[BITList] Sydney Morning Herald's reporter - Article on India

[John Feltham]

India beats Australia, and it's not just cricket

Matt Wade

May 31, 2011

BlackBerrys displayed for sale at a shop in the southern Indian city of Kochi. Photo: Reuters

Australia prides itself on being an advanced, competitive economy. But in some countries with a reputation for being poor, inefficient and corrupt, consumers get a far better deal.

In India, where I lived for the past three years, you can buy a good-quality new car for less than $4000, make a mobile phone call for a few cents and use any ATM free.

There are many reasons why, especially the cost of labour. But it's hard to see how buyers here are getting value for money, especially for some high-tech services.

Maybe the most striking contrast was telecommunications. Indians can choose from about 15 mobile phone providers that compete fiercely on price. SIM cards are available for as little as 10 rupees (21¢) and some companies have recently offered discount call rates for as little as one-fifth of a rupee per minute – less than a 0.5¢. I could check emails on my phone in Delhi for less than 1 rupee (2¢). A new entrant to the telecom market recently started charging for text messages by the character. Established players had no choice but to follow. Another firm recently announced a promotional rate of 0.25 rupee per minute for long-distance calls.

Needless to say, I was stunned at the cost of telecommunications when I returned to Sydney. No doubt India's huge market and low wages are factors. But capital and technology are major inputs for the telecommunications industry both here and there. So is the vast gulf in prices justified?

Low prices didn't necessarily mean inferior services. I travelled widely in India and experienced clear mobile phone reception even in remote areas. But on my first trip out of Sydney after returning I couldn't get a phone signal on long stretches of the highway linking our biggest city and the national capital. There are properties less than an hour's drive from Canberra where mobiles don't work, not to mention the many mobile black spots in downtown Sydney.

The low prices for mobile services in India have helped create a vast market. India now has more than 810 million mobile subscribers and is on track to overtake China as the world's biggest market. India's income per capita is less that 3 per cent of Australia's but it has managed to add about 600 million new mobile phone users in less than four years.

Other goods and services I used on a regular basis in India were also superior and much cheaper than here. The broadband at my home in Delhi was faster and cost a fraction of what's on offer here. The same goes for cable TV, which cost me about $8 a month. The deregulation of India's aviation market means there are now many private airlines offering cheap, dependable flights and the cabin service, in my experience, was usually better than in Australia.

It's not just prices in developing countries like India that raise questions about the value for money Australian consumers are getting. Research released last week by Choice showed 12 top music albums cost, on average, 73 per cent more via the Australian iTunes store than the US equivalent. Nike running shoes on sale for $240 at a major Australian retailer cost $134 from an online store based in the US. Many examples, from whitegoods to motorcycles, TVs to video games, showed Australians were paying over the odds.

Choice's Christopher Zinn says the pressure from overseas online competition is a wake-up call for Australian retailers to be more competitive. “We need to move beyond a complacent culture of high prices, high margins and poor service,” he says.

One way to move beyond that “complacent culture” is more competition. So many of our consumer markets – banking, telecommunications, supermarkets, petrol, electricity, media and transport – are dominated by a few big players.

My arrival in Sydney after experiencing the ultra-competitive consumer markets of India rammed this home.

Two airlines occupied most of the gates at the domestic terminal, the airport was a privately owned monopoly, there was a narrow range of stores at which to buy things.

The friends and relatives who welcomed me home faced some of the most expensive airport parking charges in the world and I joined the long queue to use a taxi – another industry crying out for reforms to promote more competition.

Matt Wade was the south Asia correspondent.



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