50 Paise STD

Hritik Roshan, the pied piper of "Telelyn"stands out in his fancy clothes, pulling in all the telecom "rats" or should I say, (calling) rates, and dumping them down the hill.

At 50 paise a minute, it is actually cheaper to call, then to send a post-card!

And its not only Reliance. Airtel, Idea and Vodafone too have reduced rates to similar levels* conditions apply!

Why have these rates unraveled so quickly and to such low levels.

I don't reckon that volume growth will in any way make up for the 50% reduction. I feel that there are 2 factors behind this reduction in rates.

1) The first: New Entrants:

Etilsalat DB (of Dubai) and UniNor (a JV of Unitech and Telenor of Norway) have received licences to roll out service at national level. Maybe this is a Grand Welcome being planned by our existing players for the new kids on their block. It should definitely push back the break even point by a few years.

2) The Second: Spectrum Allocation:
The one rarity in the telecom space - Spectrum. Spectrum is nothing but the frequency (in lay mans terms) allocated to the telecom operators. Think of it as the width of the road that cars drive on. The wider the road, the lesser the jams. Similarly the more the spectrum with the operators, the lesser the network congestion. And one way of justifying the use of more spectrum is by showing more subscribers.

All I can say is that it only gets interesting from here onwards. Bills will fall in real terms as rates for voice and SMS fall to 50 paise.

Now its upto the operators to make up for fall in revenue from other value added services such as dialler tunes, internet usage etc.