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.

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.


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,
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.

Ushafone
Airtime Tariff
 AIRTIME CHARGES
 Normal Hours (0600 hrs to 2100 hrs)Happy Hours (2100 hrs to 0600 hrs)
 OutgoingIncoming OutgoingIncoming
Permitted DoT rates
(in rupees)
8.40 8.40 4.20 4.20
Ushafone rates (in
rupees)
2.70 2.70 0.90 nil
Savings w.r.t DoT
rates (in rupees)
5.70 5.70 3.30 4.20
Saving (in percent) 67.80 67.80 78.50 100.00

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.

Reliance
Call Free Offer
Call Free Time
Offer Scheme
Monthly Membership
Fees (Rs)
Membership
Entitlement
Complimentary
Service For 3 Months
1/2 min. call free 345 First 1/2 min. of a
call free
Call hold/wait/forward
1 min. call free 645 First 1 min. of a call
free
Call hold/wait/forward
1&1/2 min. call
free
875 First 1&1/2 min.
of a call free
Call hold/wait/forward
2 min. call free 1,180 First 2 min. of a call
free
Call hold/wait/forward
3 min. call free 1,245 First 2 min. of a call
free
Call hold/wait/forward

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. 

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