Telcos Reviving the Value of a Paisa

When Manjari, my teenage niece visiting us during vacations, asked me if I would help her with a summer project, I agreed. It involved a study of coins. The curious kid wanted to know what one paisa coin looked like. Her next question was “What can one paisa buy?”

We were all amused as to why would a teacher give a “One paisa” project when the cheapest toffee costs 50 paisa. Manjari's search into the shape, size, and metallic content of one paisa coin landed her at the Reserve Bank of India monetary museum. Manjari learnt that over a period of time, cost benefit considerations led to the gradual discontinuance of 1, 2 and 3 paisa coins in 1970s by RBI.

Then came a discovery of sorts. There was something that was worth a paisa — offered by the burgeoning, yet highly competitive, Indian telecom industry. For just one paisa one can talk to someone in the farthest corner of India for full one second. Or send an sms of 160 characters to any one of the 600 million mobile phone users in India. Not only that, one can extract more from the service provider, if the bill plan well chosen. Of course, it also depends on the desperation of the service provider to acquire and retain a customer.

The Indian telecom industry, the world's fastest growing, must be credited with applying all the marketing tricks ranging from product or service sampling, marginal costing, happy hours, family and friends packs among others to hook the customer.

This explains the offer for sending 15,000 sms for Rs. 99 per month in a month-a cool 3 sms for just 2 paise. Or for just Rs. 299 to call 65 hours, or full hour of talking with your mother for under Rs. 5. If your circle of friends extends nationally, at Rs. 599 per month plan you can talk for 65 hours, packing in 60 minutes of calling for a little over Rs 9.

For the service provider there is little money to be made in the local and STD calls from and individual subscriber. However, money is made from value added services--ranging from ring tones and astrology, music downloads and jokes, stock alerts to cricket scores, International calls and data services. It is estimated that there are at least 100 different services that add up to plum value added services and there is hardly a subscriber who has not subscribed to a service or two at a minimum of Rs 15 per month.

And if you include the range of data services like browsing the web to send email, downloading music, streaming video to watch television the billing potential for the mobile companies is huge and is likely to grow manifold in the 3G regime. By subscribing to data packages on a mobile phone the subscriber can navigate unknown routes or even make international calls for a song.

While all 600 million Indian mobile subscribers don't own a handset that supports data services, it is only a matter of time when some of the cheaper 'copycat' look-alike handsets as market researcher, IDC calls them will be within every mobile users reach for as little as one-tenth of the average sales value (ASV) of a smart phone of a foreign MNC brand.

Industry analysts expect that a number of service providers could be offering Mobile VoIP services to offer cheap international calls. Right now making international calls is not only expensive it needs activation, often for a fee and a fat security deposit. Once the mobile VoIP services are available the call rates could drop from the current Rs. 6.40 per minute at the lower band to as low as Re. 1 to Rs 2 per minute.

Already a few mobile dialers, like the iTel Mobile Dialer Express, available in the market allow a phone subscriber to make VoIP call from the mobile phone. With the mass deployment of Wi-Fi networks in many countries and also with the introduction of cheap GPRS service, calling from mobile set using VoIP technology is getting popular. iTel Mobile Dialer Express is an easy way of doing this.

The telecom tariffs in India, simply the lowest in the world, have silently been making a visible difference at the sociological level- you see it in a bus, train or a plane. At another level there are mobile air space consumers who are busy converting phone calls from a primarily day time activity to a 24/7 activity. With a variety of cheap night time calling packages on offer, it is not uncommon for friends to call each other late into night and for much longer durations. With value offerings targeted in the non-peak hours, the service providers have been able to make inroads into the sleeping hours of young student community successfully.

The time is not far when the mobile revolution will embrace the remaining half of the country--at a steady rate of adding 20 million new mobile connections every month--in less than 3 years. The economies of scale will hopefully extract the India demographic advantage for many more seconds @ of a paisa.

By Sanjit Chatterjee, Director Global Marketing and Strategy, REVE Systems

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