Indian Telecom Industry
We had a keynote speech by the Chairman of TRAI (Telecom Regulatory Authority of India: Regulator of the Telecom Industry), Mr Pradip Baijal. The speech was very informative. He talked about the Indian Telecom Industry scenario before the inception of TRAI (ie, 1998). Before liberalisation of the Telecom Industry, the tele-density (similar to population density) was an appalling 1.92 persons per hundred before 1998! After the liberalisation of the Telecom Industry, the tele-density grew at a very healthy pace and is currently about 30%. This clearly shows how important competition is in any Network Industry (like Telecom, Power, etc). Monopolistic markets are never good for both the suppliers and the consumers.He talked about the role of the TRAI in the present Telecom scenario. It is surprising that the government which set up TRAI lobbies for BSNL (which, of course, if a 100% government undertaking) and ends up in long debates with its own brain child, the TRAI. BSNL has lost its lead to Bharati (Airtel).
In particular, he emphasised the importance of a healthy subscriber base for any Network Industry. Reliance, which faced huge losses (to the tune of 1600 crores) because of its Monsoon Hungama offer, actually gained because of the loss! It was because though it lost so much money, it gained a solid subscriber base of arnd 7 million within 4 months. This was an unprecedented growth for any operator in the scenario back then in 2001.
He then went on to describe the various strategies being adopted by the players in the market, and the need to regulate them. In this context, he talked about the Reliance's 40 paise conflict. Reliance was legally correct but it breached the code of fair play in the market. Where the other players' minimum charge was Rs 3/min, Reliance offered calls@40 paise/min. Reliance was said to follow predatory pricing. Interestingly, Baijal was not at all against this strategy. Predatory pricing was something which was adopted by the largest market player. Reliance was not one of those.
He then emphasised the need for the operators to tap the vast potential of the Rural markets. Interestingly again, the percentage of middle and high income groups in India are evenly spread in the urban and rural markets! The fact that hardly 5% of the rural market is tapped by the telecom operators, against the 40% urban market is an astoundingly low figure. Thus the above two facts show that rural markets are a gold mine for early entrees.
Yet another interesting fact came out of the presentation. The number of mobile subscribers (51.73 million) has recently surpassed the number of Land line subscribers in India (51.24 million). This is indeed an achievement for India considering the time it took to achieve this feat (roughly 8 years).
posted by Vamsee @ 9:39 PM
1 Comments:
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