In an independent survey on the GSM and CDMA mobile services in India, the “Mobile Network Quality” emerged as the most important consideration for India’s GSM and CDMA Mobile service users when it comes to selecting a Service Provider. According to the Nielsen survey the Mobile service users in India don’t really know which Service Provider has the best Network in their circle, all they know or to be more precise are told by the Service Providers is how much lower their prices are when compared to the competition.
Reliance Mobile CDMA is the Number One Service Provider in Network Reliability in Andhra Pradesh, Madhya Pradesh and Tamil Nadu, while TATA Indicom CDMA takes the Number One position in Uttar Pradesh.
Nielsen Consumer Experience Mobile Test Program in India shows that there is a huge disconnect between what is important to consumers vs. what is being focused on by Service Providers. It shows that even though network quality is a more important criterion than price, price war between Service Providers has become customer acquisition tool. Due to this lack of information and communication consumers don’t know who the market leaders are in network quality in their circle and are compelled to make choices based on their perception of supremacy.
The result, market shares in India do not follow network superiority because leading Service Providers have failed to advertise this information to the Indian consumer.
Nielsen’s Consumer Experience Mobile Test Program results indicate that out of 18 circles tested on Reliability metric a clear “Leader” exists in just four circles and in ten out of eighteen circles tested, there is a tie for first place for Network Reliability. In the remaining four circles, there is neither a clear leader, nor a tie for first position. See Table 1. The table also demonstrates that in India the leader in market share does not follow the lead in network performance.
“As Indian consumers consider network performance as a major selection and retention criterion, there is a huge opportunity for network leaders to educate consumers about the superiority of their network performance to gain subscriber base. This can be a huge marketing differentiator in an industry that is reeling under hyper competition,” said Shankari Panchapakesan, Executive Director, Telecom Practice, The Nielsen Company.
The Telecom sector in India has a scarcity of spectrum and the hyper competition in the sector has resulted in networks whose performance has not kept up with demand. To gain market share Service Providers resorted to price wars and reduced their tariffs to such an extent that today India has the lowest ARPUs in the world. This price war coupled with the huge budgets allocated to advertising has resulted in an explosion in the subscriber base. Ironically, it reflects a phenomenon where the market share does not necessarily follow network performance as demonstrated in Table 1.
The Indian wireless market is one of the world’s most competitive, with 12 Service Providers across 23 wireless “circles” and six to eight competing Service Providers in each circle. Competition in Indian telecom market is expected to intensify further following the commencement of services by new UASL holders, the auction of new 3G licenses and the introduction of mobile number portability (MNP).
“The Indian Service Providers are in a frenzy to capture market share as quickly as possible. Thus, new Service Providers will find it difficult to gain market share in the crowded wireless market. They will face challenges in terms of high subscriber acquisition costs, lower ARPU customers and lack of adequate spectrum quality. Getting superior network quality and communicating the same to the consumers will prove helpful,” said Panchapakesan.
The Indian mobile subscriber is rapidly evolving into a mature subscriber who can discriminate on the basis of superior network. This is evident from Nielsen’s Mobile Consumer Insights survey, which indicates that network satisfaction is driving overall satisfaction with services, offered by the Service Providers and has increased from 50 percent in the latter half of 2008 to 54 percent in the first half of 2009. Similar to other parts of the world, in India too a network ‘Leader’ will emerge based on superiority in network performance. As the average Indian subscriber becomes more and more discerning and network experience and word of mouth make their impact, we will see market share follow the “network”.
Nielsen Consumer Experience Mobile Test Program data, which gauges network performance across 18 markets, has been integrated with its Mobile Consumer Insights data to understand customer perception of a Service Provider against its actual network performance. The results for the same vary across markets and Service Providers. See Table 2.
Table 2 shows that Service Provider 1 in most of the markets seems to have a perception which is consistent with its actual performance. However, Service Provider 4’s actual coverage performance ‘overhangs’ consumer perception of the same. Hence, this Service Provider should prioritize investment in its marketing and communication efforts. Service Provider 5, on the other hand, is in a situation where consumer perception of coverage overhangs actual coverage performance. This Service Provider should prioritize investment in network build-out over marketing and communication efforts.