Cellular In The Lost World

An interesting development is taking place in

the eastern region. International investment agencies are

favouring states like Orissa as a preferred zone of investment,

at a time when many majors, like Dunlop, Lipton, and Philips

India, are either closing down or shifting their operations to

other regions. And interestingly, the presence of companies in IT

and telecom sectors is increasing. The latest developments being

heavy investment of Reliance Telecom in cellular communication

and the coming of Computer Associates in this region. Observes a

top telecom official of Calcutta Telephones, "East to a

traditional industrial entrepreneur may not be a very exciting

place to do business–it is a lost world to

them–however, the industrial sectors, which will shape the

future economy, are definitely showing interest.

Telecommunication is one such sector."

With the coming of Koshika and Reliance in the

telecom circles of the East, the die has been cast. The

information market of the eastern region will never be the same

again. The advent of cellular as a communication tool has made

the customers in this region realize the importance of

information flow in enhancing the quality of life. Or the other

way round, the surge of development activities in some states

like Orissa and West Bengal has put pressure on the importance of

having the basic infrastructure in telecom. The question of

connectivity in furthering the development of the region is

getting unique attention and it may not be a far-fetched dream if

in the next few months most of the major and minor cities in the

region are within the ambit of cellular network. "Cellular

with other communication tools like pager, Internet, fixed line

services, VSATs etc., is changing the communications skyline of

this region. A year back, it seemed that the East would remain at

the periphery of the information revolution that is slowly taking

place in the country," says Manas Patnaik, director, STPI,

Bhubaneswar.

" color="#081D58" size="3">Our target is to have a customer base of one lakh by the year 2000. To reach this target, our plan is to go for mass marketing instead of niche marketing. In the sense that we have to lure the vast sections of upper-middle class Bengali population by constantly harping on the issue of empowering life through the use of cell communication. color="#FF0000" size="4">" align="right">– Rajat Jain, marketing manager, Modi Telstra.

Unlike other states of the country, the states

in this region did not experience any kind of commercial

revolution. The green revolution did not touch the villages which

remained in seclusion. And the cities never reverberated with the

glory of money power. The diverse geographical features and the

social and political fabric have been a hindrance to the growth

of the telecom network. Laying cellular network in the

inaccessible terrain of the North East is not only costly but the

returns may be too low in proportion to the investment. And,

above all, the problem of militancy which is keeping the

corporate sector away from the region. In this regard, Reliance

Telecom must be given a certificate of bravado for its initiative

in opening cellular services in Guwahati and having plans to

start operation in the capitals of the North Eastern states in

the near future. Command And Mobile Net

Set The Ball Rolling

Calcutta was the first among

the metros and in the region to go cellular. With a consumer base

of over 60,000, the service providers Modi Telstra–Mobile

Net–and Usha Martin Telekom Ltd (UMTL)–Command–are

getting the sweet taste of consumerizing the service. On an

average, the market has witnessed a growth of around 3,000 to

3,500 subscribers per month. "We are already covering our

operating cost and in terms of capital cost it will take some

more time. It is not without reason that UMTL (Command) is

considered the most innovative cellular service provider in

India. UMTL has not only been the first to introduce value-added

services in Calcutta but, most of the time, it has launched these

services for the first time in the country too. Two specific

services, Real Help and Global Connect Multi-IMSI phone cards,

were launched for the first time in the world by Command,"

says Nilanjan Mukherjee, marketing manager of Usha Martin Telekom

Ltd.

From the beginning, both the service providers

packaged their services quite efficiently. The proactive business

operations have resulted in a positive growth of the consumer

base. A low default rate in payment of bills (perhaps the lowest

in the country) and a judicious mixing of the value-added

services with an intelligent airtime rate, catering to all

sections of the populace have created an environment of cellular

culture. The culture is a mix of hype and the thirst for quick

information, with the utility value of having a cell phone

becoming a USP for the service providers. "Our target is to

have a customer base of one lakh by the year 2000. To reach this

target, our plan is to go for mass marketing instead of niche

marketing. In the sense that we have to lure the vast sections of

upper-middle class Bengali population by constantly harping on

the issue of empowering life through the use of cell

communication," says, Rajat Jain, marketing manager of Modi

Telstra.

At present, the cellular connection is mostly

limited to the business and trading groups and majority of the

owners are Hindi speaking population. Now the target of both the

service companies is to hook the Bengali middle class who did not

show much interest in cell connection until now. In the city, the

average billing of each of the subscriber is around Rs 1,100 with

a airtime usage of 100 to 120 mins. The figures are very much

comparable to all India average. In terms of subscriber numbers

both the service providers have achieved critical mass and are

expecting favourable selling environment. Only thorn in the flesh

is one of the licence conditions that DoT will charge a certain

amount per customer each year from the operators. Both the

operators resent this condition and feel that the clause may lead

to the clearing of the lower segments of the subscribers whose

airtime usage is too low to recover even the operational cost.

