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Will Pricing Strategy Help Tata Docomo Succeed?

logo-tata-docomoIf Aircel is redefining how telecom operators approach value added services and GPRS in India, Tata Docomo is doing its bit to change billing practices.

The joint venture between Tata Teleservices and Japanese telecom major NTT Docomo officially began rollouts (pdf) on June 24th, with a plan to invest $2 billion for its pan-India GSM services. Tata Docomo has so far launched services in Chennai and Tamil Nadu (pdf), Orissa (pdf), Karnataka (pdf), and planned to complete a South India rollout within a week; a 22 circle rollout, except in Jammu & Kashmir and North East is expected to be completed by October 2009, reports Business Standard.

Pricing Differentiation…It’s Been Tried Before

tata-docomo-how-much-can-you-saveTata Docomo appears to be banking heavily on its tariff plans – the company is offering a 1 second pulse instead of the usual 1 minute pulse that other telecom operators are offering. This means that consumers are charged on a per second basis, instead of a per minute basis, and end up saving money on unused seconds. A nifty little application “How much can you really save” on Docomo’s website explains how this works. Rs. 0.01/second is a marked change from the Re 1/min and Rs. 0.49/min charges that usually apply.

Now while this plan might sound unique, it isn’t that it hasn’t been tried before: back in 2004, Tata Indicom had launched 1 second pulse plans, which going by their current plans, appears to have been shelved.

Services: I-mode, LBS, m-Commerce To Be Launched

At the launch of Tata Docomo, Toshinari Kunieda, SVP and MD, Global Business Division, NTT DOCOMO had said (pdf) that DOCOMO shall bring to India i-mode, LBS and mobile payment services.

At present, Tata Docomo has launched voice portals, 24-hour music, cricket commentary and voice chat, apart from offering free Missed Call Alerts and VoiceMail. Interestingly, voice based services are also being priced with a per-second-pulse: 24 hour music and voice chat are priced at Rs. 0.02/second. Caller Tune (CRBT) search service ‘Genie’ is also being priced at Rs. 0.02/second. This is a marked change, again, from the per minute pricing, and can offer consumers cheaper options.

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Our Take

With the proliferation of telecom operators in various metro circles continuing, the likely outcome will be a decrease in rates, but we think these are likely to impact low ARPU users, and perhaps increase churn. The key issue among high ARPU users will be network coverage; they would prefer that a call go through, or not be disconnected, than save Rs. 0.5-Re.1 on a call. At the same time, since operators have so far been focused on the “land-grab” of subscribers, the growth in the suscriber base is likely to be more distributed. We wonder if we’ll eventually see a trend of people in metros keeping multiple handsets for different services. In which case, a dual-sim handset would help.

Written By

Founder @ MediaNama. TED Fellow. Asia21 Fellow @ Asia Society. Co-founder SaveTheInternet.in and Internet Freedom Foundation. Advisory board @ CyberBRICS

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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