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 The 'pay-as- you-use' benefit was extended to most of the value added services which Tata DoCoMo offered. These services were voice chat, 24-hour music, cricket commentary, etc. In addition to this, the service for missed calls alerts was complimentary. All subscribers of Tata DoCoMo also availed voice mail functions without paying any monthly rentals, retrieval charges or deposits. In September 2009, Tata DoCoMo introduced the 'Diet SMS' plan under which it would charge only 1 paisa per character in an SMS.
"The value proposition offered by Tata DOCOMO is a unique and revolutionary idea which symbolizes the spirit of innovation and inventive genius. This launch is truly a moment of triumph for the Indian consumer. The launch of pay-per-use, per-second concept offered by Tata DOCOMO will create a paradigm shift in the overall telecom experience for the customer and provide a service that is refreshingly different,"said Ratan Tata, Chairman, Tata Sons.
The company received overwhelming response from the consumers. In just 45 days of its launch, nearly 600,000 connections were sold. The demand was still increasing and resulted in a supply crunch which led to black marketing of the connections at higher prices. Responding to the situation, Deepak Gulati, President, GSM Business, Tata Teleservices said, "Yes, we have got some reports and we have come down very heavily on those retailers who have sold the products priced higher than the MRP. We have stopped supplies to them and issued them warning letters."
Though the 'pay as you use scheme' offered by Tata DoCoMo received encouraging response from the customers, some subscribers were not satisfied with the service. They complained of inadequate customer service and poor network. Tata DoCoMo responded to the consumer complaints and defended itself by saying that the massive response received for its service led to the problem of congestion. It assured the complainants that they would be compensated for the losses incurred.
Many analysts were of the opinion that this venture came in with big promises for both sides. According to Alok Shende, principal analyst at Ascendia Consulting, "It is a great deal, There are benefits for both the parties.
The Tatas have already set up the network and DoCoMo has great understanding of technologies, market development and competition.
When the Tatas get the 3G (third generation) license, DoCoMo's expertise will add tremendous value. "Many industry observers believed that the Indian telecom market offered both Indian and foreign operators huge scope for growth. As of July 2009, the teledensity in India stood at 41 percent with an estimated 479 million subscribers and was poised to reach 770 million by 2013.
However, some analyst were not too optimistic about the JV since the Indian telecom market was already overcrowded with established players like Bharti Airtel Ltd, Vodafone Essar Ltd, and Reliance Communications Ltd. A member of the GLG Technology, Media & Telecom Councils said, "Due to the late introduction of services in the market, TTL will have tough challenges to establish its credibility of services although the initial tariff offered is attractive.
There are already established players in Mumbai and Maharashtra such as Reliance, Vodafone, and Airtel hence TTL will face stiff competition for its GSM brand." Some experts also felt that the business model adopted by Tata DoCoMo could be easily emulated by its competitors.
According to some telecom experts, "Semi-urban and rural customers were easily attracted by the pricing but other competitors would soon follow suit." Some experts opined that if the competitors followed the 'pay-as-you-use' scheme offered by Tata DoCoMo, the telecom sector's revenue would be reduced by 10-15 per cent.
However, Tata DoCoMo remained optimistic about its future in the Indian telecom sector. The company also contended that after the introduction of MNP it would be able to wean away a significant number of subscribers from its rivals.
Questions for Discussion:
1. Critically analyze DoCoMo's strategy for India. Analyze the rationale behind the JV between TTSL and NTT DoCoMo and enumerate the benefits to both the parties.
2. Do you think DoCoMo will be able to tap the opportunities offered by the Indian telecom sector? Also, comment on how the new venture will fare against the existing Indian players.
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