2.

4 PRICING STRATEGIES IN THE INDUSTRY

The major change in pricing strategy took place when Jio entered the Indian telecom market.
Jio entered the market offering free unlimited voice calls, messages and data. They successfully
penetrated the market within a year. However, their zero-pricing strategy was declared
predatory and anti-competitive. They were on thin ice, where a single characterization of
dominance demarcated them from being penalized for anti-competitive behaviour. This
portrays the beginning of a new era for Indian competition law, where a revolutionary pricing
strategy was applied which provided the consumers utopian incentives. TRAI amended the
predatory pricing rule which caused a disruption in the market, especially for the rivals of Jio.
It permitted Jio to continue with its low pricing but barred its rivals to reduce their current
prices to tackle competition. It reasoned that the rivals’ existing position would cause abuse,
whereas, Jio being a new entrant was inept to abuse (predation). It also scrapped traffic volume
as a parameter for establishing market power, which gave absolute immunity to Jio, as it was
experiencing huge growth in terms of traffic volume. However, these changes were nullified
by the sectoral appellate tribunal, when the rivals challenged them on the merits of intent and
capability of Jio.

So earlier, the companies in the telecom industry were charging a very high price for call and
data services but with the entry of Jio, the pricing strategy of the telecom industries in India
changed. This was done so that they can hold on to the existing customer base and also for
getting new customers. As of now, almost all the parties in the telecom industry provide a
similar type of pricing. Players have also been pricing their products very carefully due to the
price sensitive nature of customers and high competition in the sector.

2.5 PROSPECTS AND CHALLENGES OF THE INDUSTRY

The telecommunication industry is going through a transformational phase of development –

to acclimatize itself per the new technological and cloud trends. At the very outset, the focus
was on the Communication Technology (CT) which marked the first wave of the information
era. The second phase was the internet phase which started approximately around the year
2000. The industry realigned itself around horizontal solutions during this phase. It was the
time of e-commerce and portals. After 2006, the cloud began taking shape and this marked the

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third phase of transformation in the telecommunication industry. Right now, we are in the midst
of the era of cloud, where a new world of opportunities has opened up for the carriers. It is
quite evident that this era is unstoppable and there is no escape.

In addition to opportunities, the telecom companies around the world are facing a lot of
challenges in this era. New technologies like the Internet of Things (IoT), augmented reality
(AR), virtual reality (VR), microservices and more necessitate that telecom providers realign
their business strategies and restructure themselves as per the cloud era, in terms of operations,
architecture and networks as well. Moreover, in order to gain a competitive edge, they need to
focus on providing customized solutions to their customers and focus on developing long-term
relationships with them.

Rising income and growing rural market fuels demand for telecom services:

x Incomes have risen at a brisk pace in India and will continue rising given the country’s
strong economic growth prospects.
x GDP per capita of India is expected to grow at a CAGR of 7.47% from US$ 1,481.56
in 2012 to US$ 3,273.85 in 2023.
x Increasing income has been a key determinant of demand growth in the
telecommunication sector in India.
x The emergence of an affluent middle class is triggering demand for the mobile and
internet segments.
x A young growing population is aiding this trend (especially the demand for smart
phones).

CHALLENGES IN THE INDUSTRY

Just like every other sector in the newly digitized world, telecoms are in the midst of a
significant transformation. The way that we communicate is evolving to suit an environment
that demands more agility, opportunity, and flexibility.

In 2020, the first year of a new decade, the environment is rife with disruption, and changes in
the telecoms industry are everywhere.

Artificial intelligence (AI) is now a standard of everyday communications, supplementing and

enhancing the discussions between customers and brands.

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5G technology is growing, paving the way to richer mobile experiences. There has also been
an unprecedented rise in demand for new network services thanks to substantial growth in these
unique markets.

According to the EY Digital Transformation (2020 and beyond) report, disruptive competition
from vendors in the technology, service management, and other spaces, is the biggest challenge
facing telco companies.

Some of the other significant challenges are:

1. Demand for Traditional Services Is Decreasing:

While Internet of Things (IoT) and 5G have started to fuel more diversity in vendor product
offerings, businesses using legacy tools have struggled to stay ahead of the curve. Vendors in
all environments need to expand their offerings, going beyond the basics of voice, to deliver
everything from SMS to video. The way that people are communicating is changing. Internet
messaging, VoIP and other cloud-based technology is taking over the industry. Even
smartphone traffic is moving to WIFI. This means that businesses of all sizes need to consider
how they’re going to evolve their service packages to suit the new cloud-focused community.
Not only do companies need to deliver the next generation of call and contact centre offerings
to stay ahead of the game, but they need to ensure that these new services are reliable and
practical too. Customers are increasingly less accepting of drops in quality and performance.

The ability to monitor data in real time and check the quality of call traffic will be critical if
communication companies are going to thrive. Communication services need to be faster, more
agile, and more dependable than ever.

2. Security and the Risk of Data Breaches:

Monitoring call and communication quality is crucial to ensuring that customers get the kind
of telecom experience that they deserve. However, tracking and understanding your
communication life cycle will be essential to telecoms companies for another reason, too – data
and privacy. It has become increasingly important for telecommunications companies to make
data security and privacy a key priority. The Digital Media Trends Survey from Deloitte shows
that customers are still terrified by the idea of identity theft and financial loss. The result is that
customers are demanding the same level of control over their personal data that they get when
it comes to placing passwords on their bank accounts and email addresses.

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Telecommunications firms will need to work harder to create environments where people can
feel as safe as possible.

