The year 2008 was exciting for the Indian mobile-phone space. The user base has grown by about 100 million, many new operators have got licences to launch operations, and the auction of spectrum for so-called 3G, or third-generation, services is around the corner. So what does 2009 have in store for us?
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* Subscriber growth continues: India is now growing at about 10 million new mobile users every month, and that pace of growth will continue. We will probably be close to 450 million subscribers by the end of 2009. Four factors will drive the growth of the mobile subscriber base—footprint expansion by existing operators, especially in rural India, launch of operations by newer operators, issuing of 3G licences which will open up a new world of data services, and cheaper handsets that will lower entry barriers even further.
* Incumbent operators will face multiple challenges: The Indian market going ahead can be thought of as two markets—the Red Market, which comprises the highly competitive, saturated urban battleground (top 40-odd cities in India) and accounts for about 100-150 million subscribers; and the Blue Market covering the rest of India, with a potential size of up to a billion subscribers. Of these, only 15-20% have actually got a mobile phone.
Getting bigger: India is growing at about 10 million new mobile users every month and Jain says that pace of growth will continue in 2009. Abhijit Bhatlekar / Mint
The Red Market wants data and value-added services (VAS), while the Blue Market needs access (voice). A new landscape is emerging in India driven by four simultaneous disruptions—new operators entering the fray, mobile number portability roll-out, 3G services, and the green signal for MVNOs (Mobile Virtual Network Operators).
* Differentiators: Operators will focus on VAS and data services in the Red Market. Voice, short messaging service (SMS) and quality of network can no longer be used for differentiation. They are now hygiene factors.
Red Market subscribers got a phone in the first decade of India’s wireless roll-out between 1995 and 2005. They have been using Voice and person to person (P2P) SMS for between 3 and 13 years. They now want to do much more with their phone and their time is now coming. 3G will be a big enabler for richer services, and can actually drive higher average revenue per user. We will also see the emergence of data MVNOs.
* The coming era of VAS operators: Today, 90% of operators’ revenues come from voice and rentals. Of the balance 10%, about half comes from P2P SMS. So, VAS accounts for only about 5% of revenue. Operators have primarily focused on voice. I see a new breed of companies emerging that will create direct-to-consumer services and focus exclusively on VAS—think of them as VAS operators. They will have multiple revenue streams; not just from subscribers, but also from advertisers and businesses. They will be the genies that make the mobile a magic lamp in the hands of consumers.
* Flat-rate data plans: Such plans will drive the use of mobile Internet, social media and rich media. The US leads the way here. From being a laggard in the use of mobile data, the US is now showing the way with all operators having flat-rate data plans.
In India, the right price point, according to me, is Rs100 per month. A plan like this will encourage the use of the mobile Internet and other services, and create the necessary pull for companies to start building mobile data services. Operators will benefit from large-scale adoption of data plans. The mobile is ideally positioned to be a window into the incremental N3 (Now-New-Near) Web. Mobile social networks will extend the communication and interaction capabilities of the device. From mail to music, from digisodes to streaming TV channels, the combination of smartphones, flat-rate data plans and 3G will be the gateway to a wide array of rich media.
* Expect the launch of app stores. Given the huge success of Apple’s store for mobile applications and Google following suit with its Android Market, I expect Indian operators and handset players to also create app stores. These stores will open up the content and applications market to just about anyone, and drive both usage and innovation, and also create newer revenue streams for themselves.
* Mobile payments and commerce will come into vogue, which will happen via three mechanisms. First, the mobile cash balance with an operator could be used for payments. Second, a credit card or debit card could be linked with a mobile phone or number, enabling only an instruction to be issued for making payments. Finally, independent companies could encourage the creation of cash balances to be used for off-deck services. Taken together, the mobile has the potential to emerge at the centre of micropayments.
* Companies will start creating their mobile presence. A mobile presence is much more than setting up a keyword or a shortcode for lead-generation. Early adopters will start integrating the mobile (especially SMS and the mobile Internet) into each of their business processes. They will use permission-based channels (rather than spam) to build deeper customer relationships and drive greater engagement.
* Emergence of mobile as a mass and targeted medium: Today, the mobile is one of the four new media that ad agencies and businesses look at, along with FM, as out-of-home advertising and the Internet. Given the user base that is already there, the mobile is ready for breaking out of the pack. It has the attributes of a mass medium such as TV and print, and can combine the targeting that the Internet offers.
* The 2009 elections will be an inflection point for mobile usage. More than half of the voting Indian population will have a mobile, which is a two-way interactive device. As the Mumbai attacks showed, while TV can rouse passion, it is the mobile which gets people organized and working towards common goals. Just as the US elections of 2008 were a defining moment in the use of Internet and mobile, I believe that the 2009 general elections in India will drive innovation in how the mobile is used for building communities, citizen journalism, advertising and more.
Rajesh Jainis the founder and managing director of Netcore Solutions Pvt. Ltd, a Mumbai-based software solutions company.
This is the sixth of a nine-part series. Tomorrow: Apurva Purohit, CEO, Radio City 91.1FM, and president, Association of Radio Operators for India, talks about the radio sector.