Domestic mobile telephony operators will enter a war of offers, due to bring customers more subscriptions including unlimited calls and SMS to clients of other networks and options with more national calls and SMSs. This will happen as starting April 1 interconnection tariffs will fall by almost 70%, from 3.07 euro cents to 0.96 euro cents/minute, following a decision by the telecom ruling authority (ANCOM).
The interconnection tariff is the one levied for calls from one network to another. In the wake of this cut, the cost operators will register to offer clients 200 minutes of calls to any network, for instance, will be almost 8 times lower than in 2006. Against September 2012, the cost will be almost 70% smaller.
What will be the impact of this abrupt cut? “Operators will include even more minutes, more data, attractive phones and additional services. A tariff cut will be more strongly felt in the area of pre-paid card users: they do not have long-term contracts that should keep them in a certain network and are generally low-income consumers, much more price-aware,” believes Valentin Mircea, former vice-president of the Competition Council, currently a senior partner with Mircea si Asociatii law firm.
Amid the falling interconnection tariffs and amid competition, mobile telephony operators increased the number of national minutes included in subscriptions or in the options dedicated to customers with cards.
Also, after the first step taken by Cosmote in July 2012, the launch of a subscription with unlimited calls in any network, at present out of the 35 subscriptions for retail clients included in the offer of Orange, Vodafone and Cosmote, seven include unlimited calls and SMS to any network, at prices ranging between EUR29 and EUR59/month.
If operators have 70% lower costs related to interconnection, will prices paid by consumers and companies also go down, and will this happen as soon as the morning of April 1? Operators are unlikely to apply deep price cuts, but they will offer more for the same sum and this will not happen overnight, but gradually.
“The cut will not come in April, but later. We will not witness a price war, but rather an offer war,” states Valentin Mircea.
A first occasion for operators to re-launch their services offers and also to adjust the number of offered minutes and SMS can be linked to the expansion of 4G services offers starting April.
Facing 4G network development costs and still waiting to see how high the impact of the special construction tax unexpectedly imposed at the end of last year will be, mobile telephony operators are trying to impose the idea that the cut in interconnection tariffs is a technical issue, with no impact over the final tariffs paid by consumers, so as to shun a possible push for lower prices by clients.
What should happen so that the final prices of Orange, Vodafone and Cosmote should plunge, or offers include several services for the same money? Would a stronger attack of RCS&RDS be enough or should one of the three “giants” cause an “earthquake”?
The market’s heavyweights will not enter such a “game” with RCS&RDS, believes Adrian Ciobanu, former sales person at Vodafone.
Valentine Mircea believes, on the other hand, that “Orange and Vodafone will be able to come up with better offers than at present as they have and will be slashing operating costs through moves such as the agreement to share 4G networks it sealed in late 2013.
On the other hand, it remains to be seen whether RCS&RDS has the necessary strength to react with even better offers. It will more likely use its significant position on the TV program rebroadcasting market and the Internet access market and center on 4 play-type integrated offers”.
In recent years, amid the offers including thousands of in-network minutes and SMS, the phenomenon of in-network call concentration has intensified. In the first half of 2013, for instance, 85.2% of calls initiated in mobile networks had numbers of the same network as destination, against 80% in the second half of 2008.
(English version by Catalina Apostoiu)