The Gold Rush

Too fast, too little

It was a real amusement to see Zoozoo act like a superman and do heroic deeds for his world. It was touching to see a soldier talking to his girlfriend from the battlefield. It was really humorous to see people engaged in bed, other than concentrating on their next offspring. But, it was…

The gold rush was on, and after finishing for the race there remained no more gold. Today only 1.5 – 3.0 % of the revenues come from the total subscribers from 3G on an average for any Telco in India, even after spending 1000-1200 crores in the market for marketing and advertising. The reason, “if they are doing the advertisement on 3G, why should not we?”

An advertising genius would definitely say that they should have done the execution just before the growth started peaking. Now, when is that? Probably, when the total revenue touched 1% at least for a rival Telco? Here is a chart how it might be successful in different cities for the next 3-5 years:

 

 

High Success

Moderate Success

Low Success

Tier I

Yes (20-30%)

Yes (70-80%)

No

Tier II

Yes (50-60%)

Yes (40-50%)

No

Tier III

No

Yes (10-20%)

Yes (80-90%)

 

This consideration is based on parameters based on people, eco-system, Telco, population, environment, and demographic perspective.

There is a saying that there is a time and tide for the wave, which once missed leads on to misfortune. Are the Telcos in unison in saying that they have just found the foot in the door, and the best is yet to come? Or, did they maintain the “status-quo” per say hiding the facts that the investments went sour? I guess that this is the time to take the decision, and we all know it.

But wait, all is not over yet. An average 3G subscriber consumes more than three times than an average GPRS user. So, statistically speaking, about 25% subscribers in the Telcos should be 3G users to cut even, and yet we find such huge investments, and a gold rush towards the 3G market with about 1.8% of the population having mobile penetration rate in India.

But, I would say that the spending on 3G by the Telcos, after the 67,719 crore of auction earnings by the government, was not required. Probably, a tail-effect would have been allowed as the better understanding of the situation.

Probably, to educate the masses at a faster rate and to justify a cause, this happened. Yet still, the rush would be on.

Yet I believe that, there are some room for improvement. The 3G need needs to penetrate in the minds of the people. But the wait must be there from the side of the Telcos. There are occasions when the need surge, especially based on timings, age, and demography. Let us say that there is a  need to gift a person a 3G connection in Diwali, the subscription might go high. Similarly in summer where people generally are more active, subscriptions might be high. December for India might be a very dull period, but may be very high for the people in the other countries. The spike in the system must be addressed.

One important factor is that CDMA might lose out to GSM, in this run of 3G. The reason is 3G is a luxury; 2G is a basic need. Even if the process for the 3G subscription fall, the people will find it hard to switch over as the basic needs are fulfilled. CDMA does not cater to the need and want in 3G, or even devices that are preloaded with 3G applications and sold in the market at lesser competitive prices. Bundling things will not help, at least now. But such schemes will be very useful to tap the rural or Tier II and Tier III cities, especially when the per capita index is growing in the rural areas and the need is there. Till then, CDMA or pre-loaded applications has to wait. And that means sustainability for the next 8-10 years.

Content is the king, just by offering bundling of products and pre-loaded applications, things may not work northwards. It has to have pace. The content and quality will definitely drive the future ahead, with more “warmer” gadgets.

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