For the last 6 months, there’s a lot of brouhaha around Reliance Jio’s free offers and the incumbent operators’ incessant accusation of how the new operator is killing competition in the Indian telecom market. The richest 4G start-up has also been accused of being responsible for the bloodbath in the world’s second largest data-hungry Indian market. But what the incumbents have failed to notice in the success of Jio is its simplified tariff plans, besides the freebies.
While all the allegations against Jio at CCI has fallen flat, there is something that the new operator has done right from the day one that the incumbents and the so-called pioneers of Indian 4G have failed to do, even today. A simplified tariff structure, kind of tariff plans, be for voice or data, that the customers can understand like 2×2 equals to 4. And not a kind of tariff plans that the customer needs a notebook to jot down the ‘ifs’ and ‘buts’ associated with it. Say, for Rs 11 recharge, the customer gets 1 day validity, 200 MB data, 50 free calls, 35 free SMS, but for Rs 17 recharge, he gets 235 MB, 99 free calls, and 100 SMS. And, then, post the quota limit or FUP, the customer will be charged 4 paisa per 10 kb data etc.
As a consumer, choice is always good, but if the choices are confusing it also drive them away. Apart from offering freebies during initial launch phase and very attractive rates later, one of the distinctive feature of Jio has been very simple plans. Jio is offering packs with validity e.g 1 day for Rs 19, 3 days of Rs 39 and so on in these packs there is no risk of overcharging as call, SMS and data are all unlimited.
Too Many Plans
On the other hand, the incumbent operators, be it Bharti Airtel, Vodafone India or Idea Cellular, all are offering more than 100 tariff plans, starting at Rs 5 and then with the increase of every rupee, it gives you different benefits. While a Rs 5 recharge might offer you calling, may be a Rs 6 recharge will offer you a ring tone and some other subscription. You make 1 rupee mistake while recharging and you end up with something you never wanted. Or, something you wanted but missed!
Pricing Is Confusing Too
Let’s take some examples of tariff plans offered by various operators. A Rs 21 recharge on Vodafone gives you 1GB data for 1 hour, Rs 14 recharge will give you just 50MB for a day but for Rs47 you get 1GB for a day. Similarly, Airtel offers 600 MB data for Rs 149 for 2G/3G users but in Rs 149 a 4G handset user will get 2GB data and unlimited Airtel to Airtel calls. Why? Because Reliance Jio is not competing in 2G and 3G space.
Even in case of 4G offerings, tariff plans are confusing and a little difference in pricing offers huge difference in benefits. For example Rs 349 gets you unlimited calling and 1GB data per day for 28 days, but just add Rs 50 to that and you will get same benefit for 70 days.
If you look at the pricing there is not much difference between Airtels Rs 399 pack of 70 days and Jio’s Rs 309 pack of 84 days, both offer unlimited voice and data during validity period. Airtel also has huge advantage of better and more mature network coverage and yet people consider Jio to be much cheaper.
If the internet usage of India was lagging despite 900 million people were already on board on India’s mobile network a few months back, a major part of the blame goes to the these three Indian telecom biggies – Airtel, Vodafone and Idea. And within just 6 to 8 months of Reliance Jio’s entry, India became the highest data consuming country in the world.
It’s just not because Jio offered data for free, it also because Jio’s plans removed the fear factor of bill shock from the data users. They never thought ‘what will happen if my data quota is over’. Jio standardised data consumption whereas incumbents did not stop themselves from fleecing the customers. See it how!
Shockingly, the penalty for overshooting the data quota you bought across the three main incumbents is Rs 4000 per GB. For them the base price of 10KB of data is 4 paisa! You will be charged at that rate if your data consumption goes beyond your quota, and if you are not on a ‘unlimited’ plan. Well, users need to do a tight rope walk with that kind of price differential.
In the age of 4G where we are talking about 1 to 10 Mbps speed and social networking on every phone, every second of data will cost you anywhere between Rs 10 to Rs 100. This pricing was also one of the main reasons why data usage in the country was not taking off, and that is where Jio played the master stroke and users embraced the unlimited high-speed data offerings from the new operator compared to the incumbents.
What Incumbents Need To Do
Instead of cribbing over Jio’s free offers, the incumbents should do a self-assessment and put in place how to retain their customers. And the first step they can do towards that is by simplifying their tariff plans. They can commoditise data. They can keep a fixed rate for data and it should not vary much for KB, MB or GB. In fact, they should ideally have only two units for data – MB and GB, and price it accordingly. Say, Rs 10 or Rs 20 per GB. Second, if customers consume their data, they should be allowed to buy more data as per the unit price, and the pricing should not be different than the base price, unlike current practice.