02 June 2010

IMC – Mobile VAS Conference

The Indian Merchants’ Chamber(IMC) conducted a conference on mobile VAS in Mumbai on May 28th 2010. I attended the event being a delegate for the event thru my company. The theme of the event was to discuss the ‘Impact of 3G and BWA on Mobile VAS’. There were several speeches, presentations and panel discussions in which various stakeholders of industry participated.

Inaugural session:

Prashant Chopra of Deloitte Consulting gave a brief presentation on present outlook of Indian telecom industry.
  • The presentation included a snapshot of how the industry has progressed from Nascent phase with 2-3 operators in mid-90s to present day’s Hyper-Competition phase with 9-10 operators.
  • There has been a gradual decline in ARPU. The introduction 3G services will be a welcome relief as it has been an APRU booster for AT&Ts and Docomos in the geographies where 3G service was introduced 4-5 years back.
  • In India, operators can leverage on the fact that there’s very low broadband penetration and definitely there’s a lot of scope of leapfrogging directly to wireless broadband.
  • For selling data intensive services new marketing strategies have to be adopted. There has to be shift from ‘Traditional segmentation’ based on Demography, Income, Location to ‘Evolved segmentation’ based on Degree-of-Involvement of consumers.
  • Web services have to focus beyond information oriented content of Bollywood and Cricket to hardcore e-commerce which involves actual transaction.
  • For the evolution of VAS, the friction in the value chain has to be sorted thru proper regulations. Larger pie of the revenue should be given to content providers.
Vijay Mukhi - Co chairman of VAS Committee of IMC made some practical points in his address.
  • If one searches for “benefits 3G services” in Google the top results will be articles dated 2003-04. This proves the fact that rate of spectrum auction in India have been very slow.
  • With new services there’s risk of increase in crime like anonymous calls etc. There has very less progress in Cyber-Law in India and till date we don’t have a full time lawyer practicing ‘Cyber-Law’.
  • Even after investment of 70,000 crores for spectrum and projected 30,000 crores for infrastructure, there has been no sign of a killer application operating on a 3G network. It would be difficult to sell new services to aam-aadmi since a 2G call is any-day clearer than a 3G call.
  • For a country which has head in 21st century and feet in 19th century, by default pornography will be most sought after service on a 3G network. It will be very difficult to monitor the usage of a user in a personal device like mobile phone. As per the latest IT law downloading such stuffs is not a crime, whereas uploading objectionable content is a crime.
  • Having two separate auctions of 3G and BWA is irrational. WiMax is treated as a different technology and basic telephony is intentionally disabled to protect the telcos.
Session-1: Impact of 3G and BWA on Mobile VAS

Aprita Agarwal, Executive Director of Telecom Practice at KPMG shared some facts and research and market analysis done by her group.
  • At present the major revenue in VAS segment is thru CRBT. With the introduction of new services on 3G network the revenue pie of VAS for telcos will be around 30 %.
  • The initial revenue growth will be more in B2B segment in areas such as fleet tracking.
  • The 5 MHz spectrum is too less considering the consumer base and projected demand for services. With this bandwidth there will be very less percentage of users who can be alive on a network.
  • For telcos, it’s tough to introduce Unlimited Data plan as 5000% increase in usage will translate into only 250% increase in revenue. So constraints have to in place by introducing only ‘usage based plans’.
Muneer Sayyad (head of Reliance IOT Lab) introduced buffet of technology and standards which make a 3G network. His talk more inclined towards technology jargons and how there will be convergence between Web 2.0 and Telco 3.0
Akila Jayaraman – an analyst at ‘Global Consumer Lab and User Experience’ Ericsson India presented the highlights of market survey done by her firm for 3G services.
  • At present there are very less active VAS users. 97% of cellphone users in India don’t even know whether their handset is 3G enabled or not.
  • Since in India there’s lot of diversity i.e. there are different users with different needs, it would be difficult to have a single killer application. So group of services have to be offered in a single package.
  • Mobile broadband is the most preferred service. Every 2 out of 5 users are looking forward for it. At present mobile-data-card is the primary access for 50% of active internet users. Most of them use the card staying at their home!
  • The strategy for telcos should be in a phases such as targeting a group with Bouquet of services, marketing with sachet pricing and achieving reliability by offering services to critical mass.
Session-2: Mobile TV and advertising.

