The Second Revolution

Indian telecommunication has evolved through revolutions. While most of these revolutions were started by Reliance, first by Mukesh and then by Anil, this ‘Second’ revolution is definitely brought about by Tata Docomo.

Reliance gets the credit of getting us phones for Rs 500. Reliance gets the credit for forcing phone manufacturers to reduce their prices too. Reliance made calls cheap enough for an anybody to talk on phone. And when BSNL joined in, telecommunication in India truly expanded as even villages got cellular coverage.

But it’s been years since there was no progress in the telecom sector other than hopping increases in the number of subscribers every month. Yes, we have more than

35 crore GSM and more than 10 crore CDMA subscribers today. But other than that, there was a silence in the market. A Raja’s only scheme since he joined the ministry, Mobile Number Portability or MNP, was showing no signs of starting and his claims to reduce call rates to 20-30 paisa were lost somewhere.

And then came DoCoMo. The day DoCoMo was launched in Bangalore, the schemes said Rs 49 for SIM with lifetime validity, 1 p/sec calls anywhere and 100 free msgs anywhere in India after first msg for the day charged. In short, I had no reason for not buying a DoCoMo as I already had two phones. I put the DoCoMo SIM on my old set on day 1, and within a week, my Airtel was on a backfoot.

No, DoCoMo wasn’t the best thing on the earth. It showed me Network Busy signal and made me talk to ‘aunty’ from my childhood who always used to say ‘is route ki sabhi linein vyast hain, kripaya thodi der baad dial karen/ all the lines to the route dialled by you are busy, please dial after some time’ back then. But then it was only during the evenings, and I had started feeling the difference in my phone bills already. Yes, DoCoMo was something for sure.

I guess similar thoughts striked many people and DoCoMo added record number of customers in the very first month, more than 1.8 million. I’m trying to find more recent data but since COAI doesn’t yet show the data for DoCoMo, recent statistics are not available. But then, the numbers must have been obviously significant as Reliance reduced its call rates to 50 paisa/min across India to stay in competition and one by one, every company, including Airtel who had stated they won’t jump into this price war, made their call rates 1 paisa per second.

Interesting part is that the same thing, that is 1p/sec, when tried with CDMA had failed and Tata Indicom didn’t get even half the success that GSM is enjoying. That explains the mature mindset of Indian customer who is ready to experiment but not ready to commit himself for lifetime with one cellphone operator.

Now the question that comes to my mind is that with such low ARPUs, how much will the telecom companies be able to earn and how much sustainable this change is. Surely all these companies who claim to be ‘barely surviving’ must be earning something otherwise there is no explanation for the huge number of competitors for new licences. But then, the way competition is increasing in all fields of Telecom (read DTH and IPTV after that), things are surely going to be difficult for mobile operators. My guess is broadband is one thing where these companies might find scope and can hope for a larger share of revenues in coming future, but for that they’ll have to be ready in advance. May be before DoCoMo launches a Rs 1/day plan or something.

Tags: India, Telecom