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GSM players keen to retain subscriber base
THE WAR between Global System for Mobile Communication (GSM) of cellular operators and the limited mobility of Code Division Multiple Access (CDMA) operators closely resembles the Cola war fought over the last decade in India.
Both Pepsi and Coke went head on to acquire market share through aggressive marketing strategies. They spent heavily on marketing and reduced prices of the soft drink. But soon they realised that the market did not expand as expected. They understood that the increase in total market size was not adequate to compensate the loss of revenue from price reduction and the spending on marketing. Hence, both players raised prices and brought down their marketing spend.
A similar scenario is likely to emerge in the technology-based mobile phones arena.
Both CDMA and GSM operators have been reducing prices frequently and will be spending heavily on marketing. Will these lead to expansion of the market sufficiently to compensate for the savage price cuts? For an answer one will have to wait and watch.
With the entry of two CDMA based operators — Reliance and Tatas, the GSM based operators have already begun to feel the heat. They have started spending heavily on marketing and promotional schemes.
It is clear that they will have to retain the existing subscriber base of nearly 10 million across the country. One way to do this may be to reduce the call rates pan India but it is feared that consumers will like to test the new CDMA products.
It is suggested that new subscribers may opt for the CDMA-based mobile phones. "The overall value for a subscriber whether he is on GSM or CDMA-based technology, will not significantly differ'', according to Arun Sikka, Vice President (Sales and Marketing), RPG Cellular Services Limited. He felt that the behaviour and the lifestyle of the consumer would determine the usage of the different type of mobiles.
Mr. Sikka said the CDMA and GSM operators would have to co-exist if they want to get their share of the pie.
The GSM operators have started protecting their subscriber base by introducing new consumer schemes. RPG for example would be concentrating on consumer services. Mr. Sikka said the company would ensure that it would give effective network coverage, efficient billing system and competitive price. He was sure other GSM operators too would provide such a package to survive in the market.
About Reliance's entry, he said one would have to wait and see the final bill value for a consumer before drawing a conclusion. But one of the greatest disadvantages of CDMA-based mobile phones was that they did not have the roaming facility.
Today nearly 50 per cent of the total subscriber base was using STD call facility.
About the prices of handsets for GSM and CDMA, Mr. Sanjay Sethi, Head of southern region, Agrani Convergence Ltd, said that as of now there was a market for GSM handsets, but with the entry of Reliance and Tatas, the demand for CDMA handsets would also increase. Though both companies were offering their own handsets, they were not ready to enter the retail market.
Shanthi Kannan
in Chennai
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