Second is the new Minute now

the GSM brand of Tata Teleservices Limited (TTSL), launched its commercial operations in Andhra Pradesh on Thursday, a few days after its launch in Tamil Nadu, Kerala, Orissa and Karnataka. The company has launched its services with a first time "pay as you talk" pricing. The pricing model is based on the number of seconds the user talks unlike the conventional minute based usage. It is sure to change the dynamics with which the industry operates. With reliance already offering sachet pricing for various mobile offerings, pay as you talk could change the measurement metrics altogether. Pay as you talk model has enjoyed success in the other telecom markets globally especially in the emerging markets. Qtel (Qatar) and Vodafone have successfully implemented this model and have received tremendous customer response. Qtel plans to continue the offer as a full time plan which it launched as a promotion. Tata Docomo will be implementing the model to almost all the offerings like local, STD, VAS and Interactive calling. However, in terms of pricing evaluation, the cheapest local call costs approximately around 10p/min with a recharge of Rs 198 for a year but with the new Tata offering it is 60p/min. So it could be a boon for people who make calls less than 10 seconds. In terms of STD, the lowest rate comes to 1 rupee per minute as compared with 60p/min for Tata. It could be a profitable bet here if the promotional tata offer continues.

Google Goes TV Friendly

The kind of business model the players have been following is that they weave their online business strategy around the non-online business. E.g. Viacom and BBC have introduced separate online business segment altogether. However, the content to be provided comes only from their TV segment. The popularity of the show is monetized through the online portal and advertising. However, Internet giant Google plans to swim against the tide. YouTube is moving past laptops, desktops and mobile screens and plans to develop professionally produced content for the TV viewers to watch. It has already released the beta version of
YouTube for Television and will use the Net to deliver video content to Internet-connected devices — Nintendo’s Wii and Sony’s PS3 are the only ones so far in the beta. YouTube has also developed advertising schemes for networks and studios to sell their advertisements on the branded YouTube channel. It could imply some major deals if these channels find their way to the TV screen.
To beat the professionally produced content YouTube can cash on its library of music videos by delivering it in a high quality video and audio format. Like a regular broadcast TV, YouTube can form stations playing the most popular music videos which users can watch like a TV station. YouTube currently has deals with MGM, CBS Home Video, Sony Pictures Television and a host of independent content producers. If they could start moving some of this content to the TV through the YouTube for Television service, it would be an amazing start. It would also be a big step in giving Hulu a run for its money in terms
of advertising.

Mobile-izing the Sachet Marketing

The word sachet instantly forms the image of the 1 Re shampoo sachet hanging in the general stores across India. Its success has made the consumer goods industry in India to rely heavily on this marketing model. It has been successfully implemented by various FMCG players. Coca-Cola introduced the 200 ml bottle priced at INR 5 for its BOP customers. Godrej also launched 50 gm sachets of its popular products at low prices for the BOP customers. These have not only increased the product penetration in the Indian customers (especially rural) but also have helped to create brand loyality.
In the extremely price sensitive Indian telecom market, sachet marketing might entirely change the way the operators charge their subscribers. RCom is overhauling its pricing model to offer mobile Value Added Services (VAS) such as caller tunes, news alerts and Internet surfing for as low as Re 1, rather than a monthly subscription basis.
RCom has already successfully tested the prospects of this model in gaming. The new pricing would not only give the company a reach to a wider audience, but also encourage the data and VAS usage among its customers. When compared with countries like Japan and Korea where the VAS contributes as much as 30% to a cellphone operator’s total revenues, Indian cellphone companies typically earn 9-12% of their revenues from VAS and data services.

It means that operators still have a huge potential to tap in to. The data and VAS ARPU might not grow immediately because of the low prices, but it would rise significantly over a period of time as the low prices would populate usage.
85% of India’s mobile subscriber base consists of prepaid subscribers, and the sachet based pricing would definitely benefit this segment. However, the usage syill remains very low in the rural areas for these services. The success depends a lot on the pricing and the affordability of supporting handsets.