Expanding coverage

Virtually everyone who is involved in India's mobile industry is looking at means to put more subscribers onto the network. The first part relates to expanding coverage. Reliance Communications has plans to hook up over 2 lakh villages. IDEA Cellular has just signed up Nokia Siemens Networks for a $ 500 million deal. The plan is to double the coverage in six of the 11 circles (basically states) in which IDEA operates currently.

Meanwhile, IDEA has already started work on setting up the network in Mumbai. But services will start only once it manages to get adequate spectrum. But, that is an altogether different story. It also has the licence for Bihar. Currently, IDEA has 14.45 million subscribers and controls 11.06% of the GSM market in India.

This is also over and above the $ 3.5 billion that market leader Bharti Airtel plans to invest in this fiscal.

Expanding networks is fine. The big need is to get more subscribers onto the network. Reliance as usual went another step ahead and launched cheap colour handsets at Rs 1,234 ($ 30). This should go along way to get a newer rung of Indians to go mobile. This time round, Reliance Communications has signed up with Chinese manufacturers like ZTE to launch phones under the Reliance Classic brand. Can Reliance now launch high-end phones using the same brand?

That could be very interesting in a market that is so price conscious. But if one is to believe what the Nokia's of the world say, the Indian consumer goes not just for price but looks at value for money. If that is the case, then this initiative of Reliance could backfire.