Data and De­vices Shape the Tele­com Land­scape

Data/mo­bile in­ter­net has to­day be­come a full-fledged rev­enue stream for tele­com op­er­a­tors and a source of en­ter­tain­ment and con­nec­tiv­ity-on-the-go for con­sumers.

Voice&Data - - CONTENT - by Anu­pam Va­sudev Chief Mar­ket­ing Of­fi­cer, Air­cel)

The evo­lu­tion of the In­dian tele­com sec­tor is quite a fas­ci­nat­ing story in it­self. It seems like only yes­ter­day when we grad­u­ated from making trunk calls to us­ing mo­bile phones. Back then you could, per­haps, see al­most ev­ery­one walk­ing on the road talk­ing on the mo­bile phone placed right next to his/ her ear. To­day, same peo­ple can be seen look­ing down on their phones while walk­ing around, fid­dling with them. This is a clear ex­am­ple of tran­si­tion that our in­dus­try has made from voice to data.

Stud­ies have shown that glob­ally av­er­age time spent on mo­bile (non-voice) has grown to 82 min­utes per day. This means that across the world peo­ple with mo­bile phones are spend­ing a con­sid­er­able time ev­ery day on not just talk­ing, but also us­ing their phones for tex­ting, in­stant mes­sag­ing, watch­ing videos on­line, play­ing games or down­load­ing songs, etc.

Data/mo­bile in­ter­net has to­day be­come a full-fledged rev­enue stream for tele­com op­er­a­tors and a source of en­ter­tain­ment and con­nec­tiv­ity-on-the-go for con­sumers. This data explosion was a con­scious ef­fort made on the part of the tele­com op­er­a­tors who re­al­ized the in­fras­truc­tural lim­i­ta­tions that ex­isted in In­dia. As a re­sult of in­no­va­tive ini­tia­tives such as Air­cel’s Pocket In­ter­net, a mar­ket with size of less than one mil­lion mo­bile in­ter­net users in 2009 reached 200 mil­lion users in 2013. While 200 mil­lion mo­bile In­ter­net users may look like a huge num­ber, we have the po­ten­tial to at least reach around 500 mil­lion users in the next 5-7 years pro­vided the right ecosys­tem is cre­ated. If this seems like an im­pos­si­ble task, then we can eas­ily draw some in­spi­ra­tion from our neigh­bor­ing coun­try China which al­ready has over 400 mil­lion mo­bile in­ter­net users. Un­doubt­edly, there are many en­ablers to fur­ther drive the ex­plod­ing In­ter­net adop­tion in In­dia but the key fac­tor is evo­lu­tion of de­vices and the sup­port­ing ecosys­tem. Let’s take a look at some of the as­pects of the de­vice ecosys­tem that will fur­ther fuel the mo­bile in­ter­net growth in the coun­try:

Qual­ity of hand­sets: With the rise of the in­ter­net, the

con­sumers have be­come more aware than ever about their choices. While de­vices re­main para­mount in driv­ing data us­age, the qual­ity of the de­vice needs to be su­pe­rior for a con­sumer to opt for it. The qual­ity also ex­tends to other fea­tures of a de­vice such as its screen size, op­er­at­ing sys­tem and tech­nol­ogy ac­cess. We have seen how con­sumers have mi­grated to big­ger screens, high def­i­ni­tion res­o­lu­tion and im­proved stur­di­ness for bet­ter in­ter­net ex­pe­ri­ence. The early smart­phones post 2007 era started with 3.5”-3.7” screen. From there we have now pro­gressed to “Ph­ablet” space. At about 6” screens th­ese “Ph­ablets” are just be­low the start of next cat­e­gory of tablets. In ad­di­tion, with the avail­abil­ity of high speed ac­cess via mo­bile tech­nol­ogy, now phones have started be­com­ing a mass consumptio­n medium lead­ing to a shift in be­hav­ior of con­sumers who are on the move. Aside, for an op­er­a­tor, when a con­sumer mi­grates from a fea­ture phone to smart phone, 3-4 times more data is con­sumed. Even when the same user up­grades to a bet­ter tech­nol­ogy, for ex­am­ple from 2G to 3G with higher speeds, the in­crease in consumptio­n is about up to 4-5 times en­sur­ing a ded­i­cated rev­enue stream for tel­cos.

