Per-second billing- non-impressive

Tata DoCoMo came up with the ‘differentiating’ factor of per-second billing to enter the Indian telecom market with a bang. It surely did hit with a bang but unfortunately could not sustain this ‘differentiating’ factor. Other telecom service providers followed suit and converted to per-second billing. It resulted in more problems for the service providers with more losses in revenues.

I do not think this per-second billing is going to result in addition of subscribers or a churn in subscription form one service provider to another. Currently many a subscribers avail a call rate of 50 paise per minute or 30 paise per minute among the same service providers. Many of the plans include friend talk or group talk where the rates are as low as 10-20 paise per minute. The new plans of per second billing have rates of 1 paise per second which equals 60 paise per minute. Thus existing customers would not want to change over to the new plans. Moreover, with the implantation of Mobile Number Portability, I do not think there would be any churn due to per-second billing option.

Apart from this, only the pre-paid customers who are light users will find this useful. Post paid users who are heavy users would not be much impacted since the value of reduction in price would be negligible. The plans would help pre paid users who are almost 90% of the total subscribers but thinking of the future doesn’t seem to be the right idea. The only way the service providers would earn profits was if they used VAS. And thus targeting the post paid user would be a prudent idea.

The urban areas of India are congested and there is hardly any place for a new entrant irrespective of the differentiation. The rural areas are very sparsely penetrated and better infrastructure would result in addition of subscribers there. Even though the rural population are low spenders, the volumes of subscribers could do the trick for the service providers. And low tariffs could see the populace using more communications.

Thus I think, although analysts thought that per second billing would be the game changer in the telecom space in India, it is far from what is going to happen.