Telecom companies are crying for a hike and just when the price hike looked inevitable, Reliance has come up with a price drop in broadband. That just tells you that they are not done disrupting the space.
Yes your inhibition could be partially correct for a simple reason that Reliance Jio is yet to make a mark on their fixed line broadband. They had announced very ambitious plans and very large numbers. One has not heard from them post that. So I guess they have not rolled out in as many cities as they said and probably they do not have as many customers that they had envisaged. It is clearly a challenger syndrome over there. But I do not think that repeats itself on the wireless where now they are in a vantage position.
Given what is going on in the market, it is high time that operators raise their prices and there are a few reasons for that. The whole pricing syndrome is becoming a little dichotomous because on one end we say that access has now gone down the Maslow’s hierarchy. It is now roti, kapda, makaan and wifi which is nothing but broadband and on the other side, we do not want to pay for it.
The other things that have accentuated the demand and the need for quality and experience is the Covid situation where the telecom access now is not going to be only serving a basic connectivity but is responsible for work from anywhere and is responsible for healthcare services, education services of kids at home as well as entertainment for the whole family.
Given that we need to reposition the entire pricing factor, I will be very surprised if customers in India will not be willing to pay Rs 300-400 for this. If you go and buy Netflix, you pay a much bigger amount for a month and I think given all these, it becomes even more relevant.
The second thing and more important is that voice calling was linear, it was about putting a tower and connecting. But data is non-linear. When you actually deliver a customer experience, it is an interplay between access, storage, content, devices, digital services, security and many more things that come together in a non-linear fashion to make that happen. That cannot happen at $2 per customer per month. It is not going to serve any purpose.
So it is time for telecom companies to re-orient their networks, to go deeper inside homes, to allow work from anywhere. Operators will have to invest and that can only happen if price becomes a recovery mechanism for them. Even if the government brings on the levies which is not on the cards right now, they have to really self-help over here. Finally, and very importantly 5G is staring at us. We can only delay it. We cannot wish it away. Given all this, if we were not to double our ARPUs in the next 12 months, there will be a serious challenge to find enough cash to pump it back into customer experience and stay competitive.
What is happening with Vodafone right now? It is a pretty tough situation that the company finds itself in. Is it possible for them to participate or get into this tariff war at this stage?
One has to be in their shoes and see what can be done. There are a lot of positives. My own belief now is Vodafone Idea (VI) is over that stage where it is winding off tomorrow. That did not happen. They have brought in a new brand, they are actually consolidating their position. Their stance is we are a going concern and we will be viable in times to come or we will give it our best short to make the company viable in times to come. They will be in the market at least for a few years in the worst case scenario.
Under good circumstance, they could be there forever given that pricing premium for them may not be a option because they have a network game to catch up on. If they have to catch up on the 4G sunset, 3G may not be sunset tomorrow but they have to have plans for that because they are using very expensive spectrum to deliver TDM services which cannot be viable or sustainable in the long run for anybody.
They are not in a position where they are going to set any premium on their pricing. They will probably garner and stick on to their customers with a little bit of improvement in their network and on their services and partly by being attractive on prices. The guys who can actually take the game away from them are more Jio than Airtel. With the sort of funding that Jio has received, is time for Jio to take the game away from others.
Pricing can be replicated but customer experience cannot be replicated without a huge amount of resources, without a huge amount of capital investment and that takes away the game and everywhere in the world, it is not the cheapest price player who leads the market, it is the service provider who provides the best experience to the customers, who leads the market.
If that is true, being fully funded with the sort of investors they have got, I would really be happy if they were to take this game away on customer experience all the way and say guys we are going to charge a premium but we are going to give you the best service.
Airtel is the other company that can do that. Can they do it ahead of Jio? I do not know because one thing for sure, Jio has taken the thought leadership away at least demonstrated in the last couple of years that they are deciding what is going to happen. So, I guess Jio will have to take the lead, Airtel will soon follow and will not compete with them on price and Voda Idea will protect their base and will probably remain a trifle below these guys, but at every opportunity they will inch up their price as well. This is because this game cannot be won with price. This game can only be won with customer experience.
India needs to be very serious about that activity because now telecom is not a vertical, it is a horizontal. It is serving every possible industry segment in the market through its services and its connectivity and access and if they are not quality oriented and experience oriented. It will be a letdown not only for their industry but across industries and India’s competitiveness as well.