Just another brain-dead techie with views on everything under the sun!

Friday, January 17, 2003

Disclaimer: The following article is not written by me and does not reflect my views. I do not wish to pass judgement on any individual or any organization by posting this article. This came to me in mail.

Who is Reliance trying to fool ?

The Media has been going ga-ga about Reliance Infocomm's new Pioneer Offer. Everybody has nothing but good things to say about it, but has anybody bothered analyzing the offer?

It isn't all as rosy as it seems.

First of all, NO, the mobile phone isn't free; it's a hidden cost and a big one as we will soon see.

Second, you pay a hefty Rs. 3,000 as Club Membership fees, which entitle you to receive privileged services like game downloads, ringtones, and a more of such freebies. A marketing booklet with discount coupons worth Rs. 1 Lac also comes along (come on Reliance, a Mid-Day newspaper does a better job at giving us free coupons).

Third, all the billing money for three years has to be pledged to Reliance in the form of post dated cheques, or full upfront payment, and no, there isn't a trial period for the service. If you choose to exit the plan in the first year, no matter what the reason might be, you stand to lose the mobile phone, club membership charges, and Rs. 100 from each of your post-dated cheques.

Fourth, all seemingly free services like Voice Mail, Call Divert, Call Conferencing and Data Connectivity (Internet Services) are billed to you at regular talktime rates according to Reliance's Website. As for those who consider that airtime rates are quite cheap, let's analyze it a little further.

Reliance bills at Rs. 1,800 per quarter, and the club membership of Rs. 3,000 is compulsory and non refundable. That makes a total of Rs. 24,600 for three years. [3000 security + (1800 x 4 quarters x 3 years)].

In return you get 400 minutes of talktime free each month. i.e. 14,400 minutes for 3 years.

Divide the two and you will realise that each minute within plan limits ends up costing you around Rs. 1.71 or Rs. 5.13 for a three minute standard call . And once the plan's call time is up, you pay standard BSNL/MTNL landline fees. This implies that every call you make is getting you closer to bearing the cost of owning the mobile phone.

Let's deduct the price of the handset from the amount you pay to Reliance and see the difference. Reliance claims the phone costs around Rs. 10,500, but we don't believe that is a fair estimate. Considering they buy it in bulk and the options are fairly limited, let's place the price of the handset at Rs. 7,600. [my take on this: I disagree. For one I do not subscribe to the argument that since they get cheaper prices in bulk, they necessarily have to pass down the same price to the customer. Another thing is that I do not, for a moment believe that a CDMA phone can come for under 10K. But those are just my views!]

The total fee for the new plan without mobile phone will then amount to Rs. 17,000 (Rs. 24,600 - Rs. 7,600). The total cost-per- minute at Rs. 1.18 in this case is still more than that of the basic telephony providers they vie to replace.

Though cheaper than other mobile phone services, it is still costlier than a landline. This, despite the fact that setting up a CDMA2000x1 network costs less than landline based solutions, and the TRAI is offering Reliance a good deal via free interconnect with BSNL/MTNL.

The quality and features, Reliance has been harping on will be seen in time. But, some basic misconceptions which give the deal a greater than god image can be cleared right away.

The SMS facility on Reliance phones is limited to sending and receiving messages to Reliance phones only. It isn't possible to send or receive SMS messages to/from standard GSM mobile phones. So SMS being free isn't too good an option unless Reliance is a monopoly, which, if and when it becomes one, will make them charge for it.

The low-cost STD calls too are for Reliance-to-Reliance phones only. If you wish to call up a standard land line, you pay standard MTNL/BSNL charges.

All this, and a lot more needs to be explained in clearer terms for the consumer to gauge how well this plan meets her data/telecom needs.

Services that Reliance claims it will offer need to be explained in a lot more detail to make it clear to the customer about what exactly she's going to get. As for whether the service would really deliver what it claims; only time will tell.

We would rather sit back and watch the playing field level up, and then pick the tried and tested option that has proven its performance.

Well!! .... what do you people think?? Does this make sense or is it just a ranting of an iconoclast? Leave your comments...


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Sameer/Male/27. Hails from India/Maharashtra/Mumbai/Prabhadevi, speaks Marathi, English and Hindi. Spends 60% of daytime online. Uses a Faster (1M+) connection. And likes Reading/Computers.