Telecom Price War

Since the inception of Q3 of this fiscal year, the million dollar question that has been haunting the management & marketers of telecom companies is weather the company would be able to sustain the price which has been thrown into the market?? What would be the next step by the rivals??? What should be the strategies?? Should the company react or respond to the moves taken by the rivals??? There has been lot of debates going on these topics.
However, only time would be able to tell us as to what would be the faith of the ongoing price war??
It is a known fact that Indian telecom industry offers the cheapest call rates in the world. Even then, there is price war among the service providers. The Billion dollar Question that arises in the mind is what is the need to have a much cheaper call rates when you already have the cheapest???
The Answer to this question probably lies into the economics of competition. This industry is so lucrative that it is attracting everyone in the corporate world resulting into addition of more players in a field which is already crowded. The urban market which tends to stagnate in a short span of time has more to contribute towards the war. Since the infrastructure required per user in the urban is less and the revenue generated per user is high in urban market compared to the rural, everybody in the field is interested only in the urban market which makes it a ZERO SUM game.
When Tata Docomo recently entered into the field, the only option that it had was to drag the frustrated and unloyal customers of other players into its favor which its sister company (Tata Indicom) has been practicing since last many years on the basis of the superiority of CDMA technology over GSM (in respect of Clarity of Voice etc) . However, since there were no any technological competencies this time in a level playing field, it played its game on the pricing front.
It initiated to change the rule of the game completely by first introducing the per second charges for all outgoing calls (Local & STD) and then also the roaming charges. It managed to take a first mover advantage by quickly garbing a significant chunk in the very first month of its launch followed by similar trend in the upcoming months as well. The other players having NO CHOICE had to change themselves accordingly with the change of the games rule.

A question arises into the mind as to that a similar thing happened some 2 years back when BSNL tried to use an innovative pricing strategy by introducing Re.1 call per minute all over the country but at that time neither the customer responded to it nor other players took much interest in it. Why????
The percentage slash in the call rates are almost same in both the situation. Then why was that it didn't aroused any interest among the customers or the players?? May be it was not a proper time to introduce that particular strategy OR No one took BSNL's move seriously(As it has no longer been seen as a competitor)!!!!!!!!!
Now, Reliance has taken a step ahead in the war by introducing 1paise/SMS and Tata Docomo introducing 500000 second in Rs.99 which is much lesser then 1paise/sec.(0.02paise/sec). If the war doesn't stop here then a time would come when the call charges would be absolutely free and the customer would be the most precious assets of the companies. Indeed the time has arrived, because with the introduction of MNP (Mobile number portability), the customers would get an added advantage and whatever loyalty persist among the consumers would vanish. The customers would not even think twice in changing the service provideronce the MNP is introduced, that too @ a cost of only Rs.19.
Hence, the next Quarter and the succeeding fiscal year would be a tough time for the telecom service providers as their margins, bottom line and the top line would be shrinking from every angle. Only way for the companies to cope up with the situation is to be customer friendly and do whatever you can to help retain the customers. The time has come when the company would run only at the mercy of the consumers.
Innovative marketing & pricing strategies rather than price war would be a better option for both the consumer as well as the company. For E.g. introduce a plan where in a person can speak for 1 hour free of cost to his/her friend's Birthday. Taking such steps would also help consumers think about the company and they may remain loyal.
At this point of time when there is a stiff war going on in the battlefield among the telecom players, it would be more interesting to watch new players such as UNINOR, DATCOM, EDISALAT DB, STel etc venturing into the market. In fact, Uninor is already in the market by this month. As a marketer it would be the most appropriate time and field to watch and learn the marketing nuances and strategies of the companies which would be changing from time to time as the battle progresses.