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| Reliance Communications: Paisa power | | Power Moves |
| Sayantani Kar / Mumbai Dec 08, 2009, 00:28 IST |
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Reliance Communications has started to offer SMS at one paisa per message. This is way below the existing rates which vary from 50 paisa to Rs 1.50. Like the one-paisa schemes for calls, the rock-bottom SMS tariff could soon get replicated by other operators. But this does not seem to bother Reliance Communications. It is targeting not one but two ends with the new scheme. It aims to drive up the SMS usage among its existing subscribers, most of who are on CDMA (since its GSM network is six months old), and also wean GSM subscribers away from other operators.
In the fiercely competitive market place, Reliance Communications first tried to break the clutter with its Simply Reliance plans in September when it brought the number of plans (subscriber options) down to three. It has since then stressed how its plans are without a catch and applicable across networks, are technology- (GSM/CDMA), payment mode- (prepaid/ postpaid) and home circle- (local/roaming) agnostic. The one paisa per message add-on scheme is its SMS component of the same strategy, though there is an additional charge.
Consumers can subscribe to the one paisa per message service by buying a standard tariff voucher or rental of Rs 11 per month. They can alternately opt for unlimited free messages (with a cap of 500 messages per day, to prevent commercial use of the tariff plan). On an average, users send 25-27 messages per month. While postpaid users would have to pay Rs 25 per month for free unlimited messages, prepaid users will have to have Re 1 deducted per day from their balance.
Such rates, which work out lower than existing rates even with the added charges, could increase the relatively low usage of SMS among Reliance Communications’ CDMA subscribers. While the industry clocks 5 per cent of its revenue from SMS, Reliance Communications gets less than 2 per cent, with its mostly-CDMA users sending just 8 to 10 messages per month on average. But the larger aim is to get new consumers. Reliance Communications President Mahesh Prasad says: “We felt there is an opportunity for us to get a fair share of the GSM market, where many of the incumbents have very SMS-savvy users. If our SMS offer leads them to our network, so be it.” The simplified voice tariffs would, he hopes, initiate the new users to the rest of its services.
Romal Shetty, head, telecom, KPMG India, feels the leverage in SMS could be huge. Market estimates put 30 to 35 per cent of the 350 million consumers as comfortable SMS users. “Reliance Communications, with such a scheme, wants to break the clutter in a relatively unexplored area (SMS), instead of reacting to competition,” says he. As the recent row over SMS charges for consumers being 50 to 100 times more than the termination charges between operators showed, non-voice services such as SMS enjoy huge margins, making it easier for operators to tweak tariffs. These also require cheaper infrastructure than voice services. However, “SMS is the only widely used non-voice service and is hence a niche to exploit further,” notes Shetty.
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