Prepaid calling cards for STD, ISD to get cheaper

NEW DELHI: You can now choose the cheapest call rates for national and international long-distance calls no matter who your mobile operator is, with the government giving its approval to prepaid calling cards for STD and ISD.

The department of telecom (DoT) on Friday allowed all long-distance licence holders in the country to market their products directly to consumers in the form of prepaid packages or through calling cards, in a move that will increase competition and bring down international call rates by half.

They will be allowed to sell the product online too, according to the DoT directive issued on Friday.

It works like this. Suppose you are a Vodafone Essar subscriber and Verizon offers the cheapest ISD tariff, then you can buy a prepaid long-distance package from Verizon for so many seconds. You punch in a set of numbers specified in the package to get onto the Verizon network and make your calls. You can talk for as long as your prepaid package permits.



The same is true for STD calls too: you can buy a calling card from the operator offering the best rates.
There are 25 long-distance licence holders in the country, including PowerGrid, RailTel, Gail, Sify, AT&T, British Telecom, Cable & Wireless, SingTel, Verizon, France Telecom (Orange) and Tulip Telecom.

Companies such as Tata Communications (formerly VSNL) and BSNL welcomed the move, saying it will lower ISD rates dramatically while STD rates may not be impacted much as they are already highly competitive.

���Customers will finally have a choice of long-distance providers. I expect ISD rates to come down significantly due to true competition,��� Tata Communications��� senior vice-president (corporate strategy) Srinivas Addepalli told ET. His company has said it can offer ISD tariffs at 50% of the existing rates to several international destinations if calling cards were allowed.

A BSNL executive said the firm plans to be a major player in the calling cards space while adding the DoT move would help the company leverage its vast national long-distance network and offer the most competitive rates.

Globally, long-distance tariffs have fallen 20-53% after customers were allowed to choose their operator. The move, however, will not impact the existing telcos much as ISD contribute less than 3% of the revenues.

Long-distance traffic accounts for 10-20% of the service providers��� revenues and ISD accounts for a mere 15% of this. Executives with some telcos ET spoke to said the move will have little impact on STD tariffs as they were already very competitive. Bharti Airtel is India���s largest long-distance provider in terms of revenues. ���We are exploring and examining all opportunities that would come in its way due to this regulation change,��� said Atul Bindal, Bharti Airtel���s president (mobile services).

Globally, calling cards is a multi-billion-dollar business with country-specific cards being very popular in markets like the US. In fact, many Indian telcos sell calling cards to NRIs settled in the US and elsewhere.

Foreign carriers in India are not very exited about the DoT move though, which they say was too little, too late. ���The government should have taken this step a few years ago and it would have made huge difference to the consumer. The impact will be marginal now,��� said SN Zindal, director general of the Association of Competitive Telecom Operators (ACTO), which represents foreign carriers such as AT&T, BT, Cable & Wireless, France Telecom (Orange) and Verizon in India.

���Calls rates to leading countries like the US are competitive, but it can bring down tariffs to some of the other countries,��� he added.

The move is expected to bring down call rates to Europe, Australia and Gulf countries. ���Calls to the US are priced at about Rs 5 per minute by most operators, but calls to Australia cost about Rs 10 per minute. The distance from India to the US and Australia is almost the same,��� reasoned V Sridar, research fellow at Sasken Communication Technologies. ���The big change will be that rates to a lot of countries, especially Europe and the Persian Gulf will become very competitive.���

Telecoms regulator TRAI had recommended offering customers the choice of selecting their long-distance operators through long-distance calling cards in August 2008. The DoT took a year to clear the TRAI proposal.