tactic to avoid the phenomenon of "phone-bill shock."

By slashing rates yet again, mobile players have clearly broadcast their intentions in no uncertain terms that they are willing to face the attack from BSNL.

But the last word has not yet been said in this high-decibel pricing battle aimed at garnering a greater share of the customer's voice, and by extension, his wallet. More price cuts with improved customer retention plans might be in the offing.

Yes, price competition does hit companies where it hurts most, but for customers who have never had it so good, the times ahead promise to be just as painless.

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