Telecom firms shift from tariff to tablet war

As the telecom industry increases focus on higher-priced data services, sector leaders seem to be in a mood for another price war reminiscent of the long and pyrrhic one fought over voice that marked the first phase of India’s telecom revolution.

Last week, two leading mobile telephony firms — Bharti and Reliance Communications — launched their own versions of the fastest-growing personal device.

While RCom unleashed a 7-inch tablet PC priced at about Rs13,000, Beetel Teletech, a unit of the Bharti group, took the wraps of Magiq, pricing it at Rs9,999 — under the psychological figure of Rs10,000.

Videocon, one of the new entrants to India’s telecom scene but one with a previous device manufacturing history, is also throwing its hat in the ring.

The company’s device is being readied and will be out in the market in 3-4 months, a spokesperson said.

“This is exactly what we wanted to trigger,” crowed Mahesh Prasad, president, RCom. “We wanted to be a catalyst and give the industry a little push to make sure the device adoption and data consumption takes place at a robust rate.”

Hyper competition in India’s telecom sector saw voice tariffs diving to rock bottom levels over the last two years.

It was only last month that the trend finally began to reverse when telcos started raising tariffs marginally to stem the fall in revenue growth and profit margins.

“I think telecom players entering the tablet PC market is inevitable as they are looking to raise their average revenues per user (Arpu) numbers. More the number of tablet PCs, more is the data being consumed and that means higher Arpus,” said Vinod Swahny, chief executive, Beetel Teletech.

In late 2010, Tata Teleservices, which runs the Tata Docomo brand of mobile telephony services, had partnered with Olive Technologies to bring out their 3G-enabled tablet PC called OlivePad.

While Beetel as tied up with Airtel for offering bundled data services, it is open to tying up with other operators too, Swahny said.

RCom offers up to 50% discounts on its data plans for those buying tablet PCs from it.

Beetel Magiz, on the other hand, is being positioned as a mass-market product.

“At Rs25,000-30,000, the multinational brands are beyond the reach of aspirational consumers,” said Swahny, who expects to sell at least 100,000 pieces in the first year, with a very large part of the demand coming from Tier-2 and 3 towns.

Much like homegrown mobile handset makers such as Micromax and Lava, the focus of Bharti and RCom is on design and technical specifications, while the manufacturing is left to specialists in China or Taiwan.

Vishal Tripathy, principal research analyst at Gartner, the market researcher, said low-pricing gambits may have an initial impact, it are unlikely to become a trend as the tablet PC  market is still in very early stages of development.