Roaming charges too get the TATA DOCOMA rub

National roaming is equal to local now.The tariff war in the telecom sector, which was triggered by Tata Docomo's per-second local and STD billing recently, has erased the cost differential and set a new equation.

Responding to leading telco Bharti Airtel's 60% reduction in roaming charges on Friday, Tata Docomo on Sunday introduced 'pay for what you use' pricing paradigm to the roaming services.

Other industry players are expected to follow suit. With mobile number portability set to be introduced in the four metros and 'category A' circles such as Maharashtra, Karnataka and Madhya Pradesh by the end of this year, and the rest of the country by March 20, 2010, the tariff war is expected to intensify further.

This is despite most telcos arguing that tariff is only one of the considerations for the subscriber. With number portability coming cheap to customers, at Rs 19 or below for changing the service provider while retaining the same number, telcos would want to continue playing the tariff card for sometime to come so that they can win over their rivals' subscribers.

In the backdrop of the revenue de-growth that many telecom companies are already facing in India, the tariff war may have serious implications on the sector.

The auction for 3G (third generation) telecom spectrum, for which the pan-India reserve price has been set at Rs 3,500 crore, may be an indicator of the health of the telecom sector. 3G auction is scheduled to begin on January 14, 2010.

Tata Docomo, the relatively new GSM brand of Tata Teleservices, which has lately been adding record number of subscribers every month, will from Monday charge its roaming subscribers 1 paisa per second for incoming and outgoing calls, the same as local tariff. This is for both pre- and post-paid subscribers, and for calls to and from any network. So far, the company was offering a roaming tariff of Re 1 per minute for incoming and local outgoing, and Rs 1.50 for outgoing STD calls. Tata Tele's GSM service is available in 15 of the 22 circles in the country.

Tata Docomo president Deepak Gulati said in a statement that when a subscriber is roaming, most telecom operators in India charge a minimum of 50-60 paise per minute even when the call duration is less than a minute. Under the new offer, subscribers will be charged only for what he or she uses -- at 1 paisa per second, he explained.

While announcing the cut in roaming tariff on Friday, Bharti Airtel president (mobile services) Atul Bindal had said that a customer on national roaming can make an STD call to another Airtel number at 60 paise per minute, compared to Rs 1.50 earlier. All incoming calls for Airtel subscribers, while roaming, will now be charged at 60 paise per minute, from Re 1 earlier. Roaming Airtel users will, however, be charged 80 paise per minute, for local as well as STD outgoing calls to any other network.

A representative of Reliance Communications, another prominent player in the ongoing tariif war, pointed out that the company had cut roaming rates much ahead of others, on November 5. "RCom is the first company to offer roaming charges equal to the local call charges for all tariffs," he said. The company offers three tariffs -- 1 paisa per second, 50 paise per minute and Re 1 for 3 minutes -- and a customer can choose anyone of these three and avail single tariff for all calls, RCom maintained.

Bharti Enterprises group CEO Akhil Gupta said tariff was only one of the factors for a subscriber, and not the only one. Referring to the tariff-cut issue, he had also said that it was not the objective of Bharti to match the lowest common denominator. But, Bharti announced per second billing and slashed the national roaming rates soon after.

What next? How much more would the telcos bleed? That's the question being asked all over, especially since Indian telecom tariffs are already the lowest in the world.

Consolidation in the highly competitive telecom market is one of the answers, according to analysts and industry biggies.

If communications minister A Raja is to be believed, this is only the beginning. Going by him, 25 paise per minute calls are not far away.