DoCoMo started a bloodbath in the telecom market with their per-second billing plan. The results are here for everyone to see. They recorded huge subscriber acquisitions over the last 3 months literally forcing all operators to emulate their pricing plan reactively. Finally TRAI announced its recommendation that all operators should provide per-second-biling.

What comes to mind analysing this disruptive market entry strategy is that there was no entry barrier that incumbent operators had created for such a thing to happen.

Are we in India reactive people? We had no entry barrier for westerners to come and rule us for generations, this while we were probably more affluent than most countries. Having philosophically laid the point let’s see if it holds relevance in the 15 year history of Wireless Mobile services in India. Have we become complacent conformists?

We started with 2 operators per circle and the 2 Operators were very content charging the customer a limb and a half for providing mobile services. They believed that the government would be their competitive entry barrier. Our government however played false over several steps, they first allowed something called ‘limited mobility’ for basic services providers, then they allowed BSNL/MTNL as the 3rd Operator, following this by announcing a 4th Operator licence. Finally realising that they cannot enable & regulate ‘limited mobility’ and that it is not in the interest of the consumer we had the Unified Access Service Licence. India then had 6-7 Operators in some circles!

The point to be noted is that each time competition entered prices dropped. It happened with BSNL, it happened with Reliance and now with DoCoMo. Each time the incumbents cried foul, and reacted. They continue to do so today. What they probably haven’t learnt is to proactively build entry barriers and place little trust on regulatory. Or could it be they just dont want to? Do businesses in India always try to rake in as much cash & profits while they can and then just react when someone comes & lowers the barrier? I read about Apple bettering Nokia on handsets in the news today and the first thing that came to mind is the exorbitant price it was launched for in India – a similar attempt like the 16 Rupee incoming and outgoing call rate mobile tariffs that India started at. Do we spend too much time in coming down the pyramid? Do we always need a Monsoon Hungama or a Pay Per Second scheme to make us address the mass market requirements?

Anyways, earlier  what actually happened each time there was hue & cry on new competition being allowed and falling prices turned out to be a boon and a half in disguise.  The market grew faster not only in subscribers but also in Minutes of Usage (MoU) as there were more people talking. This made the operators earn more and grow faster. This time though the market is growing in subscriber additions the MoU is not growing and that has the operators worried. This means that the actual user base is not growing but just churning or in other words the SIM/Subscriber ratio is increasing which doesn’t actually contribute to revenue as revenue is purely a function of MoU. (Do read my next blog, “Emerging Telecom Performance Parameters” to understand this better)

We now have around 12-13 operators to choose from in some circles with another 4-5 standing on the sidelines. One question is what disruptive entry strategy will they adopt? MTS has already done the easiest of them and continuing in the price war direction launched a 0.5paisa per second billing plan. The other question is that if the incumbents feel that it is time to be proactive and create some impenetrable advantages what strategy should they adopt? One of my coming Blog topics is “What Next After Per Second Billing”, and it aims to address some eventualities that might occur and operators could orient strategic moves around them.