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The last decade has brought in
significant changes in communications. Premium services of yesteryears are
coming for free today and operators are looking for new ways of generatingÂ
revenue. In the emerging data-centric networks, distance does not have any meaning.
Distinction among services just does not exist, courtesy the Internet. On account of these fundamental shifts, it seems archaic to bill for data services, especially value-added services, the way we have been billing traditional voice services.Â
In the new scenario, operators cannot afford to charge premium or make money on the basis of connectivity alone. To boost low-volume evening and weekend traffic, companies have started offering services at discounted rates. Though this paradigm has been applied to ISPs, mobile and value-added services, this has proven to be a mere enhancement and not a major differentiator from a billing point of view.
The Indian SceneÂ
When Internet first came to India, an hour of connect time was priced at
Rs 60. To be online for this one hour, one had to pay Rs 16.80 (12 pulses of 5 minutes each at Rs 1.40) to the telephone company. Clearly, basic connectivity was at a premium. Not so any more though. Today, basic connectivity is just another universal commodity just like water, electricity or gas. Companies like ETH and Net4India are offering it at very nominal amounts. For 1,800 hours of basic connectivity, ETH is charging
Rs 2,600 or Rs 1.50 per hour. Compared to this, in order to surf the Web for one hour, a phone user pays about Rs 25.20 to MTNL, which is over 17 times more than what one would pay companies like ETH and Net4India. It is no wonder then if companies like ETH are able to
harness a customer base equivalent to what VSNL or MTNL took four years to generate.Â
If tomorrow, some provider (possibly a basic service provider like MTNL) were to make local loop free or inexpensive to call on their own Internet
server, they could get the entire market share. In fact, MTNL has already
started providing toll-free services in India.
Almost two decades ago, fax machines started working on the same circuits at the same charge. However, a one-page fax (transferred in one minute) can convey far more information, and adds significantly more value than a
one-minute call. Since there is no way of distinguishing a fax from a
voice call, this has continued to work.Â
In India, companies and individuals
were initially asked to pay a licence fee if they were going to use fax on the
regular circuit. As this was almost impossible to detect and implement, this fee has gone away.Â
It has been some time now since modems have become a household entity and are extensively being used for data transfer. Data explosion will be the next big challenge for service providers. In fact, in the world of Internet, voice
has become data. Since data transferÂ
has become almost free, the IP backbone is being used for making voice calls
the world over. In India too, this will open up. Though a ban has been imposed on making calls over the Internet
(also called as IP telephony), experts reveal that this ban will not hold for
long.Â
Today, basic connectivity provides the bread and butter for an operator. However, abundant availability of global bandwidth, eroding margins, increasing competition, and churn are making this a nonviable business proposition. The real value can only come from an
increased customer base and enhanced services.
We need to build a new model to charge for services based entirely on value and de-linked from connectivity. When I go and book my airline ticket on the Internet at midnight, the increased convenience and value, far extends the Rs 1.50 or Rs 25.20, one now pays for connectivity. Or when one looks up stock quotes on one’s cell phone, it far extends the Rs 6 per minute airtime charge one pays.
We would like to recommend an entirely new paradigm for today’s telecom operators based on a total value proposition. Delhi-based cell phone operators are already providing Short Message Service (SMS), Voice Mail Service (VMS), roaming, mobile e-mail, caller-ID, fax services, etc. These services first need to be cross-discounted and aggressively marketed to establish a significant market share. We suggest that service providers bill consumers on the basis of a value-matrix–having high rates for services that give out higher levels of satisfaction and vice-versa.
Following are some examples of how this could be done.
Charging of a Voicemail
A voicemail needs to be charged by priority and on count, not by duration. The operator can offer three priorities–emergency, urgent, and normal. In emergency priority, they can offer a human and automated customer care to track the recipient. This could be easily charged at Rs 50 per incident. An urgent message could be charged at Rs 10 and automated alerts could be sent via e-mail, regular phone lines, etc. A normal voicemail could just be charged at Rs 1.
Information Sharing on Unified PlatformÂ
Charge for information sharing on a unified platform can be based on the medium through which information is being shared–be it e-mail, cell phone, normal phone or fax–and the type of transaction, rather than on the basis of duration or volume of data. In stock exchange personalization, for instance, one is allowed to personalize one’s portfolios. Walletwatch.com and indiainfo.com are currently offering this type of service. The service provider here has an opportunity for setting up rules for purchase, sale and information sharing. For instance, daily feeds of traded stocks can be sent via e-mail at Rs 1 a day. Updates of stock increases of one percent or more via cell phones can be charged at Rs 25. On the other hand, updates of decreases of one percent or more via the cell phone can be given away free. In a similar manner, selling or buying triggers can be sent by all methods simultaneously–e-mail, fax, cellphone, normal phone–at the rate of Rs 25 per incident.
Bill Delivery and Presentment
Bills can be delivered to consumers in a number of ways. According to their preferences, customers can look up their bills on the Web, receive them through e-mails, or on their palm tops. A plain bill by e-mail could be sent free. Customers could be induced to pay on the same day by introducing discounting schemes and an assurance of handling queries instantly. Further, if the service provider allows the consumer to download the bill from the Web onto his Personal Digital Assistant (PDA), he can charge higher rates.
Internet services have always been billed at a flat rate for connection time or on a fixed monthly fee. However, due to the nature of these services, there is a need to bill them on the basis of various parameters ranging from “bandwidth, type-of-service, and Quality of Service (QOS)” in addition to time online.
A videoconference requires much more bandwidth than a fax call. This makes the case for billing according
to bandwidth. A videoconference might be more valuable to a business customer than a residential customer. Here again, a combination of the value matrix and the extent of usage of service can be brought into play. Depending upon the importance of the service to the user, the service provider can assign “values” to the service and bill the customer on the basis of value and duration of service.
Make Them Pay for Quality
Different services can give different levels of satisfaction to consumers. For instance, more information can be conveyed through a fax than a voice call. Therefore, the priority of a fax call will be more to consumers than a voice call. So, the fax call should be charged at a higher rate.
Similarly, consumers should be made to choose the quality and pay accordingly. In case of IP telephony, for instance, time and distance do not matter. The service provider must make the consumer choose the quality of transmission as against the price. In order to make a voice call of a higher quality, the consumer will have to pay more. On the other hand, if he wishes to make the call at rock bottom prices, he should be made to settle for higher latency.
Smart Packaging
As for churn, did you know that only about 8 percent of dissatisfied customer complain? This is particularly worrying since those whose complaints are solved are actually more loyal and churnless. There is thus a need to develop innovative strategies that can help in building long term relationships with customers. Some of these strategies are as follows:
- Free samples can be offered to people to get them caught on.
- New services can be bundled free with existing services. For example, MTNL could offer all its subscribers whose phone bill was greater than
Rs 1,000, a free use of its Internet services for a stipulated period of time. - Subscribers can be brought under mileage schemes wherein they earn points on the basis of the amounts billed to them. On this basis, a subscriber can then avail of other services provided by the service provider. For example, MTNL can bring out a scheme wherein on each bill of Rs 1,000, the subscriber earns ten points. If the subscriber accumulates 100 points within a defined period of time he would be entitled to a Rs100 calling card for free. Else, if he manages to accumulate 200 points he would be entitled to a free usage of its Internet services for the first 25 hours.
In conclusion, we would like to reiterate that the real challenge lies in retaining customers. Faced with a number of choices today, the customer has become elusive. In order to hold consumer interest it becomes imperative that operators–big and small–start thinking in terms of services in their entirety. Though they may be offering the same basic package, the real opportunity lies in delivering some value to the consumer.