'Per second' billing: Devil lies in the detail
9 Nov 2009, 0542 hrs IST, Omkar Sapre, ET Bureau
Sahil Shah, a kirana shop owner, was delighted to switch to the ‘one-second billing tariff’ plan offered by his cellular operator. However,
he was in for a rude shock when he exhausted a fortnight’s talktime in just a week. He took a closer look and realised his mistake in opting for the plan.
Mr Shah was earlier using a tariff plan of 30 paisa per minute before he switched to the ‘one-paisa per-second’ plan. With his calls lasting for an average 3 minutes, he ended up paying 180 paise per call in the new one-second billing plan, compared with 90 paise earlier. The one-second billing phenomenon, introduced in June by Tata-DoCoMo, the newest cellular operator, has caused a frenzy in the domestic telecom industry with all operators jumping on to the bandwagon. Impressed by subscribers’ frantic adoption of the tariff plan, industry regulator Trai mooted making telecom billing mandatory at one-second pulse, for subscribers’ benefit. Sections of the industry erupted with objections that such a move will cost the industry billions of rupees. HSBC Global Research, in a report, had described the ‘per-second plan’, a disruptive for the sector and said if all telecom operators adopted the plan, it could hurt the sector’s revenue by 10-15%.
However, it has now emerged from an analysis by the ET that ‘one-second billing’ is a marketing ploy that will neither hurt the industry nor be a major game-changer for the industry. Instead, it will cause a churn in prepaid customers seeking operators offering this tariff plan. Users actually stand to lose, if they switch to the ‘one-second billing’ plan without understanding their calling patterns, and if their existing tariff plans are less than 60 paise per minute. While all operators are promoting the per-second plan aggressively, Idea Cellular has positioned the plan, along with an alternative plan at 40 paise per minute for those making longer duration calls.
Pradeep Shrivastava, chief marketing officer, Idea Cellular, said: “It is incorrect to say the per-second billing is inexpensive. So, while we launched a per-second plan to be competitive, we have an alternative plan for users making calls, which are longer than 2-3 minutes. The longer the subscriber calls, the more she/he saves, compared with the per-second billing.”
The one-second billing tariff plan — one-paisa per-pulse of a second for a local call — essentially implies that a call of one minute or 60 seconds will be charged at 60 paise. However, the prevalent calling rates in most high teledensity telecom circles are way below that mark. All operators already have tariff plans between 10-50 paise for a pulse of 60 seconds, and a major chunk of telecom subscribers is already using that. Operators also have local call plans going as high as Re 1 per minute, but very few subscribers use those, according to industry sources.
Per-second billing is useful only for those subscribers whose local calls are of a very short duration, that is, of less than 60 seconds. These are typically price sensitive users who want to pass on a quick message. On the other hand, a majority of subscribers make longer duration calls for business, social engagement, reaching out to their loved ones, etc, for whom the one-second billing plan would be detrimental, if they are already on tariff plans less than 60 paise per minute for a local call.
