It's war time for operators, again!

The roll out of 3G services has begun in India with Tata Docomo taking the lead, and with this has commenced the tariff war, yet again.
The tariff plans launched by Tata Docomo have being labeled affordable and hence we can expect other private operators rolling out comparably lucrative tariff plans to lure subscribers towards 3G.
Before Tata Docomo launched 3G, a lot of ambiguity and speculation surrounded 3G tariffs, and some operators opined that 3G prices would be high mainly because operators need to recover the costs incurred in procuring spectrum.
Sanjay Kapoor, chief executive officer, India and South Asia, Bharti Airtel had said that he expects 3G services to be priced higher because of the expensive bids. "The bid prices have taken away the possibility of providing these services at cheap prices. Data services on 3G will also not come at throwaway prices."
In fact, most established players were counting on 3G services to rake in the moolah as the entry of new service providers, which resulted in fierce tariff wars, was eating into telcos' profitability.
However, this had put a question mark on the success of 3G services as India has always been a price sensitive market and nothing attracts an Indian consumer more than a good value proposition.
Tata Docomo has got the first mover advantage and to an extent will now decide the direction of progress. Experts feel that this step by Docomo towards keeping prices low is one in the right direction and other private operators will have to follow suit.
"Tata Docomo has set the ball rolling and no one can go into offering services at higher prices now. If they had gone with high prices scenario would be different", says Sandeep Gupta, director, Protiviti Consulting.
TTSL has announced tariffs as low as 0.66 paise per second and data plans starting at Rs 500 for postpaid users. Other private operators gearing up to launch 3G services also will have to keep prices low and perhaps opt for a per second billing model.
Telecom consultant Mahesh Uppal agrees. "Without a doubt this will put pressure on other service providers. India is a very competitive market and other operators will lose out on their share of subscribers if they launch 3G at higher tariffs."
Low tariffs are expected to push the uptake of 3G services in India, and if operators act pricey it could get difficult for them to add 3G subscribers.
Uppal says, "Customers won't try services if they are highly priced. Price is not determined by the service provider but by the market forces. Operators can either act pricey and wait for niche customers to use their service or do what it takes to hook the customers on for a steady flow of revenues."
Gupta clarifies that while we will see a tariff war coming into play, inane price cuts to add subscribers won't recur. He says, "The price war would come into play but the price won't go below 10-20 per cent of current prices. This is because, at the end of the day, telcos need to earn revenues to recover costs."
With prices falling, what avenues can service providers look at to recover costs? Innovation in data plans as well as value added services are key according to industry experts. 3G data cards will also present a good opportunity to operators, and will initially bring in some volumes.
Uppal adds, "Of course, operators cannot sell services below cost. Their challenge is to come up with a business plan that customers find affordable so that customers try out the new services. They need to have attractive services which customers would be willing to use for longer periods."
Speaking on the same lines, Mrutyunjay Mishra, chief operating officer, JuxtConsult, said, "It will all be about how operators use bandwidth they have, to provide services. Consumer targeted apps and services will remain cheap but operators need to be creative and access apps which are beyond their reach. There will be a lot of B2B possibilities as enterprise apps have always required higher bandwidth."
Gupta believes content related VAS will be the key. "VAS revenue streams from services riding on 3G will increase. This will help operators recover their costs faster. "