One paisa revolution

The purchasing power of the paisa has eroded considerably, taking into account inflation. Once we agree that the paisa has lost the value of what it could potentially buy, with the exception of talk time, we need to understand the characteristics of a revolution to enable us to call the positive changes brought about by the telecom ‘one-paisa revolution’.

The purchasing power of the paisa has eroded considerably, taking into account inflation. Once we agree that the paisa has lost the value of what it could potentially buy, with the exception of talk time, we need to understand the characteristics of a revolution to enable us to call the positive changes brought about by the telecom 'one-paisa revolution'.

Revolution represents radical change. Even in its astronomical application, the word is used to describe a change in position. While all revolutions involve change, not all changes can be described as a revolution. Changes that may be called a revolution must have characteristics that a mere change lacks. That which is particular to the class of change which warrants the different name revolution is, either the great speed, the great extent of change, the great number of people affected and/or the great degree to which people and their lives are affected by change.

In India, the telecom revolution has taken place since 1995, primarily due to the unleashing of policy and regulatory shackles. During this period, the mobile subscriber base grew from nothing to more than 600 million, connecting the largest number of people conceivably possible anywhere on the globe, with the exception of China. The resultant network effect has increased the demand for services, thus making it attractive for operators, equipment makers and content providers alike.

There is also evidence that the phone is powerful enough to replace face-to-face interaction in several instances. With every decrement in mobile airtime rates, the usage has been increasing and is now at an all-time high of about 411 minutes per user per month, considerably higher than that witnessed in most countries. There is also reason to believe that the marginal utility of making a mobile phone call for people at the bottom of the pyramid is much more than for richer subscribers. The dual causality between economic development and mobile density is one of the reasons for the rapid increase in India's rural subscriber base. With people at all strata of the society, ranging from the fishermen of Kerala to women self- help groups in the hinterlands of Tamil Nadu, getting notable benefits from the use of mobile services, there is support to believe that the changes brought about by telecom represent a revolution.

Another important concept that is making this one paisa revolution possible is the 'price point pack' (PPP), an innovative marketing and packaging concept that is designed to sell a small portion or a single-use portion of the product at an affordable price. The first PPP ever introduced was some 60 years ago! Brooke Bond and then Lipton, the leading tea companies in India, launched what was called the 'paisa pack', which was a paper envelope that contained tea worth one paisa (then 1/64th of the Indian rupee) that could make 1 or 2 cups of the beverage. Followed diligently by Pan Masala and, then later on, by the FMCG companies to sell shampoos in sachets, PPP has been successfully adopted by our telecom operators to sell the perishable often referred to as 'erlangs' of network capacity.

Thus, the one paisa revolution has made growth more inclusive. However, the telecom industry in India continues to be much dogged by regulatory and policy uncertainties. At the minimum, subscribers and operators who have contributed to this revolution, expect that the regulator and policymakers rise to the occasion in formulating appropriate and predictable policies for the country's development in an inclusive manner.

(Kala Seetharam Sridhar is senior research fellow, Public Affairs Centre, Bangalore . This article is coauthored with V Sridhar, research fellow, Sasken Communication Technologies. Views are personal)

Source: The Financial Express

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