Translated material
Pay every minute
Russian telecom operators are preparing for free incoming calls
Russia is entering the era of CPP (Calling Party Pays - the calling party pays). From July 1, we will completely legally stop paying for any incoming phone calls, unless, of course, we are in a roaming zone. It seems that the Russian market will survive the transition to a new payment system for communication services relatively easily. There will be no serious shocks in the market, and things won’t get any worse for subscribers either. If the operators agree on the price of a minute of our calls.The officially declared level of mobile penetration in the country is close to 100%. In reality, and this is well known to analysts, this figure is somewhat lower due to the fact that the average citizen has more than one contract with a mobile operator per telephone subscriber. One way or another, estimates of the penetration level of cell phones do not fall below 70%. This means that free inboxes are already commonplace for a huge number of people, since this is the principle that cellular operators adhere to.
Now the list of telephones from which calls are not charged will be supplemented with fixed (wired) telephones. This is customary in most countries. Among the few exceptions to the CPP rule are a conversation ordered through an operator at the expense of the called party or a call to a special advertising number. All incoming calls will be free only within the coverage area of your network. When traveling within the country and abroad, calls received will have to be paid for.
Cellular operators are not happy
According to MTS analysts, the share of calls from fixed phones to mobile phones is now less than 5% of total traffic. This means that the majority of ordinary owners of federal mobile numbers will hardly notice the impending total freeness of all incoming calls, and cellular companies will lose only a small part of their income?
No, that's not true. Mobile operators predict a loss of up to 10% of their current revenue - this is exactly the percentage of income that expensive calls from landlines bring in today. Alexander Izosimov (General Director of VimpelCom OJSC, Beeline trademark) believes that simply eliminating fees for all incoming calls would cost the company $200-300 million a year. According to operators, it would be unfair to subscribers to compensate for free incoming calls only by increasing prices for outgoing calls, because prices would have to be increased by 30-40%. In addition, in this scenario, traffic imbalances and a sharp increase in the load on mobile networks are inevitable, since the previously introduced three-second non-charging interval allows you to dial a landline number with a request to call back. MTS Vice President Mikhail Shamolin warns: “An incorrect implementation scheme for the CPP regime in Russia can lead to sharply negative consequences for the communications industry.”
How to protect the market from losing balance
The simplest and most obvious way is to charge landline phone owners for outgoing calls. But this is dangerous: citizens who are not accustomed to saving on time spent talking on their home telephone may become indignant and blame the government for what is happening not on the operators or the deputies who passed the law on SRR.
As an alternative to this, a hidden increase in tariffs is also possible, since operators have such experience. According to AC&M Consulting, prices for mobile communications in Russia in 2000-2005 decreased at an average annual rate of 28%. But you can reduce prices in different ways. You can reduce the cost of a minute in new tariffs, or you can use seasonal discounts, a series of short-term promotions and gifts. In the second case, after the expiration of the promotional period, we end up receiving prices from a year ago, which, in fact, is equivalent to a hidden price increase. In the Moscow market, MTS masterfully masters this technology, Beeline readily uses it, and recently Megafon has also moved in the same direction.
Another option is to introduce a connection fee. The technique is unpopular, but effective: tariff descriptions look much more tempting to the consumer than they actually are. An example is the “Simply put” tariff (Beeline). The same technique is used in the latest MTS tariffs.
It is also possible to charge per minute instead of per second from the second minute. All operators have already noticed this innovation. In the case of a predominance of two-three minute calls, the transition to per-minute rounding of call time is equivalent to an average price increase of 15-20%.
A low-key, but also effective measure is tightening tariffs. You can close tariffs with cheap calls within the federal network (such as “Jeans-007” MTS), close the ability to make MGTS numbers your favorite (tariff “Simply put”, “Beeline”).
A subscription fee introduced in an explicit or hidden form (when, for example, the payment period is limited in time) is also very conducive to obtaining a guaranteed and stable income from each subscriber. What is actually happening is that cheap prices remain only in tariffs with a subscription fee.
Preemptive maneuver
MTS and Beeline have already agreed among themselves that they will pay each other $0.05 for passing a minute of traffic between their networks (instead of the previous price of $0.01) and offer traffic exchange on the same conditions to other market participants. Currently, the mobile operator receiving the call pays the other operator from whose network the call originated about one cent per minute. At first glance, inter-operator calculations are conditional and are in no way related to prices for end consumers; with equal traffic between networks, as much as you receive, you also give back. However, this will only be the case if the talkativeness of the subscribers of the two communication networks is approximately equal. Otherwise, an operator with cheap tariffs per minute of conversation will lose income, and significantly, from increasing prices for traffic exchange. Therefore, the agreement between the two largest operators may hurt subscribers of other market participants, primarily those operators that offer their customers cheap unlimited communications. Another example is tariffs with cheap calls to mobile phones of other networks. For example, the Megafon-Moscow operator will have to either significantly increase the price of a minute in a number of old tariffs, or lose millions of dollars every month.
It seems that by agreeing on five cents per minute of traffic, MTS and VimpelCom are unambiguously informing the market about what price per minute of conversation in the mobile communication network they consider fair. However, there are serious doubts that the proposed conditions will be accepted without complaint. Vitaly Slizen, director of the department of state policy of the Ministry of Information and Communications, comments: “This is called, excuse me, I will not use the word “blackmail,” but nevertheless I will say that this is called a direct attempt to put pressure on both other market participants and the regulator.” According to Mr. Slizen, no later than June 20, the Ministry of Information and Communications will present tariffs for inter-operator payments, where the price of a minute of traffic will be three to four cents.
How much does a call from a landline cost?
MTS analysts consider a fee of 3.2 rubles economically justified. per minute of conversation. Of this amount, one ruble is due to Svyazinvest (invoice processing, cost of services and work with subscribers) and 2.2 rubles. -- compensation for mobile operator costs. But, realizing the social significance of the issue, MTS agrees to receive 1.4 rubles. (those same five cents). Beeline almost agrees to four cents of compensation, Megafon-Moscow vaguely declares a price in the range of 2.5-4 cents. The Ministry of Information and Communications has already formed its own opinion on this issue. “We suggested that operators make specific calculations. Not this “between bad, very bad, good and somehow”, but specific invoice traffic flows that have developed to date. Calculate with two call termination prices: three cents and four cents per minute. We expected that they would come to us and tell us the results in a reasonable manner. If the calculations show that your profitability will drop by two percent, and it really will fall by two percent, and citizens will have more opportunities to use communication services, then we will go for it. Let's go absolutely consciously. We asked you to do this very specific thing, because we are ready to argue with specific figures and we were ready to convincingly prove that in the window of three to four cents it will be good for the industry, and it will be good for the citizen. and normal tariffs will be formed for the end user of fixed-line communications,” Vitaly Slizen said last week during a press conference.
Vremya Novostei will continue to monitor the development of the situation.