For the telecommunications industry in India, paisa has become the buzzword. Although coins worth less than Re1 have literally vanished from the market, mobile service operators are trying to woo their customers by offering “1-paisa" or “half-paisa" options for calling. In a desperate bid to hold on to or grow their market share, companies are engaged in a fierce price war. With new service providers joining in, the race is gaining further momentum. The question, however, remains whether this model is sustainable.

Photo: Chris Rank / Bloomberg

While the price war for talktime rages on, companies must look for other ways to achieve differentiation and growth. Innovation will have to be the watchword. India has been a hotbed for many innovations in the telecom space: The massive growth in subscribers led the operators to come up with innovations in almost every aspect of the business—service offerings, business models, operations and marketing, all usually enabled by new technologies. Now, this innovative spirit will have to be unleashed in new directions: to provide new services, open fresh markets and further empower end-users.

One ripe area for innovation is extending the cellphone from being primarily a talking tool to an information and community networking device that addresses the local needs of people. Personal computer penetration in India is in single digit, while mobile penetration is already in excess of 40% and is growing at an incredible pace. Mobile phones are, therefore, the right channel for most Indians to access the Internet. But significant innovations will be needed for the mobile to be an effective medium for information access and social networking in a country such as India, where traditional Web paradigms are not meaningful to most of the population as yet. These customers will need specific and localized information in a simple and accessible format. We can expect to see novel interfaces for the masses, ranging from speech interface on low-end phones to intuitive graphical and pictorial interface on higher-end ones.

Another important scope for innovation lies in the enterprise space, especially for small- and medium-size businesses. These businesses could leverage mobile technologies for business growth and productivity. The providers of effective mobile solutions for these businesses can go beyond the paisa wars to a different model linked to delivering business value.

For example, mobile phones can transform the supply chain of dairy cooperatives, which are run by hundreds of families, each owning only a small number of livestock. There are opportunities here to set up animal health management systems that increase cows’ milk yield. Dairies can also have a better scheduling system that leverages phones in the hands of dairy farmers, distributors and retailers across the supply chain. Another opportunity is with kirana store owners, who could create networks of loyal customers, offer special promotions and delivery services, and make their services more visible to new customers—all through mobile phones.

The increasing popularity of smartphones among the urban population is opening up new avenues for service providers as well as enterprises such as high-end malls. Sophisticated applications will change how enterprises relate to their customers, employees and partners. Industries will be able to leverage smartphone collaboration capabilities to manage an increasingly mobile workforce. For instance, in Japan, camera-equipped phones are heavily used by consumers as bar code scanners to instantly review product information and promotions, and make decisions right at the point of purchase.

For businesses, the big story will be the transformation of processes through communication technologies. Hybrid networks are helping companies create a unified communication system, taking into account the front-end (consumers) along with the back-end (supply chain, inventory) of the business. Enterprise workers are increasingly using mobile phones as an integral tool to perform their business roles. For example, in the insurance sector, business processes are being re-engineered for greater reach, richer context awareness and speedy claims processing. Such technologies allow companies to provide product information to consumers in remote parts of the country; assign an agent based on availability, qualification and location; and then enable the consumer or agent to perform a variety of transactions through phones. The technology also provides secure back-end processing and transaction auditing.

Service providers have two great needs: to scale faster and to derive better business intelligence to stay competitive. For instance, a virtualized and elastic infrastructure enabled by cloud computing (where a service can be bettered when spread over the Internet) will help them scale flexibly. And new advanced analytics technologies can help them derive business intelligence to transform their businesses to new user requirements. One of the greatest strengths of providers is the tremendous amounts of data they generate on calling patterns, usage, problem areas and user preferences. They can thus provide value-added services and insights based on analytics applied to this rich data, thereby significantly enhancing and augmenting the core services they offer to businesses. As telcos get into the business of converting data into business insights, they will be transforming paisa into profits for themselves and value for their customers.

Guruduth Banavar is director, IBM Research, India. Comment at