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RCOM Lowers Tariff Further With Rs. 0.50 Plan; Bottoming Out?

logo-rcomAnother chapter in India’s telecom subscriber land-grab has begun with GSM and CDMA operator Reliance Communications (RCOM) launching the “Simply Reliance Plan”. The plan prices all calls and SMS’ (local, STD, Roaming) on pre-paid and post-paid on both Reliance’s GSM and CDMA networks at Rs. 0.50. The company is charging Rs. 48 for existing and new Pre-paid subscribers to switch the plan, and avail of lifetime validity, and Rs. 99 per month to post-paid subscribers.

Surely, this Tariff War can’t last forever. Despite assisting in subscriber addition, the drop in prices will lead to a decline in ARPU, which won’t be adequately addressed by an increase in outgoing minutes of use.Tata DoCoMo started things off with its 1-second-pulse billing, which was followed by Bharti Airtels Rs. 0.50 per minute plan for national and long distance call on its own network. Last month, Tata Teleservices (Indicom and DoCoMo) added the largest number of subscribers – 3,418,138.

This isn’t be a battle that the incumbent operators want to fight, but this and more will be thrust upon them by the new telcos. Remember that Etisalat DB (formerly Swan Telecom), S-Tel and Uninor (formerly Unitech Wireless) are yet to launch services.

Lowering pricing will eventually just be a means of ensuring that customers don’t churn out, rather than helping add subscribers. Beyond a point, the focus for consumers will switch back to quality of service and network availability.

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