NEW DELHI: A new frontier opened up in the telecom tariff wars on Friday, with Reliance Communications announcing that it will offer its
customers the facility of sending SMSes for a mere 1 paise/SMS. (
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The Reliance offer follows a ToI report on November 5, which revealed that while companies have been charging consumers 50 paise to Re 1 per SMS, it actually costs them less than a single paise to send.
This was followed by many representations to telecom regulator Trai by consumer organizations and members of Parliament seeking immediate intervention to lower tariffs. Last week ToI was told by Trai chairman J S Sarma that it would intervene to review SMS tariffs in view of the public pressure, representations and cost data.
Within a week of these developments, Reliance has triggered off an SMS tariff war, which is expected to spread like wildfire across all major operators.
Reliance is offering SMS at 1 paise each or unlimited SMSes at Re 1/per day. The new SMS tariffs are add-on plans and are applicable for all Reliance mobile customers irrespective of CDMA or GSM network as well as prepaid and postpaid customers. Irrespective of their current tariff plans, consumers on the Reliance network can avail of the 1p/SMS plan by subscribing to a standard tariff voucher of Rs 11/month. The unlimited SMS plan can be availed on a daily deduction of Re 1/day from consumers prepaid balance.
Given that the cost of sending an SMS is just a fraction of a paise, this move will still allow telcos to make money while reducing the tariff burden for consumers in a significant manner.
According to Trai, an average mobile consumer sends 25 SMSes every month, which costs roughly Rs 25 a month at present. The new tariff plan would mean that mobile consumers will now pay no more than 25 paise a month for the same usage - a reduction of 99% on today's SMS bill.
Speaking to ToI, Reliance Communications president Mahesh Prasad said that this competitive step may prompt the regulator to reconsider its stated intention to intervene in SMS tariffs.
Significantly lower SMS costs are expected to catch the fancy of the youth and office-going consumers who are the main users of SMS, which in turn will put pressure on other operators like Bharti, Vodafone, Idea, Aircel, Tatas and MTNL/BSNL to respond immediately with similar offers.
It also blows to pieces industry and government's claims that India's telecom sector offers the world's lowest tariffs since within the last month alone the pay-per-second and paise-per-SMS has shown that there was a huge scope for further and steep reduction in tariffs.
Additionally, it reveals the regulator's ability to influence tariffs by merely taking a public position on a matter which represents a consumer-oriented stand.
This move is expected to hurt incumbents most as it is their networks that would have received high termination charges for SMS from new players. Now with a tariff of one paise, the gravy of termination charges from highly priced SMSes is likely to see a grand finale. As always, however, the consumer, especially India's youth, will be the biggest beneficiary.
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