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On June 11, 2008,
the B.K. Modi controlled Spice Telecom launched a Handset Combo offer called
Sabka Spice in which a handset came bundled with a Spice connection. The Spice S
300 handset, available at Rs 599, was specially designed to make mobile
telephony accessible to the rural population in India. "We can aptly call this
'sabka mobile' (everybody's mobile). It is cost-effective and easy to use and
especially made for the rural population. This combo offer gives economically
weaker people a chance to go mobile at an affordable price," said Subodh
Srivastava, Chief Operating Officer, Spice Telecom.1
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Spice Telecom, the brand name for Spice
Communications Ltd.'s telecom services, operated in the Indian states of
Punjab and Karnataka. The Spice S 300 handset came with a three-year
warranty and a choice of Spice pre-paid and post-paid connections.
The former had one year validity and zero rentals for one year along
with a call rate of 50 paise, while the latter offered attractive local,
STD, and roaming call rates.
Industry watchers felt that cellular telephony had come a long way from
just making and receiving calls. The average Indian consumer's phone
buying decision was getting increasingly influenced by the
multi-functionality of the handset -the array of operations that it was
able to offer.
Indian mobile phone companies, in a bid to expand their market and
profit base, had been taking their special combo packs of cheap
handset-cum-life-time pre-paid services to the low-income segment of
society.
Stiff competition among the telecom companies and frequent price wars as
the companies went for volumes at the cost of average revenue per user (ARPU)
ensured that more people could afford cellular telephony. This, coupled
with rising incomes levels, had brought mobile phones within the reach
of millions of new customers.
It had also contributed to India becoming one of the fastest growing
telecom markets in the world. Besides, India had overtaken the US to
become the #2 in the world's wireless telecommunications network at the
beginning of 20082, with 264.19 million mobile phone connections as of
April 2008, next only to China.3 The number of cell phone subscribers in
the country was expected to triple by 2011.4
Though the subscriber base was quite large and India was one of the
fastest growing markets in the world, the market still remained under
penetrated. Cellular telephony did not have a strong base in the
interior parts of rural India, due in part, to the fact that the income
of the rural population was too meager to afford the high cost of mobile
phones.
Moreover, due to the low population density in rural areas, the cellular
service providers had to invest on building more towers of higher
altitudes, and this raised the costs further. Language was another
problem since many of the dialects had no scripts in rural India.
Therefore, the main challenge that lay before the operators had been "to
come up with solutions like simplifying product access, offering
customer centric solutions (like songs, music, hello tunes that were
popular), and infrastructure sharing."5
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1] http://in.new.yahoo.com/indiaabroad/20080610/r_t_ians_tc_mobile/ttc-spice-launches-handset-at-rs599-26cf430.html (Retrieved on June 16, 2008).
2] http://in.news.yahoo.com/indiaabroad/20080613/r_t_ians_tc_mobile/ttc-experts-see-huge-advertising-potenti-26cf430.html (Retrieved on June 16, 2008).
3] "India Subscriber Base Sees Slight Dip in Growth but a Slowdown Seems Unlikely," http://www.itu.int, June 5, 2008.
4] "India Mobile Phone Industry to Triple by 2011," www.eetasia.com, (Retrieved on June 16, 2008).
5] "Emerging Rural Mobile Market in India," www.rncos.com/Report/IM567.html (Retrieved on June 16, 2008). |
