Both Nepal Telecom (NTC) and Ncell have started discussion to start subscription model plan/service for their customers. They have started looking at ways to improve their financial conditions and generate revenues as it’s becoming hard to survive and sustain. In this article, we discuss what subscription service is in telecom industry and what it means for users of Nepal and how NTA could shape the direction.
Table of contents
What is a subscription-based telecom service model?
In telecom, subscription-based service refers to a type of service where users pay for a subscription plan recurrently. To illustrate, currently, you recharge your SIM and use services such as voice, data, SMS, and other value-added services (VAS) either by package or PayG. However, with a subscription model, you get one service or a bundle in packs for a fixed duration (mostly monthly) and is repeated in another cycle (month) regularly. Let’s say, you buy a subscription plan for 30 days at a certain cost at a fixed price. Mostly, a mobile subscription plan comes with Voice, data, and SMS, with different range of volume/resources targeting different kinds of users.
In this type of service, when a subscription ends, mobile plans renew itself like Ncell auto renewal packs. And the best part of it is that it will make resources more affordable (more on that below) and you won’t have to buy packs frequently or pay in the PAYG model which is costly.
In strict sense, you will not be allowed to use any mobile service unless you buy a subscription plan, starting from basic resources to advanced having maximum resources. From the very moment, you buy a SIM, you need to subscribe to a plan. Let’s say, a basic subscription could start at Rs 199 per month with couple of GB data, 100 mins of call and 100 SMS. Similarly, the advanced subscription could at Rs 1200 to 1500 could provide you multiple tens of GB data with unlimited data (at fallback speed), unlimited calls and 500 SMS.
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Is a subscription model telco service already adopted in Nepal?
Ncell has sort-of started subscription-based telecom service in Nepal with its auto renewal packs but it is optional at the moment. In this pack, you can buy data pack from Rs 399 to Rs 1499 and voice packs at starting at Rs 199. But the telco hasn’t made it the only way of service. You can choose not to use this subscription and continue using Ncell services by recharging mobile balance and keeping its validity.
Ntc, on the other hand, is looking into ways it can start a subscription model for customers. The company already provides a similar bundle service for its postpaid users. Soon, the company could be launching auto renewing packs for the benefit of its customers. And that could lead to subscription model in the future. Check out: All Ntc mobile data price
Subscription model advantages
- Renewal facility: Subscription model service is based on renewal. Your subscription plan or package is renewed automatically to continue using service. It’s that simple which keeps things straightforward.
- Roll over / Carry over feature: The remaining resources such as voice and data packs are rolled over to the next subscription ensuring that every penny is fully spent.
- Convenience: Things become simple and easy with a subscription-based service. You don’t need to navigate through available packs. You can choose a plan and enjoy the services from your carrier. Telcos will make subscription model service easy to understand and basic for all to subscribe.
- Affordability: Another key highlight of this type of telecom service is affordability. The good news is that Ncell CEO and MD Jabbor Kayumov has himself claimed that a subscription-based service will decrease service costs by up to 80%. How great would that be if true!
- Elevated user behavior: So far, you have been recharging your mobile balance to use telecom services. However, with a subscription model, you will have a different and perhaps a more engaging user experience. By spending a minimum amount regularly, you will be using more telecom services- data, voice, SMS, etc. So, you will get more resources to stay connected at an affordable price.
- Revenues to the government: Another reason to push for subscription-based service is that it will generate more revenues to the government. Due to the current state of things, both telco companies and the government has seen decline in their revenues. But a subscription model will keep users tied to plans and promote minimum spending habit. This will lead to higher revenues for the companies and higher revenues for the government as well.
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Subscription model disadvantages
- Mandatory purchase: A subscription model works on just that – subscription. And this may not sit well with other users who don’t want to pay for a plan on a regular basis. For e.g., you use mobile services very less, but the minimum spending is also high compared to your possible monthly uses. In such a scenario, buying a subscription plans feel less attractive an option. But it depends on the kind of plans telecom companies will offer. So, we have to wait on that when they start subscription type of service.
- Difficulty at adaptation: Switching to a new way of service could pose a difficulty for users. Subscription model is new to Nepali mobile users. So far, we use carrier services by recharging our SIM and keeping its validity. Switching to a plan-based service with a fixed cost is different from the current flexible one. So, some of us will take time to adapt and accept this new way of mobile plans.
