Wednesday, January 26, 2011

Emerging Mobile Phone Trends

1) Mobile/Social/Local Combinations will Explode but will Generate Little Revenue

As we also recently noted, everyone is getting into mobile/social/local services these days from Facebook to Google and Amazon to Groupon. But Forrester says that while the number and usage of these services will increase, it does not expect the services to generate meaningful revenue in 2011. Also, in a side note, there's bad news for Foursquare buried in the report. Although Forrester doesn't name names, it says that "location-based social networks" will struggle as standalone activities as major players like Facebook integrate location into their services, like Facebook has done with Facebook Places.

2) 2011 is the Year of the "Dumb" Smartphone User

Smartphones will become more affordable, thanks to handset subsidies. And these new users will be less engaged and active than smartphone early adopters. Forrester expects they'll download fewer apps on average, but will consume more mobile media thanks to consumer education and convenience provided by the phones.
Despite the fact that these former "dumb phone" users may download fewer apps than early adopters, the overall app forecast is still good. In fact, Gartner also just released a report that stated mobile app store revenue will pass $15 billion in 2011. It said:
Worldwide mobile application store downloads are forecast to reach 17.7 billion downloads in 2011, a 117 percent increase from an estimated 8.2 billion downloads in 2010...By the end of 2014, Gartner forecast over 185 billion applications will have been downloaded from mobile app stores, since the launch of the first one in July 2008.
Worldwide mobile application store revenue is projected to surpass $15.1 billion in 2011, both from end users buying applications and applications themselves generating advertising revenue for their developers. This is a 190 percent increase from 2010 revenue of $5.2 billion.
(Note: The "dumb" reference in Forrester's trend title is not meant to a slight at the intelligence of these new users, by the way, but the phones they've upgraded from: feature phones, also sometimes called "dumb phones.")

3) The Mobile Fragmentation Problem will Continue

Forrester says it expects fragmentation to continue, but it's not just referring to the multiple variations of a single OS. It means that some customers have smartphones, some have feature phones, some use apps, some use SMS, plus there are multiple OS's in existence, in multiple versions, with multiple screen sizes and there are a higher number of devices out there. In short: fragmentation. The costs of porting, maintaining and promoting apps will remain high.

4) The "Apps vs. Internet" Debate Will Continue...to be Irrelevant

Says Forrester, it's not a question of "either/or" when it comes to a choice between apps vs. the mobile Web, but both. Frequent and intense users of services like banking and brokerage will want curated experiences in the form of apps, but the Internet will remain the fallback for more occasional information and needs. Mobile developers frustrated with the costs of building mobile apps for multiple platforms should rely more on the Web. Even if HTML5 doesn't scale within the next 2 to 3 years, mobile browsing experiences are improving, the report notes. But for targeting the "SuperConnecteds" and "Entertainers" (referring to two types of mobile users the firm classified previously, referring to, respectively, heavy users and those who listen to music, watch video and play games), apps are still needed.

5) Mobile Marketing Spend will Surpass $1 Billion

Marketer will begin allocating dedicated resources to mobile in 2011. In the U.S., Forrester forecasts that marketing spend on mobile display ads and search will surpass $1 billion in 2011. Marketers will find quantifiable ROI on mobile for generating real leads, driving foot traffic, and selling products and services.

6) Mobile Will Increasingly Prompt Users to Interact with Their Environment

In 2011, NFC will begin to matter. The market will move away from the trial stage in regions where there is NFC infrastructure in place, but barriers will still need to be removed for the technology to really take off. These include consumer demand, education and business model issues. Other technologies like QR codes (a type of barcode) and augmented reality will prompt users to hold up their phones to interact with the world around them. These initiatives, however, will remain nice, but will help raise awareness of the new forms of interaction provided by mobile.

7) The Attention to 4G will Vastly Outweigh the Impact of 4G Networks

More operators will launch 4G networks in 2011 to a lot of buzz, but Forrester says to ignore the hype. "4G will have as little impact as 3G had when it launched in Europe and the U.S. in 203." It took nearly 7 years for half of mobile subscribers in those regions to have 3G capable phones, says the firm. Expect similar trends for 4G.

8) Companies will Invest First in Convenient Services for Consumers

Forrester says that mobile product and service professionals, particularly in the travel industry, will invest first to keep their most lucrative customers happy. And in the hierarchy of benefits that mobile offers - revenue generation, cost savings and convenience - convenience will reign during 2011.

9) Casual Gaming Will Continue to Boom

Smartphones have become powerful gaming devices for the mass market, and this trend will continue in 2011. In the premium mobile space, new business models based on subscriptions, microtransactions and in-app billing will expand from the games category into others, like music and news.

