Chennai is the ground zero of tariff wars, slick deals in the mobile telephony space
: With one of the highest wireless tele-density ratios in the country, Chennai is the ground zero of tariff wars, slick deals and customer enticement strategies in the mobile telephony space.
Apart from two CDMA operators, Chennai has nine GSM operators vying for a slice of the subscriber base with a few more operators likely to enter the fray.
According to the latest data of the Cellular Operators Association of India, Chennai possessed 106 lakh mobile phones as against a population of 46 lakh (the 2011 Census).
Chennai, with a wireless tele-density of 200 (200 mobile phones for every 100 of population) ranks among the highest in any telecom circle in the country. Such a high tele-density is being attributed to the city's stature as an educated and highly evolved market, active youth segment and flourishing business community.
A large chunk of the city's mobile users have moved on from single SIMs to multiple SIMs, especially professionals who have a personal number apart from the office-provided one and frequent travellers to the city from other States who retain a pre-paid lifetime-valid SIM to avoid roaming usage while in Chennai.
It is estimated that dual SIM phones account for about 30 per cent of the mobile handset market in the city.
Mobile telephony, which was launched in the city as a private enterprise with the issuance of cellular licences in four metro circles in the country in 1994-95, has now moved from the voice-led communication on the 2G platform to the high speed data-driven era.
The three top operators by revenue market share — Airtel, Aircel and Vodafone — have rolled out 3G networks to join incumbent brand BSNL's CellOne network. CellOne launched its commercial services on the 3G platform of high speed voice, data and video functions in February 2009.
“In a highly saturated and competitive market like Chennai, the strategy for a mobile operator with a sizeable market share has shifted from new customer acquisitions to value-additions,” said an industry spokesman.
The flip side to subscriber growth coupled with plunging tariffs has been the steadily declining Average Revenue per User levels. “Operators are now looking to tap non-voice revenue streams for sustainability,” said BSNL Chennai Telephones Chief General Manager A. Subramanian.
While 2G tariffs have hit the rock bottom to enhance affordability of mobile phones, quality of services has been marred by several issues ranging across call drops, network congestion, poor grievance redressal mechanisms and unintended activation of Value-Added Services (VAS).
A key complaint that has caught the attention of the Telecom Authority of India (TRAI) has been about users being inadvertently led to subscribe to many VAS features.
While directing service providers, including BSNL and MTNL, to clean up VAS portfolios, TRAI has made it clear that in all cases of subscription to VAS offers through “pressing of star key or other keys,” the service provider shall, subsequent to the pressing of the key by an interested user, convey to the subscriber in writing or through SMS/fax/email details of the VAS scheme.
TRAI has also directed service providers not to activate chargeable services during a customer-initiated call to a third party unless the subscriber's consent had been obtained. “Music- or video-related value-added services such as caller ring back tune, background music, wallpaper etc; shall not be provided, even if it is free of charge, without taking explicit consent of the consumer”.
Experts say that operators would have to maintain clean VAS slates as value-add features, along with higher data consumption, could be the chief revenue stream in the 3G era. Consumer feedback in the initial months of commercial 3G services indicates a downside. While a number of customers opted for 3G immediately after the launch just for the “experience'', affordability and other issues seem to have pushed them back.
Amrutha Upendran, a Vodafone subscriber who was on 3G for just seven days, says that though Internet browsing was snappy and fast, “I did not realise that I was incurring a huge bill''. The outstanding bill was Rs.4,000 the last time she checked.
Customers like her also complain of repeated signal drops. “I was forced to use the landline in spite of having a mobile phone. I finally disconnected''.
G. Sridhar, another 3G user who is an Airtel subscriber, says that though 3G network is subject to coverage in an area, “you will be billed 3G browsing charges irrespective of 3G availability''.
Shivkumar, Chief Technology Officer of wi-5, a wireless solutions provider, says that what customers do not seem to realise is that there are too many players in the telecom scene and too little spectrum. “Nearly 10 million new mobile subscribers are being added each month in India. Most telecom companies are likely to use their 3G spectrum to free up congestion on their voice communication lines.''
In this backdrop, he says that operators will be upgrading their back-end infrastructure to be 3G enabled only in high density areas.
“A 3G network requires four times more base stations per sq. km than a 2G-based system to offer the same signal quality''. Since each base station costs about Rs.2 crore to set up and only about 12 per cent of subscribers are on GPRS or EDGE, the situation is likely to be the same until the user base expands, he adds.
However, with the VAS segment being the fastest growing revenue stream for telecom operators, industry insiders say that the shift to 3G might be more rapid than most people expect. VAS accounts for about 10 per cent of the total revenue.