The Indian Code Division Multiplex Access operators have made the cost to go mobile and stay mobile the cheapest in the world. Figures show that subscribers are lapping up these cheap phones -- as on March 2007, CDMA subscribers crossed the 44.5 million mark, doubling last year's numbers.
The reason is simple. CDMA operators in India continue to expand their portfolio of very low-end handsets, with over 38 VLE handsets from 13 suppliers being introduced over the last few months.
Analysts say with a tele-density of only 18 per cent and an under-served rural population, the rapid growth of cheaper CDMA connections in India is expected to fire the telecom market.
"The aggressive pricing by a CDMA operator like Reliance," says Neha Gupta, senior research analyst, Gartner India, "is based on how efficiently it markets its tariff structure and bundles an affordable handset." Volume-based handset sourcing deals with Chinese equipment vendors, like Huawei, ZTE, TCL, helps the operator in further subsidising its subscriber acquisition cost further, she adds.
Consider this. For Reliance Communications or Tata Teleservices, acquiring a CDMA subscriber has become almost Rs 1,000 to Rs 1,400 cheaper than a GSM operator, according to CDMA Development Group, an industry group that promotes CDMA technology.
With CDMA operators like Reliance packaging their tariff structure at as low as Rs 777, the GSM counterparts have to lure subscribers with an entry tag of Rs 1,799 for the handset and another Rs 150 to Rs 200 for a GSM connection.
"This price war is expected to ballyhoo rural and semi-urban mobile connectivity in India," says B V Raman, country head, CDG India. A Yankee group research report too states that 64 per cent of the CDMA handsets are sub-$40 (below Rs 1,600) units.
"Handset prices can make all the difference to our bottomlines," says Naresh Malhan, president (Consumer Business), Tata Teleservices. S P Shukla, president (Personal Business), Reliance, corroborates: "Reliance Communications has made a paradigm shift in handset bundling both through disruptive pricing as well as innovative tariff plans and
incoming offers."
Arun Khanna, VP, Haier Telecom (India) adds: "There won't be a steep price drop in the handset prices, instead it will