The Hindu Business Line : Reliance Info may peg ISD call rates at Rs 5

AFTER taking on the cellular operators with its limited mobility services across the country, Reliance Infocomm is all set to give the international long distance (ILD) operators sleepless nights by pricing its ISD tariffs at a flat rate of between Rs 3.50 and Rs 5 per minute.

According to company sources, the ILD operations which are yet to be launched will be the cheapest in the market. While a final decision on the pricing was yet to be taken, it would definitely be below the rates being offered by Internet telephony service providers, they noted.

"We have to take into account the fact that our ISD tariffs are not predatory in nature. As a result, although the company can peg the tariffs even lower, it has decided to avoid being questioned by the Telecom Regulatory Authority of India ", they noted.

At present, a one-minute international call to anywhere in the world (except the SAARC and neighbouring countries) costs Rs 24 per minute on the networks of Videsh Sanchar Nigam Ltd (VSNL) and Bharti Telesonic Ltd. Although the third operator Data Access Ltd. has a much lower tariff of Rs 12 per minute, it is a wholesale carrier and does not cater to the retail customers.

The latest move by Reliance will hit the incumbent operator VSNL's revenues, which have been sliding in the past one year. In fact, as per its latest results, the net profits of the company have fallen by as much as 77 per cent, year on year, for the quarter ended December 31, 2002. Net profit for the quarter amounted to Rs 81.8 crore, down from Rs 357.2 crore, the highest quarter-on-quarter fall ever recorded by the company

With lower settlement rates receivable from international carriers, higher interconnection charges payable to domestic carriers, and competition in international long-distance telephony having squeezed its revenues, any tampering with the tariff rates now, will only mean a further dent.

It is also likely to stump the private cellular operators led by Bharti, who were considering slashing their mobile-to-mobile ISD call rates to between Rs 9 and Rs 12 per minute. While a decision to this effect had been taken over a month ago, they had been waiting for `appropriate' time to make the announcement.

The sources noted that Reliance would be able to manage this pricing because it could avoid paying settlement rates to foreign carriers. The company has received authorisation in the US and UK to operate as a facility-based carrier providing telecom services in both the countries. The licences are in the name of its subsidiaries, Reliance Communications Inc (RCI) USA and Reliance Communications UK.

RCI has already established two points of presence (POP) in New York and Los Angeles. The company will also be establishing a POP in London which will be ready in a few weeks time. Reliance Communications UK has also obtained registration in UK, where there was no specific licence, but rather a process of registration.

The sources noted that since the termination costs of all its international calls would be much lower, the benefit could be passed on to the customers.

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