Sky's the limit for bleeding telcos

In-flight connectivity will bring cheer to chat-friendly passengers as well as the industry

A friend called a few months ago, from the air, while on a flight to Dubai. There was much excitement on both sides, discussing the what and how of such calls. While the facility has been available on select international flights for some years, the caller on-board Emirates gave me the first real glimpse into what a call from the sky could feel like. It felt out of the world, almost surreal, for making it possible for the flier to stay connected at that height and also for the seamless quality of call. There was no call drop, no missing signal and no need to shuffle around on either side to get the words right.   

Now that the government has allowed in-flight calling on Indian air space, it was time to get in touch with the same caller to find out more about her experience then. ‘’It was the only time I got to call from a flight. The service wasn’t available on return flight due to a satellite problem,’’ she said. Did she use her own phone? And what was the tariff? Did she buy a data pack on the plane? So many questions waiting to be answered.

Yes she did use her own phone. For first class passengers, there’s usually no extra charge as it’s part of the fare, but the tariff varies from one airline to another depending on the data pack. From the many conversations since Tuesday evening on the subject, it appears that beyond first and business class, data usage (mainly emails and texting) has been a preferred mode of in-flight connectivity globally, wherever it is allowed. Telcos however believe India will play out differently in the skies, as on the ground. Compare the average revenue per users (ARPUs), an indicator of how high or low the tariffs can be, for instance. In the US, ARPU is pegged at around $24, against less than $2 in India. 

The initial impression is that for telecom service providers, it will be a volume game in the Indian skies too, and therefore tariffs are unlikely to be steep. Insiders say that teams have been formed already to work on the math for best sky tariff plans. Some guessed that there would be combo packages for ground and flight, with dollops of discount thrown in. If you buy one, you get the other free or almost free. There would be corporate packages and premium corporate packages too for frequent fliers. Vacationers would get unique offers too, with plenty of customized content, depending on the profile of a passenger. It’s all about imagination on how data packages can be made attractive. Deals with online travel operators, hotels, airlines—everything will be tried.       

In the midst of all this, all eyes are on Reliance Jio, the disruptor. Will it set the tone for deep discounts on in-flight calls or wifi? In all probability, it will because it’s an opportunity every player has been waiting for—both in the airline and telecom industry. Then others will follow, irrespective of the fact that top telcos are bleeding. And irrespective of whether mass calling on flights will result in mayhem.

Some like the Bharti group are logistically prepared with a global joint venture. Others are in the works. In the end, the numbers in the Indian market are too enticing for any company to give it a miss. 

Look at the phone subscriber data. There were more than 1.15 billion wireless subscribers in the country end of February. But the growth has been slow on all counts—addition in new subscribers, minutes of usage and ARPU. As of December 2017, Trai numbers show a decline in ARPU to Rs 79 from Rs 84 in the previous quarter and minutes of usage per subscriber per month for GSM post-paid service was down to 786 minutes from 818 minutes in the previous quarter. These numbers tell a story. That, there’s hardly any room left for growth on the ground. But sky’s the limit. More so when the latest aviation statistics vouches for big growth. The country’s airports handled 300 million throughput passengers in 2017-18—that’s a growth of 16.5 per cent from the previous year.   

It looks like the decision of the Telecom Commission to approve in-flight connectivity won’t just bring cheer to the chat-friendly passengers, but even more to the telecom industry facing severe financial stress. Till turbulence strikes in the skies as well.