IIPM Admission

Thursday, September 04, 2008

Big Dada Bets on Big Adda


With access to content, infrastructure and mobile platform, RCom is in a position to ring in a new convergent future, believes DEVDEEP SINGH

Let’s Anil Ambanistart this story from March 2003, when, despite eight years since the launch of mobile services in the country, owning a mobile was still a dream for a majority of Indians. At that stage, Airtel ruled the market with 3 million subscribers, closely followed by the state-owned BSNL (2.2 million) and Hutch, now Vodafone, (2.1 million). But over 90% of these subscribers lived in metros. It was then, while GSM players were competing with each other that Reliance Infocomm (now Reliance Communications) decided to launch Indiamobile services on the CDMA platform. Within the first eight weeks of the launch, the company witnessed a record of 80 million minutes of usage by its subscribers. Today, as tele-density in the country has increased from 1% in 2003 to 23%, RCom, with its customer base of 38 million, just behind Airtel’s 51 million, has proved to be a success. It has changed the way service providers, customers, regulators and experts think and feel about telecom. It transformed the manner in which people think about the future of communications. B&E analyses how RCom provided the right ring tones for a connected India.

Tactic No 1: Become the price warrior

The success of RCom is significant considering the price revolution it initiated in the sector. While the likes of Airtel were offering STD calls for over Rs.3 per minute, Reliance empowered people to make domestic long-distance calls for a measly 40 paise. Although this was applicable for a Reliance-to-Reliance call, it gripped the price-sensitive nation and, by June 2003, the company amassed a subscriber base of 1.2 million. Says S. P. Shukla, President (Wireless Group), RCom, “According to Dhirubhai Ambani, a telecom business would achieve its goal if it could make mobile telephony services available to the masses at rates that were cheaper than the postcard.”
Not only did RCom implement this vision successfully, it strategically reduced the cost of owning a mobile at the entry level. With the Monsoon Hungama scheme that was launched in July 2003, RCom allowed individuals to own a mobile for just Rs.500. Such was the frenzy created that in next few months, the company penetrated deep into towns & villages & became one of the top mobile service providers. “Reliance has always offered the cheapest monthly plans. Also, their valued added services like Hello Tunes and others are cheaper than other operators. It’s a treat to be an RCom customer,” says a Reliance mobile user.

Tactic No 2: Go grassroots

After conquering Version 1.0 in the telecom battle (affordability), RCom focused on Version 2.0 (reach). Anil Ambani confidently asserted, “Our network expansion will give us the power to drive the market and stay ahead of the curve.” And RCom has expanded aggressively. While the company’s wireless network extends to over 10,000 towns today, it plans to take the count to 23,000 by 2007-08, covering 90% of India’s population. To achieve this, RCom plans to invest a massive Rs.200 billion in the coming year.

“The company’s network is undoubtedly amongst the vastest in the country and it has proven its execution skills. In fact, in seven months of the full-fledged CDMA launch, it became the top mobile operator in India,” says Harit Shah, Telecom Analyst, Angel Broking. And it also boasts of an extraordinary distribution channel. As Shukla comments, “We have the largest chain of exclusives Reliance showrooms under two brands - Reliance World and Reliance Express. No other operator has a phenomenal reach of 2,000 exclusive outlets where both sales and services are offered.”

RCom’s rural strategy has paved the path for its overall growth. “When we went rural, everybody contradicted our move. However, a few months later, all the other service providers were talking about going to the rural sector,” explains Shukla. In fact, it was RCom, which envisioned the approaching maturity levels in the metros, and targetted mass markets in India’s small towns and villages. It rightly predicted the rise of the rural middle class.

Tactic No 3: Be a value-added player

RCom became the telecom disrupter in value-added services. When GSM players like Airtel and Hutch were betting on GPRS and EDGE services, Anil entered with a slew of other services like integrated wire-line and wireless services, and convergent voice, data and video services, which took the mobile content market by storm. Interestingly, the competition failed to recognise that Anil was planning something bigger.

This turned out to be the ultimate weapon of convergence, aimed at redefining the scope and limits of the traditional telecom business. “Today telecom is no longer about voice or data; it is about communication in the widest possible sense of the term,” said Anil Ambani. Adds Subrato Das, Head (GSM - IT and Special Projects), RCom, “Reliance has established a pan-India, next generation, integrated (wireless & wireline), convergent (voice, data & video) digital network capable of supporting best-of-class services spanning the entire information-communication value chain.” Adding vigour to his convergence dreams, Anil recently managed to partner with Microsoft for his IPTV foray. “Until now, TV has been a broadcast, ‘one-size-fits-all’ experience. IPTV promises to offer subscribers more choices, control and convenience and a unique and more satisfying user experience,” he said. In the meantime, he has already purchased strategic stakes in firms, or finalised other financial alliances, that will allow him to access news, entertainment, music, gaming and other content that can be accessed on a Reliance mobile phone.

Apart from dominating the value-added services domain, RCom is a market leader in the enterprise segment, offering a variety of telephone solutions ranging from Internet, data networking and IT infrastructure services, helping companies meet their connectivity and automation needs. For the uninitiated, RCom serves over 800 of top 1,000 companies in India. No other telecom player in India seems to be serious about the enterprise segment. In that sense, RCom intrusion in this segment makes it India’s largest integrated telecom player.

RCom has now geared up to provide more headaches to competitors with its foray into GSM. Already, Bharti Airtel, Vodafone Essar, and BSNL are fuming and preparing themselves to face the Reliance belligerence. They have even resorted to legal recourse. But customers are not complaining as they feel that they will now witness price cuts and value additions in the GSM arena. Looks like another disruption is in the offing!

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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