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The battle between GSM cellular service providers and limited mobility (WLL) providers has now reached a crescendo. The inherent ambiguity in the TDSAT ruling, validating the legality of WLL (M), has only added fuel to the fire. Many GSM operators are now up in arms against the judgment, worrying that WLL will cut into their subscriber base and hence, revenues.
However, a look at the addition of subscriber base for both GSM and WLL service providers over the first seven months of this year goes a long way in allaying the fears of the GSM operators. Till the end of July, GSM players had added 46.68 lakh subscribers, while WLL service providers boosted their subscriber base by 32.31 lakh, lagging behind by nearly 31 percent.
In fact, the comparison was even more lopsided till June. But thanks to Reliance’s much-hyped ‘Monsoon
Hungama’ scheme, in July alone, WLL subscriber base shot up by nearly 55 percent from 20.80 lakh (as on June 30) to 32.31 lakh (on July 31).
This ensured a neck-to-neck race in July, though GSM still won by a photo-finish.
What might be even more significant for GSM players is that over the last one year (from June 2002 to July 2003), the total subscriber base nearly doubled from 73.39 lakh to 1.51 crore. According to COAI figures, the principal gainers were Hutchison and Bharti in the metros and ‘A’ circles. While the growth was around 43 percent between June-December 2002, it was more than 46 percent between January-June 2003. Common logic suggests that if WLL had indeed made inroads into the GSM base, this growth rate would have dwindled substantially.
But what enabled the Bhartis and Hutches to not only hold on to their ground, but even strengthen their base when Reliance was riding a major media blitz? GSM players would like us to believe that it was because of their state-of-the-art infrastructure and great customer services. While this may be true to some extent, they should also thank the intransigence of TRAI and DoT. Many GSM users found it extremely difficult to connect to Reliance or BSNL WLL phones. The dithering of the government on a clear stand on the IUC regime prevented many new subscribers from jumping onto the CDMA bandwagon.
Meanwhile, both Hutch and Bharti have made substantial investments in the last few months. This has helped in
improving their QoS like clearing network congestion and adding voice clarity, and thus retaining and adding new subscribers despite the WLL onslaught.
In addition, limited handset options in CDMA had an impact in the Metro and “A” class subscriber base, particularly in the 15-25 age group, who view handsets more as a lifestyle product. Though the much-hyped ‘Monsoon Hungama’ helped Reliance gain a strong foothold, it also helped the GSM players, over what Atul Jhamb, COO, AirTel Mumbai, calls ‘Inverse snobbery’. The economical financing scheme of Reliance, BSNL and Tata Teleservices ensured that CDMA handsets reached a class of people from the lower strata of society for the first time. And many subscribers, especially, in urban areas would not like to associate themselves with such handsets.
But though GSM players should not be blinded by a false sense of security. They should remember WLL, primarily Reliance, has created a whole new market segment in the mobile space. Reliance claims that by September-end it would become the largest cellular player with a subscriber base of more than 48 lakh. The company is counting on adding about one million subscribers a month during August and September. And the majority of these subscribers are bothered only about getting an economical service and good voice clarity and not about the nuances of limited mobility.
Reliance is not the only WLL player disturbing the sleep of the GSM operators. BSNL is providing CDMA handsets for as low as Rs 20, which it is charging as an insurance premium. With the launch of its WLL services in Mumbai, even Tata Indicom has services in six of the country’s most lucrative circles.
However, GSM players are not overtly worried about WLL overtaking them. Sandip Das, CEO, Hutchison Max Telecom says, “Whenever a new service provider launches an operation, there is a specific pattern whereby an initial hype cycle is created. Subsequently, a correction takes place and as a result, though the overall market size is increased, the initial hyped figures are never achieved.”
Besides, a negative verdict from DoT on the TDSAT recommendation could also scuttle the plans of WLL service providers.
Even a recent Morgan Stanley report, which says that India will have 19 million WLL users as opposed to 47.5
million GSM subscribers by 2007, seem to support Das’ contention.