No Roaming Charges in India from 2013 – What Does it Mean for Consumers and Telecos

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Mobile phone users will not have to pay roaming charges  when traveling within India from next year, telecom minister  Kapil Sibal  said Monday, but Telcos say abolishing these charges could lead to higher call rates.

There are different implications of this policy and it will affect consumers and telcos differently. At present, using mobile phone services out of ones telecom circle attracts around 50 per cent higher tariff on outgoing calls and one also has to pay for incoming calls. Considering this, there will be two groups of consumers who can benefit from this new policy:

1. The ones who travel frequently

2. The ones who are shifting to a new circle.

The rest of the people will not be benefiting from this policy. What are these people doing currently? The first category definitely purchases a local SIM if there is a particular region where they have to travel frequently. But, even after this policy is introduced, I am not sure if the cost would be still less than that on a local SIM. Also, considering the horde of Dual SIM phones available, carrying another SIM is not a task any more.

The second group will definitely benefit and the fact is that this is the only set of people who will be looking forward to this new policy.

What does it imply for Telcos and other Consumers? “Our data suggests that only 10% of customers roam nationally. While the move is welcome, you are making the industry go through a churn for something that benefits only 10% of customers,” said Rajan Mathews, director general of Cellular Operators Association of India, the industry group that represents the GSM lobby.

So, this is what could happen with immediate effect of this policy:

1. Call rates will increase to cover up the losses incurred because of reduced (no) roaming charges by the Telcos. This increase in call rate will have to be shared by all users instead of the one roaming.

2. Dual SIM phone sales might drop because the need for another SIM will be reduced considering that there is not extra charges for roaming.

We’ll have to wait and see when DoT can actually implement this policy and then we’ll be able to study the market changes better.