Tuesday, December 20, 2011

Will Walmart pay my Auto Rickshaw Charge?

Would it make more sense for telecom operators to charge commercial services for incoming calls, and subsidize outgoing calls from individual subscribers.

This way I feel, they can easily increase the ARPU. This can happen because if outgoing calls were free, people are more likely to use telephones for business transactions, and hence increase top lines for various other businesses. And this increased topline, will make the businesses willing to spend on an additional telephone bill.

It is also possible that the businesses may pass on the additional charge to the consumer using his service (like say the Pizza price goes up from 350 Rs to 355Rs-- just because the customer ordered it via telephone)...the increased price can result in a slight reduction in demand, but the increased access to market will compensate for the reduced demand by bringing in more customers.So effectively the telephone company can get the user to pay for the service although it looks like the charges are free!!

The question is what happens when two telephone companies approach a commercial unit, and compete on price that they will charge for incoming calls on the unit, the telcom who charges nothing from his individual subscribers will be forced to charge the commercial unit a higher charge, but the telcom who charges his individual subscribers will soon be out of business,because the competing telecom provides free service.

Finally what happens to the market dynamics of the commercial unit itself? Imagine, That a Pizza delivery service cant charge the consumer an additional amount due to competitive forces, he is forced to suffer a reduced bottom line due to the additional charge from the telecom, and therefore the problem of the low ARPU gets transferred to a problem of lower" realisation per customer" for the Pizza service.,a reason why the Pizza service will refuse to agree to a model where he pays the consumers telephone bill. But the point is he will have no choice, if he wants customers to call him, he will have to subscribe to the telcom who offers free services to the consumers.Soon nobody will call him.

In summary this is a debate on who pays for the Market Channel cost?
When you are a car maker, you pay to keep enough dealer locations, so that the consumers can reach you. The same applies to E commerce and telephone commerce. If you want your consumers to reach you, you pay their telephone bills. What next , Wall Mart should pay for the metro ticket, if you walk into their store. The next time I walk into Big Bazaar I want to see a marketing executive paying my Auto rickshaw charge!!

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