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Tuesday, January 18, 2011

The New Rage in Emerging Markets

Voice SMS, a worldwide hit with users, is a huge opportunity that can be tapped with better customization suited to Indian users
SMS has become a part and parcel of our daily communication. A phenomenon which started as just another form of communication and was an alternative to voice call, slowly crept into our lives. It has now become an integral part of the way we keep in touch with our social and professional network. Despite its massive usage, SMS is still 'puzzling' for a vast majority of users, who solely rely on voice as a communication medium. In India, almost 60% of the subscriber base has never sent an SMS.
As the technology evolved, voice SMS or 'an SMS with emotional touch' caught the imagination of the operators and subscribers alike in emerging markets across APAC, Middle East, and Africa. What are the reasons for popularity and the massive growth of voice SMS products in these markets? Why have similar services not seen an uptake in India despite the innovative marketing campaigns designed to attract subscribers to use voice SMS proactively?

Mobile penetration and awareness about the usage of sophisticated phones in emerging markets are low as compared to developed countries. Traditionally, the major chunk of the population resides in the suburban and rural areas, and relies on voice for communication. With limited written skills, they prefer not to type an SMS. The simplicity of a VAS service is the key to its success. Voice SMS is supposed to bridge these gaps, and plays an instrumental role in smooth and easy communication for this segment. Let us look at few of the success stories of voice SMS as a solution in some of the emerging markets. MTN Uganda, the leading African operator, saw a very impressive uptake of its voice SMS solution, and had to upgrade to triple the capacity of the voice SMS system within a few months of its launch. Within 3 months of its launch in November 2009, the service had seen an 11% penetration!
A Pyramid Research report rates voice SMS as the top next generation SMS based application that targets the low income subscribers in the Africa and Middle East region. Etisalat confirmed that out of its 7 mn subscribers in the UAE region, half a million voice SMSes were sent within 6 days of the launch of service. Analysts are of the opinion that the simplicity, cost-effective, and non-intrusive nature of the service will surely help in the uptake of the service with Nigerian operators like Visafone and Glo Mobile. Telenity has worked with operators in the Middle East and African region for making successful voice SMS deployments, and opened new VAS revenue streams.
Within the APAC region, 2008-09 saw various voice SMS deployments with operators across countries like Vietnam, Pakistan, Bangladesh, and Tajikistan. The success of the service in Africa and the socio-economic similarity in the regions clearly indicates that this service has a potential to be successful in these countries as well. Also, the operators have been promoting the service effectively by launching special campaigns like free voice SMS usage during festive seasons.

Why would a service like this be a 'good fit' for the Indian market? With English literacy levels low, a huge chunk of population struggles to communicate using SMS as a medium. SMS is complicated for this user segment. Handset manufacturers tried fixing the problem of English language by introducing SMSes in more languages than English, so that the users can send messages in Indian languages like Hindi and Tamil but that is a little complex. In addition, we also have a large chunk of literate users like senior citizens who are not very comfortable in using a mobile handset, and consider a voice call as the most convenient mode of communication.
Since the urban market for mobile phones in India is near saturation, the rural market will provide the next big wave of growth. Voice SMS, though was marketed by operators like Airtel and Vodafone as a product with a huge potential as it could address a need for subscribers in the suburban belts, has not seen the take rates that were expected.
One of the key reasons that voice SMS in India is still not so successful here because India is a price sensitive market. With call rates falling and the introduction of per second bill plans, subscribers would prefer making a call with the cost of a few paisa rather than spending money on SMS. Voice SMS is no different. As of now most of the operators have kept voice SMS at a price point of 75 paisa, and this need to become more competitive so that the operators can effectively exploit the full potential of the service.
The history of VAS application that have been a hit in a market like India shows that the Indian subscriber welcomes products and services that are simple to use and integrated in the call flow of making a regular call. CRBT-the killer VAS application in the last few years-is a case in point. This is the only service in India that has achieved a greater than 20% subscriber penetration across all the operators.
Going by this logic, the success of a high potential service like voice SMS also depends on the simplicity and ease of use from a subscriber perspective. The current voice SMS services being offered by the operators wherein the subscriber needs to dial * and a number and record the message, is still quite complex for the user segments that we are talking about. Telenity's solution, for instance, is based on an integrated technology where a subscriber is given the option to record a message in case a voice call is not completed (a person does not answer a call, is busy or out of coverage area). This integrates the service in a standard call flow of making a voice call and if priced competitively to a voice call as has been done by the operators in Africa, its penetration and usage will see a sharp rise. This also enables a much higher call completion by the operators and a big spike in their revenue.
Currently voice SMS as a service is not widely used in our country but the opportunity is huge. There is a massive suburban, rural subscriber base that uses only voice services. They use the phone only to make calls. This enables them to communicate and get their message across in all conditions. In a hyper competitive market like India with plummeting tariffs, the key question is not if this service will see mass adoption but by when will this happen.
The operators need to apply the learning from other emerging markets and price the service appropriately so that the non-VAS savvy subscriber segment can benefit from this service.
Telenity Voice SMS Solution
The above table showcases the revenue potential for operators through a voice SMS solution wherein a subscriber uses the service in case a call cannot be completed. It is an additional source of revenue for operators in case a voice call is not completed.source

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