10) "Mobile" Will Mean More than Mobile Phones

Consumer adoption of tablets, eReaders, portable media devices and other mobile products has grown in 2010 and this will continue in 2011. Apps and services will need to work across devices and consumers will want ubiquitous access to content and services.  This will force service providers to sync content via the cloud to maintain a consistent experience across platforms.

VODA lagging behind in 3G...

Hoards of people are waiting for 3G – and a significant majority are waiting for affordable 3G(Telcos, please take note). But that’s not the point here. Only 2 private operators have rolled out 3G services as of now – and even that has had regulatory hiccups – for now though there is a status quo until the end of July. But there has been positive movement too in the last few weeks. Telecom service providers are busy chalking out deals with each other to ensure Pan India 3G availability on their respective networks. Recently Aircel too announced that it will be rolling out 3G services in the next 45-60 days.
Airtel, which was supposed to have launched 3G services by the end of the year, but had to postpone it has now hinted that 3G could be on its way soon. Reported by ET, Bharti Airtel CEO Sanjay Kapoor told the Press Trust of India that the company would be making an announcement about the commercial launch of 3G in the ‘next six to seven days’. Airtel won spectrum in 13 of the 22 telecom circles and is reportedly partnering with Idea and Vodafone to ensure a national footprint. Between the 3 of them they cover all circles except Orissa.
Postscript : Looks like the reports were true, Airtel has indeed launched 3G in southern Karnataka today and will complete the rollout by the end of March. The Airtel website does not have tariff’s up yet – except for some mobile specific plans. FoneArena is reporting some tariffs which are, well, pretty steep! Understandably people aren’t very thrilled – twitter search.
While DoCoMo, the first out of the blocks with 3G services has announced that parts of North Karnataka too will now have 3G coverage (Hubli, Dharward and Belgaum to be precise). There is plenty of buzz on twitter as far as 3G is concerned. From tweets claiming that all 3G signals are live in Pune to ones that say Airtel’s press conference in Bangalore today will see the launch of 3G services in Bangalore. Several people are also claiming to have received text messages from service providers about the arrival of 3G services. I got one from Vodafone on 19th January. Still no official announcement though. There are also reports that Idea is testing its 3G signal in Kerala. It had said, back in December, that it would begin its 3G rollout with Gujarat in early 2011.
As I said, things are certainly moving in the right direction for now. Hopefully all remaining Telecom companies will stick to their roll out schedules and India will have complete 3G coverage. I wouldn’t take anything for granted just yet though – tariffs and regulation could yet prove to be party poopers – at least initially.
Have you heard any more 3G reports/rumours? Let us know!

Switching to Operators Not So Easy despite MNP buZZ

Mobile number portability got off to a rocky start as customers complained they were unable to swap service providers and telcos accused rivals unfairly hanging on to top clients. Customers queuing up to switch operators without a change in cellphone numbers were told “servers were down” or there were technical glitches that prevented quick action on their request to desert their existing service provider.

Airtel customer SK Ghosh has been sending a text message for two days only to get a terse reply: “invalid entry”. ET spoke to a cross-section of customers across the country. All of them faced similar hurdles. The response from another service provider for subscriber in West Bengal was “no default configured”.

Vodafone Essar , which runs a countrywide network, said customer helplines were awash with complaints from angry subscribers of rival networks complaining their requests to make a switch fell on deaf ears. The telco plans to take up the issue with sector regulator Trai.

“We are getting complaints from customers who want to port in to us that they are not getting the unique porting codes from their existing service providers or there is a delay in the process. It is not appropriate to name any specific operator,” Samaresh Parida, Vodafone Essar’s director (strategy) told ET.

Reliance Communications , the country’s second largest telco by customers, also said its rivals were not processing requests to switch to the Anil-Ambani promoted company.

“I can confirm that RCom helplines have received umpteen complaints from (customers of rival networks) that their SMS requests were not being accepted by their present service providers. Most complaints emanated from Vodafone, Airtel and some Idea Cellular customers in Rajasthan, Maharashtra and Karnataka who been wanting to port into RCom,” said RCom’s president (marketing) for wireless business, Mahesh Prasad.

The CEO of Bharti Airtel , India’s largest telco by both customers and revenues, Sanjay Kapoor, said his company was not blocking customers’ request to switch to rivals. “There may be some technical issues, but we should not jump to conclusions, and allow the system to stablise,” he said.

Kapoor said Airtel would gain the most by the introduction of MNP. “Our revenue market share is far higher than our customer market share, an indicator of the quality of our subscribers. We have a credible track record for services and an enviable reach in terms of our networks and MNP will therefore enable us to get more customers,” he said.