- Less flexible: Subscription model makes it mandatory for users to buy plans to use carrier services. If you don’t buy a plan, it’s likely you won’t be able to use voice, data, and SMS service as well as receive incoming calls. This heavily contrasts with the current ways of usage where you top-up mobile balance, buy packs, or opt Pay-As-You-Go (PAYG) model. So, it might seem less flexible to some. However, in the long run, once you become adapted, you will be fond of such subscription than the regular one.
- No guarantee it will fly: So far, there’s only talk of this type of service coming into play. However, both telcos Ntc and Ncell, regulator NTA, and other stakeholders will have to come into agreement for it. Again, there’s no assurance that it will be popular and accepted by the users. So, as of now, we are only exploring what it’s like and what it would bring to the industry.
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Opinions differ among Ncell, Ntc, and Nta on subscription model telecom services
Ncell on Subscription Model
Major industry stakeholders have different views regarding subscription model service. Ncell, of the three, has remained vocal for its adoption at the earliest. “We have long treated the subscription-based model as a necessary measure for the long-term survival and development of the industry. This model will not be expensive for the customer. But it will rather make services more accessible,” Kayumov said.
“As it is not about increasing prices but in fact about making services cheaper for customers. Ncell recently launched renewal feature, and this is the most customer centric move, as customers tied of buy their favorite pack every month,” Kayumov added.
Further, he said that “Users get higher validity and won’t need to worry about subscribing to packs every 28 days anymore. Subscribers who use services for free would have to begin paying a nominal fee for mobile subscription.
“It’s the need of the hour to jointly work out a modality proactively,” he declared.
He also claimed that against the current packages and PAYG model, voice packs are almost 7X cheaper than, data packs about 80X cheaper and combo packs are in fact 2X cheaper than individual voice and data packs in subscription model.
Ntc on Subscription Model
Government-backed Ntc says that while it’s discussing subscription services, it will not immediately launch it. “We are studying but there’s no plan to start such service in the near future,” company’s spokesman Hari Dhakal said.
“This kind of model is available in our postpaid service but not in prepaid. If the package is taken to recurring payment, it will be a subscription model. We will adopt such a model once customers demand for it.”
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Dhakal did highlight the positive aspects of subscription model. He said that it guarantees revenues for the company and help predict income. Also, customers won’t have to worry about buying packs frequently.
Nta on Subscription Model
Meanwhile, Nta chairman Bhupendra Bhandari believes that companies shouldn’t bring subscription model at least for now. He said that it is necessary to ensure consumer rights before implementing such a new model. Bhandari maintained that subscription model is only possible when user access, convenience, and transparency is ensured in the industry. But he did admit the positive sides of the new business model.
“We are positive about increasing the income of telecom service providers. But we should go for the subscription model only by keeping the issues of consumer rights and network availability as a precondition,” he said. “Currently, Nepal has 3.3 million 2G users. We also have customers who use monthly recharges of 50 and 100 rupees. It is not fair to create a compulsion for those customers to take a service of 200 rupees per month. Such a subscription model does not fit the Nepali market.”
The NTA chairman suggested that telcos provide packs in small clusters per month instead of offering fixed-price service with a 7-day expiry date. “Let’s work step by step on how to take the people who are currently using a monthly service of Rs 200 to Rs 500,” he said. “If we need an annual increase of 5/10 percent in the income target, we must also ensure the rights of the consumers. We must satisfy the government and all stakeholders.”
He also directed telecom companies to get approval from the authority when launching new products like the renewal packs.
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Our verdict
Subscription model service is new for Nepalese Telecom sector but seems market bound. The industry is reeling from streak of poor financial gains. Growth of OTT apps, lack of service diversification, telecom policies, etc. are putting pressure on telecom companies to explore options to trigger income. So, it seems that a subscription model telecom service looks like an ideal solution. Maybe that NTA, Ntc, Ncell all come together for this approach sooner. It is also beneficial for customers in the long run as a strong and determined telecom industry drives innovative and modern technology advancements.
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We hope that if subscription service becomes the norm, it be logical, scientific, and accessible for our pockets. What do you think of subscription model being adopted in Nepal? Would you like buying plans to connect for services and renew on its own? Share your feedback in the comment section below.
