After per second billing, what next for telecom?

After per second billing and the more recent cut in roaming rates, what comes next in the ongoing price war between mobile phone companies? CNBC-TV18's Aakansha Sethi finds out.

It's nothing short of a war between these telecom majors, and the bad news for them is that this is a war that is nowhere close to its end. Telecom majors like Airtel, Vodafone, and Reliance Communications have been cutting tariffs to maintain market share with the entry of new GSM players such as Tata DoCoMo. After the introduction of per second billing, now roaming rates have also been slashed.

RN Prabhakar, Member, Telecom Regulatory Authority of India, says, "Discussions on cut in roaming rates had been going on, now Airtel and Tata DoCoMo have gone ahead and cut tariffs. I am sure they have factored this into their business plans."

Industry experts say the cuts are only expected to increase and tariffs are yet to bottom out. Sources say a further 15-20% decline in call rates can be expected over the next few months.

SMS rates are also expected to decline, with the TRAI expected to issue directives in this regard soon. This apart, the introduction of number portability for less than Rs 19 will mean that users will find it easy to switch operators. This will lead to higher churn and operators may be forced to offer incentives to existing users. New operators may also entice existing users by bearing the cost of migration and discount other upfront charges.

"Since call drops are quite high, customers felt why should they pay for a minute when call drops in 5-10 seconds. That is why per second billing was thought of," Prabhakar added.

While the consumer is really the king in this price war, for telecom operators, the pressure on margins is expected to worsen, especially with the entry of players like Uninor that is expected to launch services by December end. Analysts say competition will only end when smaller players can no-longer sustain price cuts, which will lead to takeovers and consolidation. If industry experts are to be believed, consolidation is only six months away.