In a bid to compete with limited mobile services by basic service providers, cellular companies on Thursday announced a uniform mobile-to-mobile STD rate of Rs 2.99 per minute.
The new tariff package, which fell below customer expectations in the wake of tariff war between basic and cellular operators, would come into effect from midnight of Thursday.
Announcing the new tariff package on behalf of cellular operators, Telecommunication and IT Minister Pramod Mahajan told reporters that this was the first instalment of the new rates and the industry would announce many more concessions on a weekly basis to 'kill their rivals in instalments.'
The high-profile meeting of cellular operators decided on this major tariff initiative in New Delhi.
"We discussed the entire mobile business...touching on aspects such as how to provide more value with respect to long-distance offering," managing director (corporate affairs) of Spice Communications, Umang Das, said.
As per the new tariff structure, all the STD calls from mobilie-to-mobile -- irrespective of distance (beyond 50 kms) and time -- would be charged at a flat rate against the peak of Rs 9 a minute charged till now for calls beyond 500 kms.
Also, this tariff will not be applicable to cell phone to landline calls.
The charges for distance up to 50 kms would remain unchanged at Rs 1.20 per minute.
The new rates are for STD calls and not ISD calls.
So far, subscribers were being charged Rs 2.40 for calls up to distance of 200 kms, Rs 4.80 for distance up to 500 kms and Rs 9 for distance beyond 500 kms, Mahajan said.
He said that while charges were double during the day, subscribers paid single rate during the night.
"Now nobody has to wait for the night to make STD calls. It is death of both the distance and time," he said.
Earlier in his opening remarks, Cellular Operators Association of India Director General T V Ramachandran said that the operators would take aggressive action to hold on to their market share.
The new tariff is expected to benefit over 10 million cellular users in the country as it simplifies the existing distance-linked tariff to a one-rate plan, Mahajan said.
With the one-rate plan of Rs 2.99 per minute, the effective reduction in mobile-to-mobile national STD tariff over the last year has surpassed 88 per cent.
Thursday's decision was taken in a meeting of cellular operators which included representatives of Bharti, Hutchison, Escotel and SpiceCorp amongst others.
The decision came as a reaction to the aggressive limited mobility launches, the latest being that of Reliance.
The new package was announced by the cellular operators including Bharti, Hutch, BPL, Escotel and AT&T, despite they suffering accumulated losses of Rs 8,000 crore (Rs 80 billion).
Announcing the new tariff package, Mahajan told reporters that government was committed to provide level playing field to all the operators who came to it with their problems.