Sunday 23 March 2008

What can mobile operators learn from Laloo

I am sure a lot of you have no Idea who Laloo or 'Lalu Prasad Yadav' is. He was long term chief minister of Bihar state in India is well known for corruption and scandals (as are many other politicians in India). In 2004 he became the Railways Minister of India.

Indian Railways is a very sensitive topic. As much as people like to complain about it, its makes everyone proud. Its one of the biggest railway network in the world, employs over 1.5 million people and the total distance covered by the trains is 3.5 times the distance to moon.

In 2001 an expert declared that Railways will be bankrupt by 2015 unless privatised. It was making huge losses and was expected to make US$15.4 billion loss by 2015. Lalu turned it around in 2-3 years and now its made profit of U$2.47 billion.

To turn this huge organisation from loss making to profit making he followed some simple logic.
  • Reduce the fares instead of increasing them and the occupancy will improve
  • Increase the freight loading hours from 10 hours to 24 hours daily
  • Make everything simple for ordinarly people to follow including reservations
  • Once the basics are working keep improving the infrastructure and make further cost reductions

Now lets compare this to how mobile operators behave.

  • They provide big subsidy for the handsets but they think this gives them right to charge whatever they wish.
  • The tariff's are still not competetive for international calls and while roaming abroad. A simple call making and receiving for a UK mobile on roaming to US can be charged to £1.20 per min. Compare this to making it free using Skype. This puts off so many people in calling home when abroad and receiving calls on their mobiles. If its cheaper more and more people will make and receive calls when abroad.
  • Using data abroad could be like commiting suicide.
  • There are couple of networks who give huge student discounts but with them text messages can take upto 12 hours to be delivered.
  • Some networks have customer service open for limited hours and they charge calling the number even with the same network mobile.
The mobile operators like to complain that the voice call revenues are decreasing and there is still not enough data uptake. I would urge them to set their house in order before they complain. In the end the consumers will always find cheaper alternatives like VoIP and WiFi unless its something important. On the oher hand if some cheap options are available we do not mind trying them.


Arvind Iyer said...


Why have you commented that Indian tarrifs are not comparable, while the other blogs, conferences, reports speak the opposite?

pharses like "this gives them right to charge whatever they wish" disparages the private sector communication revolution of India.

Are international calls, abroad roaming really the focus of growth for these companies?

Zahid Ghadialy said...

Hi Arvind,

My blog was aimed more towards European operators and especially UK. I have quoted money in £'s and the figure shows UK operators. I cant comment on Indian operators and tariffs as I dont have much idea about them of late.

When I visited India some years back, I was surprised to find very cheap and competetive tariffs. The only problem I had was that I couldnt get a 'Pay as you go' kind of SIM being a foreigner. There was too many beaureaucratic procedures. In the end, I had to ask someone to get a SIM on his name and then use it while I was there. Hopefully this has changed.

Now going back to the article, if I am in India i pay £1.20 per min for a call to UK. Even though this is expensive but I can understand. What I dont like is that I have to pay £1.20 to call someone in same city in India as well. As a result, I use my current phone just for receiving texts (because they are free) and get another local SIM.