Mobile price war may spell doom for PCOs

The ongoing price war in the mobile telephony segment may sound the knell for PCOs, with the coin-operated public call offices becoming history in the next two years, say analysts.

The recent introduction of Re 1 per minute tariff by operators will speed up the process, with mobile phones becoming cheaper than fixed lines. 

PCOs' SWAN SONG
Company	Call tariff/minute
BPL Mobile	Re 1 for STD calls
RCOM	50 paise per local call
MTNL	99 paise per local call
Vodafone-Essar	Re 1 for local calls
Bharti Airtel	Re 1 for local calls
* All the schemes were launched between January 1 and February 5, 2008

To begin with, BPL Mobile recently launched a scheme called the 'India One Pre-Paid', which offers STD calls at a flat rate of Re 1 per minute.

CDMA major Reliance Communications (RCom) launched the lowest local call tariff of 50 paise under a pre-paid scheme, while MTNL introduced local calls at 99 paise.

Vodafone-Essar and Bharti Airtel were not far behind with their offer of Re 1 per minute for local calls. All the schemes were launched between January 1 and February 5, 2008.

These schemes, "no doubt", will suffocate the humble PCO that helped popularising telecom services in the country, said industry experts.

"With prices hovering at around Re 1 for local calls and at similar levels for long distant calls, why would anyone go to a PCO? They would prefer to make calls from the comfort of their home, rather than stepping into a booth or using conventional coin-operated PCOs," said S Subramaniam, Chief Executive Officer, BPL Mobile.

Mirroring the opinion, Madhusudan Gupta, senior research analyst with Gartner said, "PCOs will surely be affected and would have to look for other sources of income as this price war will cannibalise them. However, with present mobile telephony penetration at around 18 per cent across all 23 circles, it would be a while before mobile phones takeover PCOs and landlines."

PCOs are used by people without mobile phones or landlines, and telecom penetration, which according to Gartner would increase to 25 per cent in 2008, is an important factor, he added.

According to Telecom Regulatory Authority of India (Trai) figures, there were a total of 5.78 million PCOs in the country as of September 30, 2007. State-owned telecom major BSNL has around 2.04 million, garnering a 35 per cent of the total PCO market in the country. This is two per cent less than the 2.07 million PCOs, a market share of 37 per cent, that the company had on June 30, 2007.

The number of surrenders were also more than the total additions. For instance, BSNL's new connections stood at around 32,000 for the quarter-ended September 2007. India's largest PCO service provider's market share dipped to 35 per cent this year from the 70 per cent recorded two years ago.

Similarly, MTNL's market share in PCOs stood at around 4 per cent with around 0.25 million (25 lakh) PCOs as on September 30, 2007.

This is lower than the 5 per cent share and the 0.26 million PCOs that MTNL had on June 30, 2007.

Other private operators combined had a 61 per cent market share with a total of 3.50 million users as on September 30, 2007.

However, private operators registered an increase in numbers during the three month period ended September 30, as in June their market share stood at 58 per cent with 3.27 million PCOs.

A Trai official said that the Re 1 local call tariffs and other schemes that would be rolled out as new players come in will impact the growth of the PCOs, which even otherwise would have died a natural death. According to an analyst it is only a matter of time before everyone would be able to afford a cellphone.