Vodafone Idea starts to lobby for minimum pricing

Vodafone Idea has written a letter to the Indian Government which suggests it is pushing for minimum pricing to ensure a healthy and sustainable telco industry.

As it stands, the competition conundrum in India heading towards a perilous conclusion. With Vodafone threatening to abandon its pursuit of digital riches in the country, a defacto market duopoly is increasingly becoming a realistic outcome. This would be far from a perfect position.

According to The Economic Times, Vodafone Idea has demanded the introduction of a minimum cost for data tariffs in the country. The proposed plan would see prices set at a minimum of 35 Indian Rupees (c.$0.48) which would be more than double the average cost per GB in the country as it stands. Vodafone Idea is also asking for free phone calls to be banned.

While Indian consumers might be disturbed by the prospect of a price hike, especially considering there was already one three months ago, it is perhaps a necessary step to ensure competition is preserved in the country.

The introduction of Reliance Jio in 2016 was seemingly an effort to stimulate progress in a lethargic telco industry, hence the Government assistance which was offered to the firm. But it arguably went too far, taking prices far below want would be deemed sustainable for the competition which have to deal with legacy networks, products and business processes.

Looking at the concept of competition, it is generally accepted that 3-4 telcos are required to ensure the consumer is protected through suitable competition. This unofficial rule has resulted in many acquisitions being denied in Europe, or at least there being major concessions being offered to create a replacement. The same scenario is currently being played out in the US with T-Mobile and Sprint merging, but with Dish emerging as a replace fourth player.

However, India as a country is a different case. With a population of 1.3 billion, many of whom will live in areas where the digital divide is incomprehensible to those in more developed digital markets, perhaps Indian authorities should be doing more to encourage more investment and competition. Three MNOs does not look to be a sustainable position right now, and the prospect of dropping to two would worry many.

Vodafone has threatened to pull out of its joint venture with Idea Cellular due to the $7 billion spectrum licence bill it is facing, though it does seem to be searching for ways to make the situation work. The proposal to introduce a minimum price for data could add more security for the firm which is desperately attempting to avoid bankrupting itself in search of the rainbow’s end.

Consumers not convinced by the price-point of new smartphones – report

The smartphone is central to our lives, but it doesn’t seem like we are being bought by the latest fads as easily anymore.

According to research from Counterpoint (first spotted by the Wall Street Journal), the idea of buying a refurbished or second-hand smartphone is becoming more attractive to consumers, while refreshment cycles are getting longer. Such news could not be worse for a segment which is struggling with profitability and sluggish sales already. The report indicates one in ten devices now being purchased are refurbished models.

Of course Apple is generally excluded from such misery, though there have been rumours that the new iPhone X didn’t meet internal expectations. This is a brand which is usually able to contort it customers into all sorts of uncomfortable positions, but it seems not even the iCultists could swallow the $1000 price tag. This might be a worry for other brands who don’t have the luxury and robust brand positioning of Apple.

According to the research, refreshment cycles are up from two years, pushing towards three, while additional research from Baystreet Research suggests Equipment Installment Plans could also be a contributor to the misery. As these payments are hidden in monthly plans the consumer is less aware of how much a new device actually costs. With telcos becoming less inclined to push the subsidized device model nowadays, more consumers are leaning towards buying devices outright and perhaps getting a shock at the price. Realistically, refurbished or second-hand devices are almost as good, while substantially cheaper. It seems consumers are starting to accept this trade-off.

The iPhone X at $1000 is very expensive, as is Samsung’s Galaxy S9 at $840 which was launched at MWC this year, but what do customers actually get. There are few revelations when it comes to new flagship devices so what is the point in spending such extortionate amounts of cash. Refurbished devices are pretty much the same, unless you are a photograph buff but we question how many people there are who care that much about exceptionally detailed photos and videos.

The slump device manufacturers are in is perfectly demonstrated by the euphoria at MWC this week. Samsung might have launched its device, but HMD’s re-release of the banana phone, grabbed a lot of attention. This is the second year in a row where nostalgia have triumphed over the new and adequately demonstrates our point.

When we were at the event, Heavy Reading Analyst Steve Bell pointed towards graphene batteries which can be charged quicker and last longer as possibly the next big buzz for devices, while Light Reading’s Dan Jones is keeping an eye on the on-device storage improvements. Improvement to batteries is long overdue in the space while improved storage could drastically change the way content is consumed, stored and cached. Both areas could drastically improve performance of the devices.

These are two areas which could reinvigorate the refreshment cycle and get consumers excited again, but right now the trends are going the wrong direction for manufacturers who want to charge more for less value.