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| Devangshu Datta: Getting that EDGE | | Mobile data offerings aimed at post-paid and enterprise users are of doubtful efficacy |
| Devangshu Datta / New Delhi Oct 24, 2009, 00:30 IST |
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Mahatma Gandhi would disapprove of me. Not only do I pay taxes as he once refused to; animals die, and grain is fermented to keep my cats and me happy in-between filing tax-returns, which is one of the most painful tasks on the semi-annual agenda.
The paperwork could be a lot easier. Tax-deduction-at-source (TDS) is tied to PAN. There’s no reason why the IT Department should not painlessly offer TDS statements to PAN-holders. However, pain-mitigation would conflict with the IT Department’s branding strategy. So, one must organise certificates, while haunted by the fear something will go missing.
Making a virtue out of necessity, I use this as a trigger for reviewing lifestyle and expenses. I notice that, in the last 13 years, my telecom expenses have remained almost constant though usage has increased massively.
In 1996, I paid Rs 16.80/minute for local mobile voice (reception as well) and Rs 66/hr for pay-as-you-go dialup. Until 2002, I used the mobile as little as possible, and strictly rationed surfing. My telecom expense split was roughly 50:50 for data versus voice.
Now, it’s flat all-you-can-eat for wired broadband and on mobile BB, it’s pay as you go for downloads, not minutes. My expenses now split 80:20 in favour of data. Voice expenses have shrunk drastically despite far higher usage.
The revenue I generate is many multiples of ARPU (average revenue per user) and I’m probably ahead of the norm on the voice:data split. But this illustrates several trends. Voice ARPUs will drop. Data revenues (including value-added services) could rise.
This is a conundrum for service providers. Over 90 per cent of today’s 450-million plus subscribers are pre-paid mobile customers, focussed on voice. That segment is growing the fastest. Most rollouts are rural and over 95 per cent of rural subscribers are pre-paid. Hence, lamentations about dropping ARPUs.
Telecom has high capital expenditures and predictable overheads. When a network is rolled out, there’s a massive capex. Service personnel must be employed to maintain networks, regardless of traffic levels. Once a network is at near-capacity, it’s a cash-cow.
India’s market is a long way from that stage of maturity. Service providers are still rolling out 2.5G even as some parts of the world migrate to 4G. Next year, India may finally see the advent of 3G, assuming the mess is sorted out. The next few years will see continuous heavy capex, and mounting marketing spends to grab and retain subscribers.
The only way to raise ARPU is to convert voice-users into data-customers. Most pre-paid plans offer crappy data-access, suggesting little apparent attempt at this. Service providers would actually have to be much more pro-active in creating and pushing content that tempted cost-conscious farmers, plumbers and auto-drivers to get on the Net.
Currently, mobile data offerings are aimed only at the post-paid and enterprise user, who may accept a high-end plan. This focus is of doubtful efficacy. My own experience suggests high-end ARPU will stagnate or drop, as competition in the data segment rises. If I switch to 3G, I’ll stop using EDGE and the current mobile BB.
Instead of targeting me, the service provider needs to target Shravan, who looks after my plumbing, and Anil, who is my general dogsbody. They already deliver higher than average ARPU, since they are sophisticated city-slickers. Both have lots of leisure time and an abiding interest in Bollywood. They stay in touch with and remit cash to their families in Bihar and Rajasthan.
There’s a clear road map there for the marketing mavens. The day Shravan shows me digital pictures of his kids who live in Jehanabad and transfers cash to his missus via mobile, I’ll know the industry is closer to getting it right.
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