MUMBAI: There has never really been a better time for a consumer with a mobile phone. If tariffs have moved southwards to levels of less than Re 1
per minute, the next round of the telecom war has just unfolded. Consumers have been spoilt for choice with changes in the tariff structure and really paying for just the time spent on the mobile, though it could well be a case of operators' margins being hit.
When Tata DoCoMo launched its per second billing offer earlier this year, it was apparent that the other operators would retaliate. From a time when pulse rates were calculated on a per minute basis, the user was paying one paisa for each second of conversation. "This is based on the concept of fairness and pay-to-use," said Abdul Khan, head (Tata DOCOMO marketing), Tata Teleservices (Maharashtra). In the first month of the launch of Tata DoCoMo (this is a GSM service) in Maharashtra, it brought in over a million subscribers. "Tariff is just one manifestation of what we stand for. The focus will be on the overall customer experience," he added. The company has also announced the tariff for short messaging service at 1 paise per character.
India, apart, from being the fastest growing telecom market in the world, remains the most competitive as well. Low tariffs, with a host of freebies, make it hugely important for operators to have deep pockets. The average revenue per user (ARPU), a key indicator of an operator's financial soundness, has dropped steadily to a level below Rs 300 today. Factors like a large chunk of pre-paid users, which is well over 90% of the total subscriber base, has not deterred operators.
Vodafone-Essar, with a subscriber base in excess of 80 million, has just announced a special package on a region-specific basis. For instance, those in the south can make calls within the region at 50 paise per minute. Referring to the most recent offer, the spokesperson said: "We come up with market innovations which provide enhanced value to our customers, enable them to structure telecom spends according to their seasonal needs and allow us to be flexible in our offerings."
The country's largest operator, Bharti Airtel with over 107 million subscribers, has just launched its Advantage Plan where its users can make calls on the Airtel network for 50 paise per minute. Tata Indicom, a CDMA operator, has announced its pay-per-call offer where local calls will cost Re 1, while STD calls will be Rs 3 for unlimited time duration.
According to Pradeep Shrivastava, chief marketing officer, Idea Cellular, pricing is merely one part of any operator's overall strategy. "Players will have to identify their strengths and make competitive offerings. Factors like quality of a network or its reach are also very important," he said. His company is now offering local and STD calls at 50 paise per minute.
Industry trackers think the objective of these decisions is to retain market share and have an entry barrier for the new operators. "EBITDA margins will certainly be hit and will certainly drop in FY10," predicts KPMG India head of telecom practice, Romal Shetty.
For now, the new scenario is all set to take charge. "This will be the phase of real competition and the next three years will be the most crucial for Indian telecom," he added. How the surge in subscriber numbers with dropping margins for operators make for a sustainable business model will be the story to watch.
When Tata DoCoMo launched its per second billing offer earlier this year, it was apparent that the other operators would retaliate. From a time when pulse rates were calculated on a per minute basis, the user was paying one paisa for each second of conversation. "This is based on the concept of fairness and pay-to-use," said Abdul Khan, head (Tata DOCOMO marketing), Tata Teleservices (Maharashtra). In the first month of the launch of Tata DoCoMo (this is a GSM service) in Maharashtra, it brought in over a million subscribers. "Tariff is just one manifestation of what we stand for. The focus will be on the overall customer experience," he added. The company has also announced the tariff for short messaging service at 1 paise per character.
India, apart, from being the fastest growing telecom market in the world, remains the most competitive as well. Low tariffs, with a host of freebies, make it hugely important for operators to have deep pockets. The average revenue per user (ARPU), a key indicator of an operator's financial soundness, has dropped steadily to a level below Rs 300 today. Factors like a large chunk of pre-paid users, which is well over 90% of the total subscriber base, has not deterred operators.
Vodafone-Essar, with a subscriber base in excess of 80 million, has just announced a special package on a region-specific basis. For instance, those in the south can make calls within the region at 50 paise per minute. Referring to the most recent offer, the spokesperson said: "We come up with market innovations which provide enhanced value to our customers, enable them to structure telecom spends according to their seasonal needs and allow us to be flexible in our offerings."
The country's largest operator, Bharti Airtel with over 107 million subscribers, has just launched its Advantage Plan where its users can make calls on the Airtel network for 50 paise per minute. Tata Indicom, a CDMA operator, has announced its pay-per-call offer where local calls will cost Re 1, while STD calls will be Rs 3 for unlimited time duration.
According to Pradeep Shrivastava, chief marketing officer, Idea Cellular, pricing is merely one part of any operator's overall strategy. "Players will have to identify their strengths and make competitive offerings. Factors like quality of a network or its reach are also very important," he said. His company is now offering local and STD calls at 50 paise per minute.
Industry trackers think the objective of these decisions is to retain market share and have an entry barrier for the new operators. "EBITDA margins will certainly be hit and will certainly drop in FY10," predicts KPMG India head of telecom practice, Romal Shetty.
For now, the new scenario is all set to take charge. "This will be the phase of real competition and the next three years will be the most crucial for Indian telecom," he added. How the surge in subscriber numbers with dropping margins for operators make for a sustainable business model will be the story to watch.
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