INTENSIFIED COMPETITION IN CELLULAR SERVICES
Aug 04 - 10, 2008
The cellular mobile phone operators have adopted aggressive marketing techniques for expansion of cellular network.
The verification of unauthorised Subscriber Identity Modules (SIMs) was a significant development under which the PTA in collaboration with National Database and Registration Authority (NADRA) and mobile operators has devised a comprehensive mechanism to verify the SIMs.
China Mobile (Zong) came up with increasing numbers of subscribers at a rapid pace while Telenor and Mobilink also offered various value-added services at lowered rates to attract more and more customers. In such situation, the competition among cellular mobile phone operators has become more intensive, market sources told PAGE.
According to them, after India now Pakistan can claim of having being amongst the world's lowest telecom tariffs. Even the International calls to some of the most frequently called countries from India and Pakistan - such as United States of America (USA), United Kingdom (UK), Canada, Germany and Hong Kong - present a stark comparison of how Pakistani mobile users are so much better-off than the Indians.
"Pakistani operators offer such ISD calls at rates as low as (Pakistani) Rs 1-1.99 per minute. In comparison, Indian mobile subscribers are still paying Rs. 5-6 per minute to call these countries," they said.
Both Indian and Pakistani mobile users have to pay Rs. 8 to 9 per minute when calling each other. A call from Lahore to New York (a 15-hour flight) costs Re.1 per minute, while a call between Lahore and Amritsar (a 15-minute flight) costs a whopping Rs. 9 per minute in either direction, Naveed Ahmed, who's relative reside in India, said.
Due to intense competition, cellular companies including Mobilink, Ufone, Telenor, Warid (Singtel) and Zong (China Mobile) are presenting lowest ever rates. The Etisalat-owned Ufone is among the most aggressive price warriors.
Statistics show nearly 53 of every 199 Pakistanis have access to a mobile phone, which is more than double of India's mobile teledensity - currently hovering around 24 mobile phones per 100 citizens.
Further, Pakistan Telecommunication Authority (PTA) has reduced Mobile Termination Rates (MTR) with effect from 1st June 2008 by about 30 percent. The PTA after considering the results of cost models, international benchmarks and other factors issued a short determination whereby MTR has been reduced by 28 percent i.e. from Rs.1.25/- to Rs.0.90/- over a period of two-and-a-half years (2.5 years). This reduction is mainly due to the rapid growth in the mobile market of Pakistan. It is expected that the reduction in MTR would reduce fixed-to-mobile tariffs as well as off-net tariffs for cellular mobile operators resulting in more affordable telecom services for the general public.
At present, Pakistan has around 56.7 percent of combined teledensity, which is expected to increase further specially providing impetus to the fixed-line telecommunications market. These decisions contribute towards creating a healthy competition among the CMTOs which continue to strive for improvement of their service in order to attract new subscribers.
A spokesman of Pakistan Telecommunication Authority said that the authority remained vigilant for all developments in the telecom sector during the current quarter.
With the shifting from seven digits to eight numbers, all switches in Pakistan Telecommunication Company Limited have been enabled for eight digits, which was a huge task for the PTA which took it bravely, the spokesman said.
According to him, the market share is considered an important tool to gauge the level of competition in any sector of the economy and help determine a Significant Market Power Player (SMP) whose tariff needs to be regulated to safeguard the competition in any sector.
During the current year, the market share of Mobilink declined from 44.3 percent in March 2007 to 38.5 percent in March 2008 despite the fact that the company added more than seven million subscribers. Telenor improved its market share from 16.3 percent in March 2007 to 20.2 percent in March 2008 and also added 7.6 million subscribers during the period. The market share of Ufone did not increase during the last one year and remained at 20 percent while Zong became an emerging player in cellular mobile market of the country adding 1.14 percent share during the last year and its share reached upto 2.6 percent in March 2008.
CHANGING THE RULES OF THE TELECOM GAME
As mobile users become increasingly aware and new entrants penetrate the telecom industry, it is evident that price wars through low call rates are no longer a viable strategy for mobile operators. During the early days of the telecom industry, call rates were the major deciding factor for switching or remaining with one telecom provider. However, as mobile telecom companies battle for supremacy, profit margins are hitting rock bottom and companies are fast shifting their focus from customer acquisition to customer retention.
As telecom giants realign their marketing strategies in this all out cellular war, they are pulling out all stops. It is common to see lowest ever call and sms rates complimented through mega-budget advertising campaigns, event launches and high profile star endorsements, establishing "larger than life" campaign strategies as a norm within the telecom industry. However, in this cut-throat environment, such campaigns are no longer the guarantee of success and have lead industry players to increasingly look for Value Added Services (VAS) through which to entice customers. Paradoxically, it is the phenomenon of falling call rates and increasing VAS being juxtaposed with fast rising customer expectations, which is creating a dilemma for these industry players. If low call rates and VAS are no longer a guarantee of customer loyalty and cannot prevent churn, then how are the industry leaders to maintain their advantage? In such an environment where the customer has become increasingly knowledgeable and the bar is continuously being raised through competition, the answer can only be found in one area and that is the arena of customer services.
The rise and demise of mobile operators within the telecom industry will now be played on another field, no longer focused solely on tariffs, coverage or VAS. This new frontier shall be distinguished by the simple philosophy of a service industry focusing on enhancing customer experiences and developing them as the new generation of brand ambassadors. Simplistic as it may seem, this philosophy has proven to be a mantra for success stories the world over. Take for example, the exceptional success of McDonalds, which remains one of the most frequented restaurants in the world. It owes its success to the fact that they have constantly exceeded customers' expectations; be it through exciting new value promotions or the convenience of designated play areas for children, and consistently proving that they care for their customers.
Since its entry into the telecom industry, Mobilink has consistently maintained an advantage. Although they can boast both first mover advantage and the largest network in Pakistan, this is no longer enough to guarantee its leading position within the industry. The market is fast becoming populated with other providers, China Mobile being the most recent entrant and others like Telenor, bringing international experience to the table. It is keen to note how the largest player has risen to the challenge to not only meet customers' expectations but, pre-empt its growing customers' needs. The example here is the introduction of their call centre Customer Services in four different languages; Pushto, Sindhi, Urdu and English. Although Pakistan is a country with a large regional language speaking community, no other service organization has chosen to facilitate the regional language requirement on this scale by offering assistance in locally spoken languages. Once a customer calls they are connected to an automated helpline, wherein the pre-recorded voice prompt options are offered in these languages. Moreover, customers also have the option to speak to a customer service representative in their language of choice. With more than half of the new connections per year being from the non-metropolitan sectors of society, there is a dire need to ensure that all linguistic requirements are met and the digital divide is bridged.
Mobilink has taken steps to realize the old adage of "customer is king" and is seen to be channeling its efforts in this direction. As the telecom war in Pakistan evolves it remains to be seen who will exceed customers' expectations and how fast, and I for one can't wait to see what these cellular operators will offer us next.