Post-paid Internet Access Boosts MTNL Bottomlines

The ISP business of MTNL has seen a dramatic growth in its bottomlines after the launch of its post-paid Internet service. In Delhi alone, the ISP has seen its revenues zoom from a meager Rs six lakh prior to the launch of the scheme in January 2002 to over Rs 60 lakh now. The ISP had a subscriber base of about 21,000, which has now swelled to two lakh subscribers in the Capital. According to MS Chaube, GM VAS, there are about 90,000-95,000 Calling line identification (CLI) calls per day. These calls indicate the number of subscribers that hook up to the Internet each day. The average holding time of each customer has been found to be 20 minutes.

The total subscriber base of the ISP in both the metros is over 4 lakh today making it the third largest ISP in the country after Satyam Infoway with more than six lakh subscribers and VSNL with five and a half lakh subscribers. MTNL launched the free scheme on January 26 in a bid to make its service popular. Subscribers could simply register at the MTNL site by dialing its telephone number and hook up for its Internet services free of cost. The scheme drew a huge response. In June the ISP made this service paid with a nominal charge of Rs six per hour. The main leverage of customers was the easy accessibility of service. Said MC Chaube, "The scheme become popular because of its immense convenience. Customers do not have to bother with the hassle of getting a CD and paid only for the Internet time used." This is opposed to the marketing strategy of most ISPs where the Internet time is pre-paid. Besides the hassle of making CD's easily available, there is a huge degree of churn in this strategy. Subscribers frequently change service providers based on availability of CDs or simply for the sake of a change. In the post-paid strategy of MTNL, it had a captive subscriber base who not only found the scheme convenient, but also had the ease of a single bill payment. 

On Diwali, MTNL announced that dial-up access rates for Internet surfing would be halved from Rs 24 per hour to Rs 12 per hour between 10 pm to 6 am. This initiative was at the behest of the Pramod Mahajan, the Communications Minister to boost the ailing ISP sector. Chaube said that the new rates are expected to spur Internet usage by 15 percent-20 percent. As a basic service provider, the company is skeptical about the rate cuts as there has to be a huge surge in traffic to offset reduced tariff. At the same time, the service provider can afford to do it during the late hours as voice traffic is comparatively idle during those hours.

Balaka Baruah Aggarwal 

(CNS)