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The Next Disruption

One hears of disruption very often these days, with Jio topping the list for changing the telecom game and toppling the pecking order in every possible way. It’s a coinage that’s found currency and speed in the day and age of startups perhaps, but disruption in its true sense belonged to the previous decades as much as now.

While Reliance Jio’s disruption is about offering rock bottom tariffs, forcing the older players including Bharti Airtel and Vodafone to shed their low ARPU (average revenue per user) customers to strengthen their books, it was in the first decade of the 21st century that India saw a real breakaway in telecom. It was disruption like never before when the Calling Party Pays regime (when payment for an incoming call is set on the caller as against the Receiver Party Pays model), came into being and Indians got hooked to their cellphones for life. For millions used to their landlines, it was time to transition to mobiles, for many more, cellphone became the only way to stay in touch.

A generation (read pre-paid mobile customers) that was wooed and cajoled by every telco, when there was no Jio around, was happy with the disruption as he was showered with freebies and discounts. No telco bothered about the revenue that a user was giving back to the company as volume was the big game in India. So, the phrase used frequently was deal and not disruption. That changed. Recently, when Airtel and Vodafone Idea together decided to give up around 200 million subscribers, it was a turnaround from their indulgent days. This time, disruption was in your face — Jio had brought the industry to such a state that incumbents had to part with the low ARPU users who had earlier given these telcos a pride of place in the world. The message was clear: There are no free lunches and that the days of freebies are over.

It could be a coincidence that a similar message is going out in yet another disruptor industry. When the aviation sector saw the growth of budget airlines, thousands of Indians transitioned to flights from trains, with the momentum picking up after the launch of Indigo in 2006. Budget airlines with their initial low fares and other deals forced Railways to up its game. But once the conversions had happened, disruption struck the industry hard. Soon, it was hard to tell from the fares which one was a budget airline. While full service airline Kingfisher was shut down in 2012 due to a massive financial crisis, Jet Airways is in talks with corporate groups including partner Etihad to avert such a crisis.

That there’s no room for freebies is clear in aviation too. The budget airlines, many of them also in losses, have decided to monetise wherever possible so that they don’t go the same path as Kingfisher or Jet. Even for services such as web check-in, the no-frills airlines have decided to charge customers, though there’s lack of clarity on what exactly will be priced. Without losing an opportunity, the Ministry of Railways said on its Twitter handle, “no need to pay extra charges for web-checkins. No long queues for checking in your luggage. Avoid unreasonable tariff and reduce your carbon footprint by travelling on the good old Indian Railways at affordable rates”.

E-commerce, which analysts have termed as the biggest disruptor for the retail industry, may be the odd man out in the disruption series. That is, it’s still not done with its deep discounting, though the scale is down from what it was a few years ago. For bargain hunters, e-commerce continues to be destination shopping, though in some categories discounts have fallen drastically. Take the travel sites or the OTAs (online travel agents) — flight tickets are hardly ever discounted. There could be deals on hotel stay but the discounts are mostly through cashback, which invariably entice you to book again and again to make good the money returned to your online wallet. Cab aggregators such as Uber and Ola too have mostly gone back on their earlier promise of low fare. The deals are fewer in number and value as investors funding these startups are sitting up and asking for return on investment.

Top players in e-commerce — Amazon and Walmart-owned Flipkart — may still play the discounting card because of their deep pockets, at least till the shareholders of the American behemoths bear with the cash splurge. Or, perhaps till the next disruption. – Business Standard

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