19 Sep 2017 18:01 IST

Voice chat tools: double-edged swords for big telcos

With high costs and intense competition, there’s no end to the travails of India’s telecom sector

Two days ago, I was at a large Airtel store to get an in-person customer service.

I was joined by at least 30 others, all waiting for their numbers to be called. Impatient ones — hoping that standing closer to the customer service desks would somehow speed up their chances of being called sooner — shamelessly eavesdropped on the conversation between customers and the service reps. It was classic Indian-style mayhem.

Not surprisingly, many of us had the same technical problem, which was why we were at the store in the first place. People bond in banter when there’s nothing better to do or when life’s burdens are too hard to stomach. My 4G SIM card, that was inserted into my phone by a service representative just 10 days prior with a lot of pride, was at best, capable of 3G, defaulting for the majority of time to 2G speeds.

And it wasn’t as if I was out in India’s back-country either. Standing on Anna Salai in Chennai last week, all my phone did was switch between ‘No Signal’ and ‘2G’.

Promotion and reality

Telecom infrastructure is a big problem in India and ignoring it does not mean it will go away. The marketing teams at the major players promote 4G LTE incessantly on TV and in the print media as though it is freely available for all. The truth is, its availability is sporadic and confined to the large metros, where people have been promised 4G bliss by simply switching their SIM cards for free at the nearest service centre.

(Oh, while you are at the centre, would you please also link your Aadhaar card with your mobile number? TRAI is making it mandatory, you see. No, we don’t know why we are the only nation on Earth that requires biometric data to operate a mobile phone. Yes, you are not a terrorist, but we need another ounce of demonetisation blood again, with the spirit of sacrifice to keep the nation safe.)

Cut-throat business

The telecom business in India is as cut-throat as mafia businesses in New York city, when the fictitious Don Corleone ruled. There are too many players and, while some consolidation has happened (Vodafone-Idea; Reliance-Aircel), the rate of infrastructure investment is just not keeping pace with demand.

A significant part of investment amounts to transfer payments from the private economy to the revenue-hungry government, as telcos bid up the price of valuable spectrum. This doesn’t do any good for the customer, as the government uses these profits from the spectrum sale for feel-good projects that are unrelated to telecom infrastructure!

Telecom companies in India are also burdened by the strange business model that exists here — they earn revenues only off of their networks. In most western countries, telecoms make hefty profits from device sales that are priced into postpaid contracts through EMI-payments. New devices become available for consumers to upgrade to every two years.

Race to the bottom

Because customer bases are extremely large in India, the industry is getting commoditised, with near-zero loyalty for phones or service providers, even as prices race to the bottom. The Reliance-Jio effect of offering lots of freebies should not be overlooked. The industry is training the Indian consumer in what he is already the best in the world at: shop around and you may get a better deal.

The net result of such a fractured industry is that network performance is terrible. Voice calls drop routinely. In fact, the quality is so suspect that I often have to tell callers that I will get back to them from my landline phone, which, incidentally, is somewhat of a relic these days as more people cut the cord forever.

How consumers cope

So, how are consumers reacting? They are simply using their home or office WiFi connections (and cellphone data plans with a 3G signal) to make voice calls using WhatsApp, Skype and Google Hangouts.

These tools do not use the public telecom infrastructure to initiate and terminate calls because one Whatsapp user simply talks to another when both are logged into Whatsapp. Call quality, modulated to HD levels — and encrypted — is excellent. Even if the internet connection drops, calls automatically reconnect, unlike in the public telephone network.

But there’s a bigger problem here. Unlike Reliance Jio, all other telecoms are still aggressively dependent on voice call revenues to help bring in the much needed cash. So, in the short term, while a customer’s WhatsApp calls made on the data network relieves the telecom’s voice network load, in the long run, if customers get accustomed to using these voice chat tools, they will render the big telecoms irrelevant.

Consumers have already abandoned profitable SMS-es, preferring, instead, to use free WhatsApp and Snapchat texts. They are also shunning the so-called ‘value-added services’ like sports scores and ringtones, as they can get these for free on the internet.

The telcos are in a conundrum. High costs, high customer churn, extremely low call rates, threat from voice chat tools, dog-eat-dog competition, low network reliability and poor call quality — the travails of the Indian telecom industry are like in no other country. The sad truth is that this situation is only likely to get worse.

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