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Data Cards: Who holds the Aces?


With broadband penetration in the country set to grow by leaps and bounds, Internet data card providers are busy carving out niche markets based on innovative pricing and plans
ANIRUDH RAHEJA | Issue Dated: November 10, 2013, New Delhi
Tags : Internet users | China | US | broadband | Tata Photon+ | Reliance’s NetConnect | MTS’s MBlaze | Airtel | BSNL | Idea | Aircel |

The number of Internet users in the country has already crossed the 150-million mark (TRAI pegged the number of Internet subscribers in India at 164.81 million as of March 31, 2013) – larger than even some countries like England or France, but still small compared with the likes of China and the US, which have nearly 500 million and about 250 million Internet users respectively. However, broadband penetration in India is beginning to pick up though today less than 10% of the overall country’s population, and 20-30% of the urban population enjoys broadband cover. But the growth rate of Internet is nearly 20% per annum and this spells good business for Internet data card providers with their promise of anywhere-anytime Internet mobility. With the rise in the sales of netbooks and laptops, portability is of prime importance and that is being guaranteed by a seamless Internet connection by data cards.

In its Telecom Policy 2012, the government envisaged adding 160 million broadband users before 2015 and is committed to putting in place the policy-enabling changes for achieving its goal. Sensing a good business opportunity, telecom operators are currently busy drawing up plans and strategies to rake in the potential windfall. Currently, the wireless broadband space is dominated by the top three CDMA players in the country: Tata Photon+, Reliance’s NetConnect and MTS’s MBlaze. Being early movers, these players were quick to usurp the upper end of the Internet user base. However, with the advent and rollout of 3G nation-wide, these players now have competition from players like Airtel, BSNL, Idea, and Aircel, all of whom claim to provide high speed Internet services through mobile phones itself, hence cutting the need for a dongle.

Already, 3G numbers have rocketed to over 28 million in just four years since it was introduced in India in 2009. A player like Airtel, for instance, claims to have over 7 million 3G customers in India. “We are seeing a fast increasing propensity for usage of rich applications and video services, resulting in data consumption patterns which are as much as 4 times of that observed on 2G,” says an Airtel spokesperson. But even as 3G players are still busy evolving a clear strategy around their high-speed Internet proposition, the cost of delivering it is steep. As of now, clearly it’s the CDMA players – Tata Photon, Reliance and MTS – who have emerged as the flag bearers of the world of high speed mobile Internet access, and are reaping big benefits.

From the perspective of marketing, pricing is the most critical part of any service in India. And telecom players are aggressively experimenting with the same (like they did to popularise voice in India once). Even for high speed data card services, companies have come up with USPs based on 3G pricing, which are focused on personalisation and simple-to-understand packages and service options such as sachet, standard, flexishield, high value, volume-based charging packs, pay-as-you-go et al. To lure customers, companies have also devised other attractive plans like bundling services with handsets, offering a slew of new services like mobile TV, video on demand, HD gaming and other innovations.

For instance, MTS’s MBlaze offers special tariff vouchers of Rs.52 with a 200 MB download, which is valid for one day. It also offers tariff vouchers of Rs.76 for a 350 MB download, and a Rs.96 voucher for a 1 GB download, both valid for 24 hours. Besides, there’s also the offer of unlimited data usage with Unlimited MBlazer priced at Rs.699 for a one month validity. To popularise its products and services, MTS also has a tie-up with Vodafone, which sells MTS’s CDMA dongles under the brand name “NetCruise”, offering speed of up to 3.1 Mbps. In order to promote its products further, the company has plans to mount promotional campaigns focusing on the digital audience.

Another major player in the data card business is Reliance, which also has several plans to offer such as My Best Value Plan, Unlimited Internet Plans, 3G speed booster pack. Like MTS, it too offers several tariff vouchers that are customised according to the needs of the customers. As far as the leader in the data card business – Tata Teleservices – is concerned, the company has constantly been banking on the superior technology plank from its Japanese partner DoCoMo for its offerings. According to a senior official at Mobility department of Tata Teleservices, “the company pays a lot of emphasis on pricing, placement and promotion of its product lines. Product, customer and usage trends are studied on a continuous basis to identify existing and emerging market opportunities. The company then innovates and collaborates to put together the right product and applications portfolio.”

And it’s not just the high-end technology play. Most of the dongle players are also lowering the rate of their main play dongle offerings to sub-1,500 rupees, for gaining a wider customer reach. Some players are going premium too to cater to the enterprise customer. Obviously, quite a few experiments are happening, especially in realm of pricing, and it will take some time before one can separate the leaders from the also-rans.

But being still an under-penetrated category there’s no real cut-throat competition as of now. The leading players have identified their strengths and niches, and are protecting their turfs. Tata Photon, which has separate well-defined strategies for the metros and its pan-India business, has been able to establish consumer preference and a high brand recall. On the other hand, MTS is slowly and steadily rising up the ladder, while Reliance NetConnect, after a great start and a high-decibel campaign, is not really been able to get its positioning right.

As far as consumers are concerned, the Internet-savvy and high-value customers still prefer the dongle (for its plug and play ease). But with improvement in the quality of 3G services, many starters are beginning to get their first Internet experience on mobiles, which threatens to spoil the game for the CDMA players. Thankfully, it’s not an immediate threat. “It not a market that one brand can crack by any stretch. We are not selling a product where the need is already accepted, a lot of the category is still being created,” says Amitesh Rao, Director, Brand and Media, MTS India. So as long as data card players can offer products at innovative pricing and plans that suit various consumer pockets, they will be able to play the market and continue to win the growing numbers of Internet users. Also, once trends like m-commerce and mobile wallet picks up in India, as should be the case in the near future, the data card business will witness an exponential growth. The convenience that data cards offer in accessing the Internet, and the growing need to use data cards by business and ordinary travellers, among other things, will drive the future growth of the data card segment in India.

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Issue Dated: Feb 5, 2017