Abstract

As of 2009, the Indian telecom sector was growing rapidly in terms of subscriber additions, with more than 10 million new connections being purchased every month. There was fierce competition among companies in this sector to enhance their subscriber base. Besides, between the two competing technologies – GSM and CDMA, GSM was the dominant technology in the Indian mobile telephony market. To attract more subscribers to its network, Tata Indicom, a CDMA-technology based brand of Tata Teleservices Ltd, launched an innovative tariff plan in September 2009 for its prepaid cellular subscribers. Marketed as the Pay Per Call tariff plan, this plan extended the pulse duration for all outgoing calls made from the home network to 10 minutes. This case discusses the implications of this plan for the service provider as well as the consumer, and questions if (and how) Tata Indicom should take a relook at the plan.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• The impact of the regulatory environment, industry competition, and consumer behavior on the revenues and profitability of companies in the Indian telecom sector
• The role of tariff plans as a key differentiator between prepaid cellular services of various telecom service providers
• and Evaluate the potential impact of the Pay Per Call tariff plan (and competitors’ response) on Tata Indicom’s subscriber additions, revenues, and costs.

Keywords

Tata Indicom, Pay Per Call tariff plan, Price war, Prepaid cellular subscribers, Postpaid, Tata Teleservices Ltd., Average Revenue Per User (ARPU), Teledensity, Pulse rates, Home network, Roaming, Global System for Mobile Communications (GSM), Code Division Multiple Access (CDMA), Simply Reliance Plan, Mobile number portability (MNP), Bharti Airtel Ltd, Vodafone Essar Ltd, Bharat Sanchar Nigam Ltd (BSNL), Reliance Communications Ltd., Idea Cellular Ltd., Tata DOCOMO, Virgin Mobile