After the high-profile launch of Reliance’s IndiaMobile services on
December 27, 2002, Reliance Infocomm has been grappling with many issues forcing
it to postpone the commercial launch. Finally, the company commercially threw
open its services to be available in 92 cities on May 1. What was promised on
December 27 and what got launched on May 1, partly shows Reliance Infocomm’s
helplessness in getting its way through the maze of regulatory bodies and other
operators, and partly under-estimation of the scale and scope of work involved
in delivering what was initially envisaged.
Though the company claims that the interconnectivity issue has been sorted
out with all cellular and basic players, the ground reality appears to be
different. The company doesn’t have connectivity with Bharat Sanchar Nigam (BSNL)
in 90% of the cities where it proposes to launch telecom services commercially.
Of the 673 cities where Reliance Infocomm plans to offer limited mobility
services commercially, BSNL has approved points of interconnection (PoIs) in
only 92. This effectively means Reliance subscribers will be able to call BSNL
subscribers in only 92 cities from May 1, not 673 cities as it had wanted to.
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Also, the interconnectivity agreement with various cell operators is yet to
be signed. The service is currently available only in 111 cities and will be
extended to the remaining cities in the country in the coming days. "We are
working closely with other operators to establish PoIs in these cities in the
next few weeks," a Reliance spokesperson told Dataquest. On the tariff
front, TRAI has virtually banned Reliance’s 40-paise-per-minute slogan and has
pointed a clear finger at the the IUC regime. Now, the company has to come out
with revised rates clearly signalling an end to the 40-paise regime that it had
initially offered to customers–for apart from its own network and that too for
the first 400 minutes, the customer will have to pay the same tariff as charged
by other basic or cellular operators.
"Our tariff of 40 paise per minute will continue with additional off-net
charges that may be conveyed by the regulator. We have filed our tariffs with
TRAI under the new Interconnect Usage Charges regime and are awaiting
approval," the spokesperson said. Clearly, customers will have to pay more
than they had planned for earlier. Also, the new tariff will have a 60-second
pulse and not 15 seconds, as promised by the company earlier.
And while Reliance was promising free SMS, TRAI has barred the company from
doing so and this service is not available now. But the spokesperson sticks to
the company stand–"The SMS facility is under test and will soon be
available to our customers." The issue of roaming is still under TDSAT’s
consideration. Considering all this, freebies promised by the company like
voice-mail, Internet access, call hold have a question mark attached to them.
Also, apps like audio streaming, video streaming, Web browsing, news, ticker
services and games may take longer in the coming.
The trouble-makers
The list of hurdles faced by Reliance Infocomm is long. It started with the
TRAI’s objection on its roaming service, followed by a petition from cellular
operators to TDSAT on the same issue. TRAI and TDSAT had also raised their
finger on its free value-added services offering. TRAI sought an explanation
from Reliance Infocomm for offering its limited-mobility customers ‘national
roaming’, even as the license conditions bar it from doing so. This was
followed by complaints by private cellular operators who stated that Reliance
was "attempting to cheat" its customers, the licensor and the
regulator by advertising that its subscribers can roam across 673 cities in
India with its connection. The operators also filed a petition before TDSAT,
seeking its intervention in the matter.
Private cellular operators have been arguing that in case Reliance Infocomm
is allowed to offer roaming, then the service would be no different from their
own–and in that case, a level-playing field in terms of entry fees and license
fees should be provided. Since this plea was filed, the matter is pending with
the regulatory bodies. On another front, the success of the project hinged on
its marketing strategy. Toward that end, Reliance Infocomm issued advertisements
inviting applications under the Dhirubhai Ambani Entrepreneur program. Under
this program, an army of entrepreneurs was to be created, and these would storm
the streets and households of the country to market Reliance’s products and
services. There was confusion on the pricing front, too. The project was
prepared on the basis that the price be fixed first and the product and services
be structured to suit the price–the idea was to fix the lowest price.
Alongside, came a slew of freebies. A discount, if you do this, and an
incentive, if you do that.
What went wrong?
Unlike existing telecom players who followed the traditional FMCG retail
model for the pre-paid segment and the direct route for the post-paid segment,
SMEs and enterprise market, Reliance Infocomm chose the innovative
catalog-marketing route and appointed 50,000 DAEs across the country. The
company believed that the Indian customer would look at the catalog and buy.
While the strategy was innovative, it did not meet their expectations in India,
where the mindset is touch and feel. As Mukesh Ambani admitted in a recent
interiew to a newspaper, Reliance Infocomm was caught up in its own web with its
direct marketing structure a total failure. The catalog marketing model of the
company didn’t work and the company had to go the retail way.
The future…
Reliance Infocomm’s Rs 25,000-crore blueprint is being reworked
dramatically. The company has already invested Rs 9,000 crore and has announced
plans to pump in another Rs 1,500 crore this year. Reliance is now coming up
with a new campaign after the commercial launch of its service. This time round,
it is dispensing with the DAE concept. Instead, it will set up its own chain–over
the next few weeks, the company will set up over 250 webstores and about 100
phone stores nationally. Every one of the 673 cities will have at least one
Reliance-owned web store, while the phone shops will retail phones over the
counter–so consumers will have a wide array of models to choose from.
The contracts with DAEs came to an end on April 30 and Reliance is not going
renewing around 50% of them–particularly that of those whose performance wasn’t
up to the mark. The remaining 50% will be retained and trained further so that
they can be transformed into customer service agents, and are also able to sell
a suite of other Reliance products and services like insurance and LPG
connections. This apart, the company intends to form a network of 5,000 service
points where the customer can go for assistance.
As of now, the innovative ‘Dhirubhai Ambani Pioneer Scheme’–targeted at
bringing a mobile phone into every Indian home–has been phased out. Reliance
Infocomm’s gameplan was to be on the complete value chain–a traditional
Reliance strategy in other businesses like petrochemicals, oil and gas. A
similar strategy has been implemented in the Infocomm venture by positioning
itself in every segment of the telecom value chain–fixed-line services,
domestic long-distance, international long-distance, mobile cellular, Internet
service provider and value-added services like IDCs (Internet data centers) and
call centers.
But the business dynamics for the business are proving to be totally
different. And regulatory issues aren’t helping matters any. For the first
time after the foray into the textile business with the Vimal brand, Reliance is
facing retail customers where branding, customer service and marketing
innovation are the name of the game. Despite these hurdles, however, Reliance’s
entry will affect the Indian telecom market by driving teledensity through
competitive pricing and accelerating industry consolidation. And deep pockets
will help it weather the storm!
Rahul Gupta
Cyber News Service