MTS slashes base tariff to half paisa per second, new revolution in Indian telecom

In one of the most daring and audacious moves in Indian telecom sector in the last two years, the Russian operator MTS has cut down all STD and local charges to half a paisa per second.

The offer is around 20-50% cheaper than the lowest tariffs offered by competitors in the country. Most operators are currently offering 50 paise per minute as their cheapest, ‘no rent’ tariff. Half a paisa per minute works out to around 27 paise per minute, as the average length of a call in India is around 54 seconds.

The MTS tariff will be available without any fixed charge such as Rs 100 or 200 per month. The base rate for India’s biggest operators like Vodafone and Airtel is 1.2 paise per second in most circles. The new operators have not been able to match the 1 paise per minute offer of Tata and Reliance and the new move is likely to make them even more unhappy.

However, to move to this scheme, subscribers will have to pay Rs 191 as a one-time fee. They will also have to ensure that they use at least Rs 900 per six months, or Rs 150 per month.

MTS is one of India’s newest operators and uses the CDMA technology. Because of this, it is impossible to use the connection on the usual GSM handsets, though the old number may be retained through MNP.

MTS was also in the news for offering a Rs 16,000 smartphone from HTC free to any subscriber who commits to a minimum bill of Rs 1,500 per month for 18 months.

The first network to take such a drastic ‘tariff action’ was Tata DoCoMo, which introduced the 1 paise per second scheme a year and half ago. This was followed by the 50 paise to anywhere scheme from Reliance.

Uninor, one of the new operators, offers nearly unlimited local calls for Rs 198 in some circles. However, the cheapest STD tariffs in India are still around 40 paise per minute and require the consumer to pay a fixed amount, such as Rs 50 per month, as ‘rent’ for the scheme.

Videocon has, however, recently introduced a scheme in which consumers who pay Rs 25 per month as rent can make the first 15 minutes of call — whether STD or local — at 25 paise per minute.

Operators are interested in offering even lower rates, but the Telecom Regulator (TRAI) has imposed a 20 paise per minute minimum amount that has to be paid to the operator of the listening subscriber. TRAI is currently in the process of lowering the tariff to 10 or 15 paise, though the move is opposed by Airtel and Vodafone.

“We are constantly looking at opportunities to engage and excite our customers. As a part of this endeavour, we have now taken our ½ paisa per second proposition to the next level,” said Leonid Musatov, Chief Marketing & Sales Officer, MTS India.

Sistema, the mother firm of MTS, is one of the World’s biggest companies and mobile operators.

Old operators in India have found their share of new subscriber additions go down drastically due to such tariff war by new operators. However, many subscribers switch back to old ones because of the poorer network reach of some of the new operators.


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