3. 2020- The Year of 5G Adoption:

The 5G action plan created by the European Union already includes access to uninterrupted 5G
coverage by 2025 in the new vision of the future. As well as being able to support a
considerable increase (hundredfold) in connected devices, 5G will also offer things like
improved data rates, better network slicing, and ultra-low latency. This opens the gateways for
new services, network operation, customer experience, and more. 5G has the potential to truly
change the role of telecoms companies. These businesses will evolve from being distributors
of technology to full-service providers too. This could mean that telecoms companies are
engaging more regularly with enterprise customers, governments, and other groups. It may also
mean working with other technology companies to build more effective communication apps
in the 5G landscape. While 5G may just be in the build phase for now, as people come to
understand its potential, we will begin to see a new wave of business built on this strategy.

4. Gearing Up for More New Technology:

Everywhere we look, the demand for new and disruptive technology is growing. Artificial
intelligence has officially changed the way that we interact on a fundamental level. We have
entered a time when many of us use voice commands instead of text to interact with machines.
At the same time, businesses are embracing remote working and video-first cultures to reduce
costs and improve work/life balance. The integration of IoT into our everyday world is looming
ever closer, with billions of connected devices already in the marketplace. Platforms that
support high levels of connectivity will be essential in this new environment. What’s more,
telecoms companies will need to think more carefully about how they can deliver end
customers the flexibility and extensibility that they need. Even concepts like robotic process
automation and computing at the edge could deliver their share of challenges and opportunities.
On the one hand, things like robotic process automation will reduce the frequency of mundane
processes, allowing employees to concentrate more of their efforts on creative challenges. On
the other hand, these kinds of tech mean more monitoring for IT teams and more planning
when it comes to things like data protection too.

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 5. Preparing for the Future:

It’s difficult to know for sure what the future might look like in the communication landscape.
What we do know is that the environment is becoming more sophisticated and advanced by the
day. This means that if businesses want to stay ahead of the curve and deliver the results that
their customers and shareholders expect, they need the right plan. It’s not enough to simply
jump on the latest trends as soon as they arrive. Business leaders need to assess the current gaps
and issues in their communication strategy and look for ways to fix existing problems. Those
who are ready to embrace opportunities from the new environment, like 5G and AI, will need
a plan for monitoring the performance of their tools and ensuring that they’re not swapping
reliability for innovation.

2.6 KEY DRIVERS OF THE INDUSTRY

Major growth driver of Indian Paint Industry are elucidated as under:

1. 5G:

Higher speeds and lower latency mean that 5G supports use cases like immersive content
(augmented reality, virtual reality) and high-resolution video, helping CSPs deliver an
unmatched customer experience to gain a competitive edge. As 5G progresses towards large-
scale commercial viability, service providers have begun trials of new use cases, and the results
are encouraging them to readily adopt the next-gen technology. As more devices and use cases
become viable, the revenue potential continues to grow along with the need for flexible IT
systems to support them.

2. Cloud Computing:

Cloud computing in the telecom sector relies heavily on the adoption of data and logic
separation principles, SDN/NFV, DevOps, microservices, and more. It gives telcos the
flexibility to acquire the corresponding services – Infrastructure as a Service (IaaS), Platform
as a Service (PaaS), and Software as a Service (SaaS), which extensively increases scalability,
standardization, self-service automation, and reduces operational costs. Telecom players
should adapt their IT processes and prepare for related security implications such as identity
theft, unauthorized access, relinquished governance and compliance policies, data security and
breach of privacy, as well as inconsistency across on-premise and cloud platforms. A recent

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Telecoms.com report predicts that 5G will mean wide-scale adoption of edge computing. The
market is quickly evolving from a centralized to a distributed cloud, and it is expected that this
year, 75% of enterprise-generated data will be processed outside of centralized data centres.

3. Secure and Reliable Services:

Modern telecom environment offers a rich set of services that need reliable and secure
authentication. The number of smartphones equipped with biometric fingerprint readers is
increasing. This technology is also being used by retailers, financial institutions, government,
and even schools, to verify identities.

Other biometric mechanisms like facial or retinal recognition, are also telecom trends and are
likely to pick up steam in the coming years. An increasingly large number of telecom
companies are adopting biometric SIM cards for curbing crimes related to mobile phones and
terrorist attacks as well.

4. Internet of Things:

Although mentioned above as part of challenges faced by telecom industry due to the huge
amount of data that connected devices generate, but this is one major trend that will provide
telcos with more opportunities in the coming years. Becoming an IoT connectivity service
provider and offering Machine to Machine (M2M) devices can open up new streams of revenue
for the telcos. Gartner predicts that there will be nearly 20 billion devices connected to the IoT
by 2020 and that IoT product and service suppliers will amount to a business of $300 billion
in revenue.

5. Mergers & Acquisitions:

With cut-throat competition, new technological innovations disrupting the existing customer
base, the year doesn’t seem to be very easy for the telecommunication sector. That’s why a
number of companies are looking to partner with media and content firms, like Vodafone and
Idea.

6. Economic Cycles:

Economic cycles affect all industries and they are major drivers of the telecommunications
industry on an international scale. The impact of Economic Cycles can be both positive and
negative for any industry. Due to its large scale of operation and increasing cross-border
presence, the telecommunications industry is a bit more sensitive to these cycles. Through its

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history, the telecommunications sector has often demonstrated its robustness in downturns and
periods of market uncertainty. The recent past has been no exception. The sector is riding out
the economic storms relatively well. Against this generally improving outlook, there are
conflicting perspectives on how the sector will evolve. Investors are also concerned about the
massive capital that will be needed to support this growth, and the need to secure new revenue
streams.

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