Print

Comment

Email

Digg

Del.icio.us

Reddit

Twitter

When the Consumer Pays
The operators still form the locus of all that for which the consumer pays. Whether as the pipe between the content developers and the customers or as the channel of delivery for the application developers, they play a very important role of billing. It is the operators who deliver the end services to the user, and thats what makes their role central to the whole system.

As per Sanjay Goyal, CEO, ACL the mobility landscape can be classified into horizontal and vertical companies. There were only 4-5 horizontal players offering a variety of services back in 2000 when the industry started, he says. Gradually the vertical companies came into existence. These were the companies, says Goyal, that boasted of a single line offering. And while the growth story lay on the horizontal side initially, Goyal thinks that its time for the vertical companies now.

Shantanu K Dash, CEO, MosPay segments the market in terms of types of applications: games (low-end entertainment), corporate/enterprise market, utility applications, and other high-end applications

Dr Subho Ray, president, Internet and Mobile Association of India, says that pronouncing this industry as the mobility landscape is not justified. This is because the mobility landscape has to be inclusive of voice. You cant ignore voice if you have to talk about the mobility landscape, he asserts. He chooses to call it the VAS industry and classifies it into: Mobile Entertainment, Mobile Marketing (though this is beyond the ecosystem in our classification), Mobile Payment, Mobile Technology

It is the operator who emerges as the clear winner in this mobility ecosystem. Since the time of the inception of this industry (around 1999-2000) the role of the operator has been a matter of perpetual scrutiny. While some argue that the operators take away the major chunk of the moolah, others debate the value additions that the operator brings on the table.

This system cant run smoothly without the operator being in the driving seat. The reasons are simple. We dont yet have an independent business model which can function without bending towards the operator. Although it has been seen emerging for some time, it is yet to arrive. Also, right now, most of the pure play players do not have the requisite infrastructure to approach the consumer directly. The brands are not well established in the market and dont evoke the same recognition factor with the consumers as the service providers do.

However, coming to the role of the operators, following are the three basic functions (or value adds) that they perform even as they sit comfortably at the loci of the operational chain:

• Branding (adding brand value for the content aggregators and application developers)
• Acting as a pipeline (as a channel of delivery to the end customer, this is specially valid for mobile advertising)
• Billing (the most important function. The operator becomes the central point of billing, since it is the one who establishes the direct contact with the consumer)

The Revenue Sharing Models
Its nothing new to hear about the unfairness of the revenue distribution that takes place in the mobility setup. Neither is it unusual to see the pure play players talking bitterly about the adamant operators. It is often said that the operators pocket a good deal of the revenue generated through value added services. And these business models have been a subject of discussion since years now. But nothing constructive seems to have emerged so far.

Notes Sanjay Goyal of ACL wireless, The biggest problem is that of billing, which has to be done by the operator. And thus operators are most adamant on the revenue share that they will keep. The reality of this system is that at the center of every act lies the operator. Shantanu Dash of Mospay adds to that by saying, There is a huge dependency on the operators because the market hasnt been receptive of any other player till now. The acceptance here has been very slow.

Another substantial reason for this market bend towards the service providers is that they are the only link on the ecosystem who can boast of direct contact with the consumer. The penetration of the operator is the deepest in any market set up. Since it is the operators who are responsible for the ultimate delivery and sale of the product, they, like anybody else, want to cash in on their strengths. Other reasons given for taking a majority revenue share are infrastructure deployment, product distribution and marketing, etc.

Subho Ray of IAMAI adds more insight into the matter. He notes that as of now, voice is the basic focus of the mobility market. Operators are still generating close to 90% of their revenue from the voice service. This is because of the market here where most of the users are low-end users who only use the mobile for regular calls. The fact that around 92% of the mobile users in India have a prepaid subscription substantiates the claim that we are still a voice oriented country.

As an IAMAI research points outVAS currently contributes only 9% to the total operators revenue. That hardly translates into a sizable portion. Given the paltry role that is attributed to VAS right now, operators dont see it as an investment opportunity, rather as a cost addition. However, things might change soon, and for the better. The MVAS study by IAMAI expects VAS to contribute around 12% to operators revenue by June 2010. The indications are clearas the share of VAS increases in the operators accounts, they shall start paying more serious thought to it. And gradually, market dynamics might force the business models to change or normalize.

Says Subho Ray, Operators are not perceiving any value in VAS as of now. Thus they are not too keen on it. But that doesnt diminish the importance of this segment in any aspect. The ARPUs (Average revenue per user) are already on a decline. So is the average call time. The scope of expansion in the voice market, though nowhere close to saturation, is gradually diminishing. We shall also soon face a situation, which is common in the developed mobile markets, wherein the voice market alone will be close to its saturation and thus not enough food for any operator to survive upon.

