An analysis by telecom regulator Trai on the success of lifetime validity schemes over six months revealed that in revenue proportion, lifetime schemes are no different from the general tariff plans offered by mobile operators.
“The big picture emerging from the analysis based on empirical data is that the scheme has been very popular. The scheme has been one of the driving forces for the explosive growth of mobile subscribers, which is witnessed in the current year, ie, 2006. At he same time, service providers seem to be getting a reasonable ARPU from the scheme despite the fact that the scheme was primarily targeted towards low-usage and marginal customers”
Main points from the study:
- 16% of the country’s mobile base has opted for such schemes
- Only 51% of these were new users, while the rest had migrated from their exisiting schemes
- 28% of the total additions during the six months period was on account of lifetime validity schemes
- These users also had an average monthly revenue per user (ARPU) of Rs 218 per month compared with Rs 261 for normal prepaid users
- At least 72% of subscribers opting for this scheme recharge their phones every month
- These are high users of value added services
- If a customer on a lifetime scheme uses his mobile for a minute, his operator gets 80 paise, compared to 77 paose for a normal subscriber
The Trai data breaks two myths, says AUSPI director general, SC Khanna
“First, the belief that lifetime prepaid subscribers don’t make outgoing calls and second, that a bulk of these customers hail from poorer states (B & C category circles) whose people have very low economic income such as Uttar Pradesh, Bihar, North East, Orissa and Jammu & Kashmir.”
This is because the study has said that over 90% of subscribers who opted for this scheme in the poorer states recharged their cards every month, against a national average of 72% and 62% in the metro cities.
The main motive of lifetime schemes is subscriber lock-in and lowering the entry barrier for new customers.
Mobile operators are bringing the entry barrier further down. Bharti Airtel, Hutch and Idea are now offering lifetime validity for Rs. 495, while Reliance Communications charges Rs. 499.