The region outside Calcutta offers more

challenge to the service providers. The service providers in the

circles of the eastern region have some critical issues to solve.

For example, there is a wide variation in customers spending

pattern. The region has the lowest per capita income and

industrial development has taken place in some pockets only. So,

the service providers are burdened with the fact that their

tariff plan should have a local flavour, targeted at consumers

who are not accustomed to aggressive life-styles. At the same

time, it is expected that the return will not be as attractive as

in other circles. Reliance Mobile And

Ushafone Get Going

Both Koshika and Reliance have

formulated their own strategies and it is worth noting their

tariff policies. Koshika operating in Bihar and Orissa telecom

circles has an airtime rate of Rs 2.70 per min. in normal hours

(0600 hrs to 2100 hrs) and Rs 0.90 (2100 hrs to 0600 hrs) in

local calls. The incoming calls are free in the late hours.

"Our whole strategy is to attract the middle class who are

the potential users of cell phones. Our whole package is targeted

at them," says Bikram Dash, manager, marketing, size="2"> Koshika. Now the initial cost of a cell phone is

around Rs 4,260 which includes security deposit and activation

charges and in the near future it is believed that in cities like

Bhubaneswar or Patna this offer can attract the fanciful minds of

the middle class. The hopes of Koshika rests on the bargain price

to create the markets of the region. "We are committed to

better service and that means low drop outs and more value-add.

For this reason, we are creating our own microwave infrastructure

without depending on DoT and that may be the reason why in future

our service will be more dependable than our competitor,"

says Brig. Rajender Kukreja, COO, Orissa circle, Koshika.

Reliance Mobile’s tariff plan is more

intelligent and well focused in relation to the consumer income

structure of the region. At least, various market research

agencies feedback suggest this observation. Probably, it is the

first time in India that Reliance started a call free scheme

besides standard fixed tariff scheme. For example, there are

schemes for call free airtime which may be 1/2 min., 1 min., or 2

min., where the consumer has to pay a fixed monthly membership

fee. A customer choosing a 1 min. call free (both incoming and

outgoing) for a monthly membership of Rs 645 will also get

complimentary services of Call hold/wait/forward for three

months. And if the airtime per call exceeds 1 min., then the

billing will be 48 paise (standard rate) and 14 paise (off peak

rate). The idea is to entice the subscriber for more airtime use

according to the needs. The call free offer has given the

subscribers of different income categories an option for cellular

communication over the fixed line in places where telephone

infrastructure has not developed. This is true for small cities

like Agartala, Imphal, Siliguri, and Shillong where communication

is still at its infancy. Reliance Mobile plans to set up its

cellular infrastructure in 26 cities of the eastern region in the

next three months.

The availability of roaming will certainly meet

the industry needs, and the efforts of Reliance Mobile will help

the entire region to be somewhat at par with the national

standard as far as connectivity is concerned. In terms of

business, Reliance is certainly deriving its mileage from the

unified and comprehensive services it is providing. It is the

largest service provider in the country now covering 34 percent

of the Indian landscape and 33 percent of Indian population

operating in seven circles across 13 states. This has given

Reliance an advantage over its competitor. It can offer packages

which a business person operating in the eastern region will love

to take because through a single connection he will be in a

position to get connection in any city of the region. Moreover,

cities in old industrial and mining belt like Dhanbad,

Jamshedpur, Patna, and Ranchi where the average income level is

suited for cellular communication has given companies like

Reliance an opportunity to establish its business in the field of

telecom. "Reliance is successfully implementing its strategy

of cornering a major marketshare in the region. Starting from its

tariff plans to setting up of microwave towers, the Reliance

approach is very focused and is now in a position to dictate the

market," observes a market analyst.

With the coming of Koshika and Reliance, the

days of fretting and fuming by the industry on the issue of

connectivity are over. But still many important initiatives are

required from the state governments—one of them is the issue

of sales tax. In some states in the region, the rate is as high

as 18 percent in Orissa and 14 percent in Bihar. As a result, the

world-wide fall in handset prices is never reflected in the

prices of handsets sold in these states. The development of

telecom industry in the eastern states depends on the extent to

which the state government is willing to lower its taxes for the

sake of the region and give more opportunity—providing

social stability, economic benefits, low tax—to the leading

players to establish their business entities.