Copyright (C) 1996, Rishab Aiyer Ghosh (rishab@techonomist.dxm.org)
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May 15, 1996: Since India's first licensed paging service started last March, the market has grown to 200,000 subscribers; it is expected to cross 600,000 by the end of this year according to Motorola, which has an 80% market share in pagers. In the US it took 15 years to reach a similar subscriber base. That was 40 years ago, of course; more recently in the late 1980s, South Korea took six years to cross 400,000, a figure expected to be crossed in 18 months by India - arguably the fastest growing market today.
The Indian Department of Telecommunications (DoT) has treated paging services very differently from cellular and basic telephony privatisation. It received bids for as many as four service providers in each of 15 cities; three in 11 cities; and two in the last of 27 cities put to auction. That was in July 1992 - it took three years of disputes clarifications before service could begin last year. In the meanwhile, All India Radio, India's state broadcaster, issued licenses for FM RDS paging (using excess capacity of its FM radio channels) which started before DoT's licensees but are likely to fall behind now due to their technological problems. Last year the DoT issued further licences for paging services for the rest of the country (beyond these 27 cities), and service is expected to commence in those areas by 1997.
India's paging market is unusual in ways besides its exceptional growth. It overwhelmingly prefers alphanumeric pagers, which hold more than 95% of the market (as against below 20% in more developed markets). And demand has largely been, so far, from individuals - professionals and people with small businesses - with under 25% corporate subscribers. These figures are surprising only when seen in isolation, but not when placed in the larger context of the country's poor telecommunications infrastructure.
India has less than one phone per 100 persons, though in the 27 cities with pager services the density is much higher. Even there, it costs between $100 and $1,000 to acquire a phone (and these are only the official rates; bribery is commonplace). A telephone no longer takes years to install, but can easily take months. Compared to these problems, a pager is heaven. It is cheap to buy - between $150 and $300, which should reduce once the new government lowers duties from the current 80%. It is cheap to run - under $5 per month for unlimited use was the upper limit allowed by the DoT, though this has been raised to a still low $8. It has some snob value (though much less than a cellular phone). Finally, of course, it is mobile and can take messages - hence the alphanumeric preference. A pager can also be your office - such is the promise of Easycall, which launched India's only personalised (secretarial) paging service earlier this month.
Easycall started late, building fairly sophisticated infrastructure through the 25 cities where it has paging licences. Easycall is actually four companies: Matrix Paging India, ABC Communications, Telesistems India and Easycall Communications. They can safely be treated as one, for they are each promoted by the Indian Natelco Group, and 49%-owned (the maximum foreign holding permitted in a telecom service provider) by Easycall International. Natelco (1995 group sales: $125 million) specialises in telecom equipment manufacturing and service (trunk radio, VSAT), and has joint ventures with Australia's Telstra, Japan's NEC and America's Glenayre Inc, among others. With Glenayre, Natelco's consultancy division has already built 56 paging networks across the country according to company figures - including, obviously, for competitors of Easycall. Singapore-based Easycall runs paging services across Asia and Eastern Europe; it was earlier known by the name of its holding company, Australia-based Matrix Telecom.
Easycall is taking the pager-as-office concept to its logical conclusion: when an Easycall pager number is called, the operator reads out a personalised message, decided by the Easycall subscriber. This alone is likely to attract customers in droves - it has proven popular in Hong Kong, and will do so even more in India. Beyond customised greetings, Easycall's other services (not all of which are as yet operational) include separate numbers for business and personal calls; message broadcast to subscribers groups; client line identification (pager terminal and management software installed at a major client's premises); fax-to-pager and e-mail-to-pager interfaces; cheap roaming across 25 cities (where another Natelco company's VSAT service will help).
Being largest network, and the only service capable of offering such personalisation - it has invested over $40 million in infrastructure - Easycall expects to have 120,000 subscribers by the end of the year, with about 50% of new subscribers. Sajive Kanwar, President and CEO of ABC Communications (which operates Easycall services in the Northern parts of India) says that his region alone attracted over 3,000 subscribers in the first two weeks of operation.
Yet they may not make any money for quite a while, due to DoT-specified flat monthly tariffs; all additional services will be offered by Easycall at no extra charge for the moment. To charge for any service beyond basic paging, Easycall will - like any other provider - have to approach the DoT to ask for clearance, perhaps on a case-by-case basis. Indian paging companies will have to do this soon, for as Mr Kanwar admits, profits will not be found in simple paging services. In fact, paging companies are running huge losses. The economics of Indian paging are as follows: each message costs about $0.04 to process, thanks to relatively low labour costs. But even with operators being paid about $120 a month, more than four messages per subscriber per day results in a loss: the average subscriber, paying $8, costs over $25 a month. Of course, volumes help. While the projected turnover (across 25 cities) of $20 million in its first year of operation will mean a proportionally higher operational cost for Easycall, it expects to break even in 1998.
India will have several cellular services running nationwide by the end of the year, in addition to the year-old services in the country's four biggest cities. Assuming that the new government behaves itself, next year should see a huge growth in the availability ordinary telephone - installed within seven days of an order according to the licensing conditions, not months. The DoT is holding trial runs of CT2 (cordless telephone 2, another gadget popular in East Asia) in cooperation with France's Dassault; these may translate into cheaper mobile communications. Will the pager market be affected?
Nobody expects a 200% annual growth rate to last for long, but nor should it fall below 50% for some years. The secret of India's pager potential lies in the exceptionally long per message time, which crosses 60 seconds, as callers interrogate operators on the mechanisms of paging. "Why can't I hear messages, if you send them by radio?" is an anecdotal caller's query, but not without basis. Pagers have already begun to reach a market quite ignorant of the concept, and the frequent prime time advertisements by the Indian Paging Services Association should help to educate an even wider market. Most impressive of all, the phenomenal growth seen and projected so far is - unlike most other new markets - for pagers in English.
Motorola for one has announced its plans for pagers in Hindi and Gujarati soon, which should reach the small-business market of western India. As manufacturers break through the complexity of India's 15 official languages and make displays for at least some of the dozen distinct scripts, the tantalising prize of a 900 million-plus population is brought - ever so little - closer. Perhaps it is significant that the Paging Services Association's promotional advertisements are in, not English - the language of today's pagers - but Hindi.
More on Motorola can be found in the Techonomist bulletin of March 18, at http://dxm.org/techonomist/news/
Information on cellular and basic telephony privatisation is at http://dxm.org/techonomist/news/bids.html