And this is the situation, say experts, that shall shift all the focus to alternate ways of earning revenue. This is when the real time of VAS shall arrive. According to Subho Ray, right now the players are approaching the operators as independent vendors. This is because the services that are being provided are on-deck services. If you go as a vendor, you shall be treated as one, he emphasizes. However, once more emphasis is given to VAS and it assumes a more significant role, then players will approach the operators as clients rather than vendors. That is when, thinks Ray, the market shall undergo a marked change.

Dash of Mospay is also optimistic. Revenue sharing models are set to change soon. There are some big names entering the market and pure play players will become more visible now. The operators role cant be erased but it will certainly take a backseat. We shall see a massive change in the next two years, he says.

Thus, most of the industry is hopeful at present. They see some kind of a mixed model emerging in the coming years. The coming of 3G services is also good news in that regard. Ray gives the example of mobile tower business. It took off slowly but is big now. The same he thinks shall happen with non-voice mobility as well. Till then we can be hopeful and anticipate a better tomorrow.

The foundations of thisnew era have already been laid. We can already see some parallel business models mushrooming, though they havent yet registered any path breaking success. Ventures like Oxicash and some partnerships with huge retail chains are a few examples. We can expect to see an increased popularity curve for more such innovative ideas.

Mdot.com
Google on SMS. Yahoo One Search. Rediff on mobile. Names we are all familiar with. Internet on mobile is something which has become the dream come true for most busy executives. The mobility factor apart, it gives you the luxury of all time connectivity and saves you from the trouble of opening the laptop every time you need to check your mail. Simply put, its your world in the palm of your hand.

As Shantanu Dash puts it: People dont use phone as a phone now. The concept of Internet on mobile has its inception as long back as 2003. Then came the high-end phones, capable of supporting good amounts of data, and further down the lane, blackberrys changed the course of human history.

But Internet on mobile is much more than searching air-ticket and weather details on the phone. It supports a huge industry at the back-end. No wonder then that big names like Yahoo!, Google and Rediff have dedicated mobile departments and are taking this segment rather seriously. According to Vishal Maheshwari, director, Mobile Business, Yahoo India, People dont consider the PC to be the only way to reach Internet now.

And given the mobile boom, Internet on mobile is a phenomenon that has caught up relatively fast. Almost the whole of this market revolves around the high-end users. It the basic assumption that everyone who owns a laptop/PC must own a mobile, and if the information is readily available on the mobile phone, it can be much more handy than the conventional methods.

There are three core constituents of the Internet mobile industry: the publisher, advertiser and consumer. Maheshwari says that the biggest challenge for any Internet company operating on mobile is to achieve a harmony in the ecosystem which appeals to all parties. Moreover, on mobile there is a more urgent need to provide a consumer relevant experience.

Vinay Goel, head of products, Google India, says their aim is to organize the world info and make it universally accessible. And what better way to do it than the mobile phone. This is especially relevant for India, where we have a base of 3 mn plus mobile users. But reaching this base is not as simple as it appears. There are many strings attached. Be it bandwidth issues or regulation hassles, it hasnt been a smooth ride so far. But that hasnt hindered the Internet companies from entering this space and making a mark.

One of the major factors that flow in favor of mobile Internet is that it is relatively independent of the operator. Or as Goel puts it, it is operator agnostic. While some partnership with the operator is necessary, it doesnt imply complete dependency. This is because of the model of openness that prevails in the Internet domain. Once a consumer has taken a data plan he is free to choose the sites he wants to visit or widgets he wants to downloaded. In such a scenario, the role of the operator is restricted to providing data plans and the end billing.

Says Uday Sodhi, SVP, interactive services, Rediff.com, Web on mobile is just like Web on PC. What is different is the consumer experience, nothing else. He says that the need of the hour is to make the overall user experience more easy and comfortable and thats what their focus is. Vinay Goyal agrees, The model on the Web is the same as the model on mobile, it all depends on the openness of the system. However, Maheshwari differs on this point. He says, Mobile Internet is different from PC because for us to reach our customers on mobile we have to form a number of relationships. Be it telcos, equipment manufacturers or advertisers.

All that Ends Well...
Yes. There are countless overlaps in the system. The roles arent well defined and the operator seems like the happiest link in the chain. But there is still enough reason to be hopeful. The content providers, the application developers and the media companies, are all flooded with optimism. Mobile is one genre that isnt engulfed in pessimism even in times like these.

No one pronounces 2009 to be a landmark year in terms of mobility. But everyone expects robust activity. Nobody is looking at explosions and a complete dismantling of the system that appears harmonized, at least from the outside. All they are looking at is some kind of change. The change which is indeed taking place, bit by bit, in every part of the country.

This change is just a sigma of the slow revolution that the mobile is bringing about. Some of it is happening in every village in the country, every single day. Be it a racing game or a romantic ring tone. Be it weather forecasts or marriage invitations... mobiles are indeed transforming the communication scenario.

And it is never a bad thing to be a part of a revolution. Is it?

Mehak Chawla
mehakc@cybermedia.co.in

Page(s)   1  2