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HomeOpinionDiaryEntry and exit of FDI: A case of Docomo- Part I

Entry and exit of FDI: A case of Docomo- Part I

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Foreign Direct Investment (FDI) is an important aspect for a growing economy like India. Our nation has allowed FDI in different sectors like multi-brand retail, single brand retail, telecom, insurance, media, defence and so on. Presence of a foreign investor not only adds quality but also some glamour to the sector. The entry of foreign investors gives confidence to a country that it is investment friendly and their exit equally gives pain. The appearance of fault line in TATA DOCOMO resulting in TATA and NTT DOCOMO is a case in point.

TATA DOCOMO (TD) created a new trend of 1paisa (ps) per second, when it made a foray into the Indian telecom sector. Prior to the entry of Tata Docomo, other mobile service providers were offering a minute’s pulse rate. Whether a person spoke for 15 seconds or 1 minute 2 seconds, he had to pay the price for 1 minute and 2 minutes respectively. During that period, Tata Docomo’s offer asking customers to pay for what they use was a new thing for Indian telecom industry and was expected to create a boom! Some long talkers soon realised that they will end up paying more if they choose this service as already established service providers like Airtel, Idea, BSNL and Vodafone were providing 50ps/minute call rate. However, it was very useful for those who made many short duration calls!

But then change in the number was a problem for many at that point of time as Mobile Number Portability (MNP) option did not exist. This prevented many from shifting completely to TD and some people used it as an alternative number. The entry of dual sim phones in the Indian mobile market was a boon for such people. Unfortunately, for TD, the competitors never lagged behind in providing 1ps/second offers. In fact, service provider like Airtel which had very good penetration, a large customer base and was appreciated by customers for its signal strength provided an option for them to choose between minute pulse and second pulse. So long talkers continued their existing plans and short talkers changed their plans and not the service provider. This prohibited many customers from buying new TD sims which had limited network coverage and had only second pulse rate option and not minute pulse rate. To tackle this, TD introduced other offers like 1ps/2seconds, 3ps/4seconds and so on. But bringing similar offers was not a big deal for the competitors! Rather, it helped them in diversifying tariff plans. Due to poor network connectivity, other Value Added Services (VAS) of TD didn’t help in attracting more customers.

Later, it was the turn of ‘cost of sim’ game! At a time when customers had to pay an amount nearly Rs. 100 to obtain a new sim, TD started providing sims at as cheap as Rs. 2! For students like me, it was like buying chocolates! The expenditure to get our photo and ID cards was more than the cost of buying a sim! With such an offer, a single customer bought 5 to 6 sims at a time. I am no different. I too had bought four sims of TD at a cost of Rs. 8! To make the offer more interesting, the company had also provided a talktime of Rs. 40 in each of those sims! I myself didn’t know what to do with so many sims! But I purchased them. I and most of the customers like me thought that the one who bought maximum sims was more intelligent in grabbing such offers! There was an upper limit of eight sims in a person’s name! Otherwise, many people including me would have purchased 25 to 30 or even 50 sims! I used to call my parents everyday from different sims in order to keep them activated.

(This is the first part of the article the remaining part will continue tomorrow)

Akshara Damle

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