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    Industry

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    Industry

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    Industry

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    © All Rights Reserved
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    of 2

    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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