Tax Trapped Telecom Sector Must Design New Strategies to Increase Internet Penetration

The government’s newly-imposed tax on internet usage is meant to restrict the diffusion of internet technologies and third generation or fourth generation (3G/4G) services.

Tax Trapped Telecom Sector Must Design New Strategies to Increase Internet Penetration

Cellular operators should adopt such strategies which will be helpful in boosting mobile internet adoption rate. With industry boundaries disassembling and market dynamics changing quickly, cellular operators need to go back to the drawing board and have a look at their business plan. As the regulatory environment is itself a considerable risk and there is little hope that this slow decrease in tariff and a stagnation of revenue growth might lead to a merger and acquirement deal.

A detailed analysis reveals that the telecom sector has already witnessed major changes in its core business model as telcos have competed for revenue growth. In achieving differentiation, they have not only offered more attractive data packages.

Revenues from messaging services and even voice are on a constant decline with more and more users shifting to Whatsapp and its like. Moreover, internet users at home and work are connected to high-speed Wi-Fi access points and have little need to rely upon these mobile telcos.

Operators are threatened by non-traditional players such as social media apps and Wi-Fi hotspots. In Pakistan, the average data customer is not conditioned to pay for the internet. In fact, consumer behaviour is a critical success factor which calls for a better pricing strategy to ensure high 3G/4G adoption rate.

WhatsApp, Facebook and Skype will become a nightmare for telcos and they will lose millions in potential revenue from voice and text plans due to the ‘cobra effect’ of promoting mobile data services.Many telcos do not understand the dynamics of emerging market which results in poor customer segmentation and targeting.

The present daily or weekly data bundles and free Whatsapp/Facebook services will quickly diminish their revenues. Telcos should develop workable business advantage by introducing new value propositions.

Here it is important that Telcos should introduce more sophisticated data pricing plans with a strategic focus on the consumer behavior and a clever segmentation based on behavioral economics.

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