LONG DISTANCE TELEPHONY : The Choice is Yours

The Department of Telecommunications has finally given its nod for the

Carrier Selection Code paving way for reduced long distance tariffs for

consumers. The introduction of Carrier Selection Code for long distance calls

will permit subscribers to choose the cheapest STD/ISD tariff, irrespective of

their service provider; make calls from any access networks and yet have the

calls routed through the network of their choice.

This initiative has been long overdue, and finally introduces choice for long

distance customers. Earlier, there were plans to introduce customer choice

through carrier access code, but eventually it was shelved in lieu of allowing

calling cards to the long distance operators.

The introduction of calling cards corrects an anomaly as customers had the

choice for their local calls but not for long distance calls. For the end

consumer, it also provides flexibility to customize long distance tariff plans,

creates an avenue to make long distance calling more affordable, and provides an

opportunity to avail benefits of refined quality of services from the best long

distance service providers.

With the reduction in the applicable license fee and entry of large number of

long distance operators, tariff has already come down over a period of time.

However, ISD tariffs are still not affordable to many. The entry of Carrier

Selection Code will have a major impact on the long distance segment and the

telecom industry is expecting some revolutionary changes in the national long

distance and international long distance space.

This would enable long distance service providers to sell their services

directly to the consumers, earn more revenue, and expand their network to become

more competitive. The industry expects that this may bring down international

calling charges by up to 70%. It will also enable long distance operators to

strengthen their market presence and empower the consumers to avail the services

of various operators and enjoy innovative tariff plan.

Calling cards in the Indian market place has already increased competition

between major telcos and new players carrying NLD/ILD licenses. According to

Christopher Almeida, senior VP, global voice solutions, Tata Communications, the

initiative is certainly going to generate competition between established

players and incumbents, and also provide an avenue for new operators to offer

differentiated services and acquire new customers.

We are planning to be present in the consumer segment by offering calling cards and we will devise a strategy to maintain market share Rajat Mukarji, chief corporate affairs officer, Idea Cellular	For long distance players with a national access number the challenge of local presence goes away, and consumers, even those who don't own telephones, can access the facilities via pay phones Naresh Ajwani, president, consumer infrastructure and operations, Sify

With the new regime in place, companies such as Tata Communications, Sify,

Railtel, BT and other players will be joining the bandwagon of Carrier Selection

Code for domestic and international calling. Tata Communications is the world's

largest provider of global wholesale voice services carrying around 25 bn

minutes annually. “We already operate calling card services in other markets and

would be launching our services after the appropriate decisions are made by DoT

and Trai,” informs Almeida.

The new regime will change the market dynamics. Tata Communications, Bharti

Airtel, Reliance Communications, and BSNL are major players dominating the long

distance communication space.

According to V&D100, a survey conducted by Voice&Data, the total NLD market

in India during FY 2007-08 was Rs 9,732 crore as compared to Rs 7,186 crore in

FY 2006-07. The ever increasing mobile subscribers base, reduction in NLD

license entry fee, and significant increase in minutes of usage were major

drivers for this growth. The total ILD market in India in FY 2007-08 was Rs

11,532 crore as against Rs 11,506 crore in FY 2006-07. This growth was

attributed to the increase in competition among operators and reduced ISD

tariff.

What Champions have to Say



Last year, Trai had recommended introduction of operator-specific calling

cards for both domestic and international long distance calls. Trai said that

the competition from the private operator would lead to more efficient services

in the long distance segment apart from offering choice and affordable prices.

The authority received suggestions from many stakeholders in favor of and few

against the issuance of calling cards. The main arguments against the motion

were based on issues such as level playing field, non-availability of point of

presence, allowing them access service at low entry fee, and constraint in the

license condition making them ineligible to directly access subscribers as per

the license conditions.

“We welcome this pro-consumer move. With an end-to-end, fully-integrated,

IP-enabled infrastructure spanning 20,000 towns and 4.5 lakh villages, 110,000

kms of domestic fibre and 65,000 kms of underseas cable, Reliance Communications

is keen to enable subscribers of other operators to experience high quality and

afford-ability long distance calls. With this move, Reliance Communications can

now address long distance calling needs of over 400 mn Indian telecom

subscribers with it superior offerings,” says the spokesperson of Reliance

Communications.

