RCom plans price war encore in GSM

Firm plans to cut GSM call rates by 30 per cent in line with CDMA charges.

After four years, Reliance Communications (RCom), India's largest mobile service provider offering Code Division Multiple Access (CDMA) technology, is set to start another price war in the Indian telecom space by cutting Global System for Mobile (GSM) call rates 30 per cent when the service is launched.

The company recently received permission to launch GSM services within its existing licence and is awaiting allocation of spectrum, the radio frequency that enables wireless communications, from the government. CDMA and GSM services cannot be operated on the same spectrum.

In 2003, when RCom (then Reliance Infocomm) launched its CDMA operations, GSM call charges were at around Rs 4.50 per minute.

Reliance Infocomm, under its Dhirubhai Ambani Pioneer Scheme launched on May 1, 2003, offered a free mobile phone, unlimited free incoming calls and national long-distance calls at 40 paise a minute.

Though the scheme was withdrawn later, it had forced rivals offering GSM to slash their rates. GSM accounts for the bulk of mobile services in India.

The company, now controlled by Anil Ambani, plans to slash GSM mobile call rates "" rental as well call charges "" to bring them in line with CDMA service charges.

At present, the GSM mobile call charges are higher than that of CDMA services. 
 

TECHNOLOGY COSTS All-India average tariff*
	Post-paid	Pre-paid	Blended
GSM	Rs 1.02	Rs 1.14	Rs 1.11
CDMA	93 paise	82 paise	85 paise
* Figures as on quarter ended June 30, 2007

RCom is planning to cash in on the difference in the average tariff between GSM and CDMA operators.

On average, GSM services are 33 per cent higher than CDMA operations.

With RCom intending to offer services on dual-chip phones, the company thinks it is necessary to have uniform prices.

A difference in prices will result in different billing and other issues, informed sources told Business Standard. A company spokesperson, however, declined to comment on the issue.

Moreover, the company expects more subscribers to move from other GSM networks to RCom's network if prices are comparatively low.

RCom's potential competitors in the GSM space said they will take a view on the new tariifs after the company announced its intentions.

RCom has paid the licence fee for GSM service licence and, therefore, is high up in a long queue of telecom aspirants for spectrum allocation.

The issue, however, is currently the source of litigation, with GSM operators contesting RCom's GSM permission before the Telecom Disputes Settlement and Appelate Tribunal.