Tariff wars & the Indian mobile market

DoCoMo's launch in the Indian market 3 months ago was a big surprise. The option of per second billing saw people buying the company's SIMs in black. Tata followed it up with a per call billing plan from it's CDMA arm, Indicom.

Needless to say, they've run away with the most new subscribers in GSM & CDMA over the last few months in the world's fastest growing telecom market.

Then the baniya company decided to get in on the act. Reliance, through it's GSM arm launched a 50p per minute billing plan - regardless of STD/local or SMS to any & every kind of phone across circles, countrywide! The rationale given was that the market had moved from being competitive to cut-throat & now it was a case of who could bleed longer, in order to garner more connections in the short term. And we all know the kind of cash reserves the R companies have.

Not that I am complaining. I remember paying Rs 2.30 a minute for STD calls when I first started using a cell about 7 years ago. This was soon after incoming calls (which are still charged in markets like the US, by the way) became free & cellphone purchase in urban India exploded. And has remained so from then onwards.

It seemed unbelievable 2 years ago when STD tariffs dropped to 1 rupee a minute. But that was then & this is now .... they cost me 50p since last Sunday (yes, Vodafone launched it's own scheme & also gave me validity till 2021 as a bonus). Thus, the customer is ruling the roost in the Indian mobile market. But somehow I get the feeling that things just took a turn for the worst .... competition moved from being healthy to downright brutal. Which is something that might not necessarily be good in the long term.

The metros already have about 100% teledensity. And the other cities will get there soon enough. And with companies like Telenor, Etisalat & SingTel planning on launching their operations pretty soon, things will get murkier as growth starts to plateau. There will most likely be a much needed round of consolidation & mergers.

The market though, still has lots of potential. Teledensity countrywide is not yet up to the 50% mark.

Whatever happens, it's gonna be interesting.