He further adds, “We are confident that our rich experience of serving over 2

mn calling cards customers, in the highly competitive global market, imparts us

significant competitive edge over other calling cards options.”

This is a great move that will benefit consumers as they will have the choice

of deciding which carrier to use. With high demand followed by intense

competition 'minutes' will be sold as commodity in the retail market.

The main advantage of a calling cards approach is the low-cost option to provide choice of carrier selection as against CPS that needs huge investment for system upgradation and the existing switches of access providers Satya N Gupta, chief regulatory advisor, SAARC region, British Telecom

The present short and long distance call rates in India are already cheaper

than most markets in the world. And therefore service providers believe that

they are already operating on thin margins and there is minimal space for

further rates reduction.

“Long distance tariffs are already very low in India and hence, there is

little room to reduce it further in an economically viable manner. Bulk of

usages come from corporate and high user segment who are benefiting from

competitive price plans. We are planning to be present in the consumer segment

by offering calling cards and we will devise a strategy to maintain market

share,” says Rajat Mukarji, chief corporate affairs officer, Idea Cellular.

Increased Competition



The availability of alternative service provider gives rise to increased

level of competition in the market. Lower prices, innovative service offerings

and higher level of quality of services would be the only differentiating

factors for service providers. This competition may be considered important for

bringing in the operational efficiencies in the long distance segment and also

in offering choice, quality and affordability to customers.

Commenting on the competition among major telcos as well as greenfield

operators, Rajat Mukarji of Idea Cellular says, “Competition arising out of this

regulation will be most beneficial for the consumer, as the consumer is always

looking for a choice. Today, a consumer chooses best fit plan based on his/her

individual usage pattern. However, the last mile product availability and

customer service are key differentiators and this is where the cellular operator

will have an edge over new entrants.”

“Customer chooses what is good for him/her. We believe in delivering the best

customer experience through brand connect, innovative products and superior

customer service, to build and maintain customer relationship which ultimately

translates into sales,” adds Mukarji.

This would be a logical extension of the competition experienced in the

mobile services market. In today's market place, there are at least seven mobile

operators in each circle for the customer to choose from. The competition in the

calling card market place imparting the power of choice in the hands of every

mobile customer would ultimately benefit the Indian consumer.

“The initiative is a win-win for all. It is an opportunity for the service

providers to make optimal use of their resources. For long distance players,

with a national access number, the challenge of local presence goes away and for

the consumers, even those who don't own telephones can access the facilities via

pay phones,” says Naresh Ajwani, president, consumer infrastructure and

operations, Sify.

“This will give rise to competition. The price of IDD calls will decrease

further and traffic volume will increase to countries where we can see Indian

diaspora or professional expatriates residing,” says Siddhartha Kataki,

associate VP, Patni.

He further adds, “There will be an emergence of huge 'spot' and 'F&O (Futures

and Options)' type of trading business for minutes. Minutes will be sold as

commodity and price index movements can potentially reflect the health of the

economy.”

“The main advantage of a calling cards approach is the low-cost option to

provide choice of carrier selection as against CPS that needs huge investment

for system upgradation and the existing switches of access providers. The

disadvantage will be that customers will have to dial in pin code for

authentication before making a long distance call, basically a two-stage

dialing,” says Satya N Gupta, chief regulatory advisor, SAARC region, British

Telecom.

But there has to be a strong regulatory monitoring to help consumers get what

was paid for. Again regulation needs fortification as there are lots of 'gray'

players in the global market who will sell 'minutes' for specific countries at

low prices. These minutes are pilfered from other carriers and usually usurp

healthy competition.

Apart from all these regulatory concerns, lawful interception may at times be

an issue and therefore needs strong enforcement, which provides mechanisms for

tracking usages of these cards, especially from public phones and STD booths.

The detailed regulatory regime for calling cards is yet to be established. It

must be ensured that long distance operators get timely and cost-effective

interconnection facilities with all access providers. Origination charges (to be

paid to access providers) need to be mandated by the regulator using cost-based

principles.

The Indian telecommunications industry is clearly in an evolutionary phase,

with a number of new technologies as well as business equations transforming the

basic nature of the industry. A critical aspect of this evolution is the entry

of Carrier Selection Code, which will add spice to the competition and will give

a new flavor to the Indian telecommunications industry.

Arpita Prem



arpitap@cybermedia.co.in