The cellphone revolution is dead. Long live the cellphone revolution.

That is a sentiment one gets as the Indian cellular industry enters a turbulent phase after its explosive growth since the late 1990s.  A tariff war is crippling most operators, even as four more line up to enter the market before the year is out, and the country’s most profitable markets have reached saturation point. The stocks of the top two providers – Bharti Airtel and Reliance Communications – have plunged. Airtel shares lost more than 30% last month and Reliance was down over 43%, thanks also to an accounting scandal. All this is prompting analysts to re-rate the fundamentals of the business.

The complete cellularization of the four metros – New Delhi, Mumbai, Kolkata and Chennai – is a key milestone. Now all have more cellphones than people, with Chennai topping with 143% penetration, according to The Economic Times. Of course, the country as a whole is far from reaching saturation point in any form of telephony. Overall, the country’s penetration is less than 40% and it could take several years more to attain full teledensity.

Even though the cellular operators are going to be selling more and more phones in newer areas, as Bharti Airtel’s recent push toward semi-urban areas reveals, the four metros will remain key to profitability.

The cities have the wealthiest consumers and already account for about a third of all revenue. Going forwards, this proportion will likely go up, or needs to, from the telecom service provider’s perspective, because the four cities represent the best markets for growing data usage and 3G services, whenever they are rolled out. This non-voice revenue stream, now miniscule, is going to be critical to the profitability of the cellular operators, given the cut-throat competition and tariff wars (pay per call, pay per second innovations, among them) in voice calls. Not only is the volume of non-voice revenue going to grow, it is going to come with better margins than voice revenues.

Competition has been at the centre of the cellular industry’s growth. Private enterprise and the zeal to sign on a billion customers has energized the sector, and truly transformed the country, in a manner the state-owned BSNL could never have. But the same competition seems to be undermining the industry now. What the industry probably needs today is consolidation, not four new entrants gearing up to start services.

Anyway, expect more price wars! Talk is cheap and getting cheaper, too.