App Ecosys­tem: While tech­nol­ogy, screen size and user ex­pe­ri­ence aid in chang­ing the user be­hav­ior, the key for any consumptio­n medium is the avail­abil­ity of con­tent at the right time, price and with ease. It is im­por­tant for a user to be able to do some­thing rel­e­vant and as per his lik­ing with his mo­bile phone at all times. There­fore, as a ser­vice provider, the onus of pro­vid­ing this con­tent lies with me as the avail­abil­ity of rich con­tent, cus­tom­ized to a con­sumer’s lik­ing, is tremen­dously re­spon­si­ble for the adop­tion of In­ter­net on mo­bile. Right from the time when high speed mo­bile net­works (3G) came into ex­is­tence around 2002, the en­tire in­dus­try was search­ing for killer ap­pli­ca­tions to ex­ploit the 3G speeds and thereby ig­nor­ing the al­ready avail­able ap­pli­ca­tions and con­tent on the In­ter­net. Adap­ta­tion of en­tire suite of ap­pli­ca­tions from sim­ple mes­sag­ing to com­plex lo­ca­tion and video stream­ing ser­vices, ex­ploit­ing power of na­tive op­er­at­ing sys­tem has changed the sce­nario com­pletely. To­day, higher speeds host­ing of th­ese ser­vices over Cloud for an end user has be­come a re­al­ity.

De­vice bundling: While rapid pro­lif­er­a­tion of mo­bile in­ter­net in In­dia has hap­pened in a very short span of time, say the last 3-4 years, we are still be­hind the curve due to the kind of de­vices avail­able in the ecosys­tem. To put this in per­spec­tive, in In­dia we have roughly about 10% 3G en­abled phones in whole user base of about 800 mil­lion. While In­ter­net en­abled de­vices in our base would be close to 55%, most of them are older gen­er­a­tion fea­ture phones im­ped­ing quicker and eas­ier adop­tion of In­ter­net on mo­bile.

Cur­rent busi­ness mod­els that pre­vail in our coun­try are one of the ma­jor ob­struc­tive fac­tors. While in US or Europe, the de­vices are sub­si­dized by op­er­a­tors with bun­dled min­utes on monthly plans, in In­dia due to the preva­lence of pre­paid and no credit ver­i­fi­ca­tion sys­tems, tele­com op­er­a­tors are un­able

‘We have the po­ten­tial to at least reach around 500 mil­lion mo­bile in­ter­net users in the next 5-7 years pro­vided the right ecosys­tem is cre­ated.’

to sub­si­dize the de­vices. The Re­verse Hand­set Bundling(RBHO) or For­ward Hand­set Bundling (FHBO), where op­er­a­tors bun­dle SIM cards with pre-loaded ben­e­fits along with de­vices in de­vice re­tail chan­nels or op­er­a­tors own chan­nels, does not pro­vide a direct sub­sidy on the de­vices. Due to lesser op­tions for sub­sidy, the de­vice price it­self acts as a bar­rier lead­ing to slower ad­di­tion of qual­ity de­vices on to the net­work. How­ever, with the in­tro­duc­tion of new EMI based mod­els through var­i­ous tie-ups with the dis­tri­bu­tion and pay­ment back­bone, some part of the prob­lem has been al­le­vi­ated. Hav­ing said that, we will not be able to repli­cate the kind of de­vice re­place­ment cy­cles we see in US or Europe un­til new mod­els for de­vice sub­sidy are built and hence, we must chan­nel­ize our en­ergy to­wards solv­ing this is­sue as well.

Av­er­age sell­ing price: Af­ford­abil­ity and value for money dic­tates the consumptio­n habits of a ma­jor­ity of con­sumers in In­dia. Over the years 2009-2013, we have seen that en­try price points for mo­bile phones have been de­clin­ing steadily and quickly. Dur­ing this time, many af­ford­able phones with great fea­tures have come into the mar­ket across var­i­ous price bands, cour­tesy In­dian and In­ter­na­tional orig­i­nal equip­ment man­u­fac­tur­ers (OEMs). To­day, the en­try price for a 3.5”-4.1” phone is Rs4,000 which was pre­vi­ously around Rs7,000. Sim­i­larly the mid­dle mar­ket be­tween Rs7,000-14,000 has wit­nessed huge change as well. With con­stant re­duc­tion in av­er­age sell­ing price, we can ex­pect a quicker adop­tion by end con­sumers.

With the ecosys­tem in place, the pos­si­bil­i­ties of in­no­vat­ing with de­vices are definitely end­less. Need­less to say that de­vices will con­tinue to re­main our en­try and exit points to the vast world of in­ter­net and tele­com ser­vice providers, along with de­vice man­u­fac­tur­ers will come up with new ways to de­light their cus­tomers. The be­gin­ning has al­ready been made es­pe­cially in the fields of e-commerce and m-commerce but what re­mains to be seen is how this saga un­folds.

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