The session was more of a panel discussion and dexterously moderated by Manish Kasliwal.
Karthik Ananth from Zinnov Management Consulting gave a presentation on marketing strategies for selling mobile services
  • He started the presentation with an anecdote of Japanese delegates getting amused by the desi concept of Jugaad.
  • As said by late CK Prahalad India market love to jump the curve. The hottest example for this the DTH service. In 2009 there were 17 million subscriber and 2014 there will be around 45 million subscribers.
  • For increasing the demand for Mobile TV there has to be short and relevant content, which allows doing things in a better way. Necessity of such services is in the field of Healthcare, Education/Training, Micro Advertising, Citizen Services, Essential Information Services and Entertainment.
  • Indian market is a ‘Value Consumer Market’ so the VAS services have to introduced centered around this idea. Like having a flash local Micro-Advertisement for a spot discount by a grocery store in your locality.
  • Local level news service will have lot of demand as the national media don’t cover such topics. People will be ready to pay premium for such services.
  • An American visitor traveling in a Local Bus observed that in India every phone has a unique ringtone whereas in US one can hear the same old Nokia Tune. This indicates that Indians ‘Love to Personalize’, so the new VAS offerings should based on this concept.
  • Watching a three hour movie in a mobile will be a pain. The application of Mobile TV will be more in B2B segment, like distribution of training materials to Banking and Insurance agents.
Sujata Dev from Times Broadband mentioned about a user’s stickiness to a mobile phone which will not be more than 5-10 minutes on-an-average. A preferred content will be a 28 minute saas bahu episode customized into a 5 minutes clip for a mobile.

Rajjat Barjatya from Rajasri Media shared his company’s initiatives in Mobile VAS space.
  • Since the lifespan of attention on a mobile is around 3 minutes relative to 30 minutes on a TV, his firm has started series short three minute episodes.
  • The latest offering is a show by name ‘Shammi Unplugged’ in which veteran Bollywood actor Shammi Kapoor shares incidences from his professional/personal life in every episode. Every Monday a new video is released which users can subscribe to watch in their mobiles.
  • Taking a leaf out of Karthink Ananth’s presentation he demoed 2-3 caller tunes to indicate how Indian’s can further personalize their mobile phone.
Satish Tembad mentioned about ‘How can we bring context’ for increasing user experience w.r.t Mobile TV. He gave an example of introducing a daily live broadcast of Tirupati darshan, for which user stickiness on mobiles will be there for long time.

Dippak Khuranna the creator of timesofindia.com talked about advertising strategies on Mobile phones. The strategies have to be dynamic since usage pattern change overnight. Three years back the 90% of mobile internet traffic used to be on Operation Deck(Vodafone Live/Airtel Live), at present 90% of traffic is outside operator’s deck. The strategy should also be based on rate of technology adoption. Predicting technology adoption is a challenge, he had expected timesofindia.com to be adopted in 5 years but actually it took 15 years !

Session-3: Mobile Gaming – What More ?

The session was moderated by Samir Bangara (COO of Indiagames). He iterated that the gaming companies should not stereotype customers. Some of prolific mobile gamers in India are outside traditional segments -a pujari at a temple in rural Bihar, a jawan deputed at a Inda-Pak border and a person who operates a Pani-puri store in Mumbai.
Other points discussed in the session
  • The growth in mobile gaming market is a step function. The adoption is dependent on factors which become favorable at the same time.
  • It will be a challenge to sell mobile gaming services to majority of existing voice-call subscribers. As declared by Bharti-Airtel, 85% of their subscribers have less than Rs.15 in their wallet.
  • Social Gaming is a new upcoming segment which game creators can leverage upon. The Farmville phenomenon is a classic example. The revenue for the segment is based on micro transactions. In China, two gaming companies have jumped into limelight by leveraging on micro-transactions.
  • Rajiv Hiranandani of Mobile2Win stressed that operators have to be more transparent have to share analytics data with game creators. As far as the business model for games is concerned, it should be initially freemium model and thereafter companies should cross-sell and up-sell.
  • Re-selling games will be one of the preferred strategies for increasing operating revenue. The Games played by Urban India, will be played in Rural India after 2-3 years.
  • The games should be more engaging as the lifespan of user-stickiness is very less relative to laptops and PCs.
Overall, a good conference and it was good to know that stakeholders are making an effort to have their strategy aligned to meet demands of the industry.

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