He said eventually, a customer would be able to make a switch. “If a subscriber does not get a response, he will resend the SMS. It is not possible for any telco to block the process,” Kapoor added. According to Rajan Mathews, director general of The Cellular Operators Association of India, the body representing all GSM telcos, technical glitches were bound to crop up in the first weeks especially considering that scale of the project.

“No country with over 700 million cellphone customers and 14 operators has ever attempted such a project. Given the complexity involved, I can categorically state that there is no malicious intent by any operator to stall or delay porting requests. Besides, any telco that has complaints can always approach regulator Trai,” he added. source

Affordable Financial Services on Mobile

India's telecom regulator Trai wants to fix tariffs for banking and other financial services on mobile phones to ensure that this facility is affordable to the masses.

At present, market forces determine telecom tariffs in India, with very little intervention from Trai or the government. The regulator is of the opinion that 'the proposed framework for delivery of basic financial services is intended to promote financial inclusion, including transfer of funds under various government schemes and programmes targeted to poor people', which calls for regulating tariffs for such services.

"Tariff regulation would be crucial if adoption of mobile banking is to be encouraged especially among the unbanked segments of the population. In such a situation cost effectiveness of delivery of basic financial services through mobile phones becomes an important consideration. Every effort should be made to keep the provisioning of the services affordable for the target beneficiaries," the regulator said when launching a consultation process to gauge the industry's reaction to this proposal.

The consultation process will also enable the regulator to fianlise its recommendations on other policy issues that are vital for framing guidelines for mobile banking services.

Trai has also sought the industry's response on a recent government panel report, which had said that customers wanting to operate their accounts through cellphones must shell out a 2% commission to the bank.

The inter-ministerial group constituted to frame rules for banking services on cellular handsets had also said that that banks in turn must pay the telco a minimum of 2.25 per transaction or 1.4% of the total amount, while adding that the commission be gradually reduced to 1% over the 5 years. If the telco were to set up mini ATMs, and if the transactions were to happen through these, then banks must pay the mobile phone company a minimum of 3 per transaction or 2.25% of the amount, the report had added.

Earlier this month, the country's two leading cellphone companies announced separate tie-ups with the largest banks here to provide financial services on handsets. Bharti Airtel , the country's largest mobile phone company by both customers and revenues had formed a 49:51 joint venture with State Bank of India to provide mobile-banking and other financial services, and Vodafone Essar Ltd , majority owned by UK's Vodafone, unveiled a similar deal, by entering into a JV with ICICI Bank , India's largest private sector bank.

Other mobile service providers are also slated to announce similar tie-ups with banks over the next couple of months.

SBI-Airtel is targeting to get two million such accounts on a yearly basis which would be easily scaled up to five million accounts a year owing to the bank's wide reach and Airtel's 1.5 million touch points, Bhatt added. Similarly, ICICI said it plans to take use the strength of Vodafone, which also has over 1.5 million retail points, for acquiring customers and servicing them.

India has over 700 million mobile connections with a penetration of more than 60%. In comparison, a significant majority of the country's population does not have access to banking services. Latest estimates by the Central Bank say that only 50,000 of the 600,000 villages in the country have access to finance.

229% growth in Q4 for Spice i2i

Asian mobile internet and VAS company Spice i2i reported a turnover of USD 97.4 million for the fourth quarter ended 31 December 2010, up 229 percent from USD 29.6 million in the year-ago period. The increase is attributed to the mobility business of the group. The mobility business contributed USD 74.7 Million to the turnover in this quarter. Inline with increases in revenue, direct service fees incurred and costs of goods sold had also increased by USD 62.9 million to USD 80.6 million in Q4. These increases were not in proportion to the increases in revenue, due to change in sales mix (revenue generated from the mobile handsets business has comparatively higher cost of goods sold and lower margin as compared to the voice business). Similarly, personnel costs, infrastructure costs, depreciation of property, plant and equipment, amortisation of intangible assets and finance costs had increased in comparison to last year's same period, resulting from the acquisition of the subsidiaries, Spice BPO Services, Bharat IT Services, and Newtel and incorporation of subsidiary Spice-CSL. Profit, dropped 57 percent to USD 1.8 million versus USD 4.1 million a year earlier. Spice i2i also announced it aims to raise SGD 151 million in a rights issue. Part of the rights proceeds are intended to be used for the proposed acquisition of the remaining 35 percent of the shares in the issued share capital of the Spice-CSL joint venture to make Spice-CSL a 100 percent owned subsidiary. The company also plans to acquire other companies comprised in the CSL Group that are involved in the ecosystem related to mobile handsets and mobile internet like VAS, retail, after sales services etc. The rights issue is underwritten in full by DBS Bank

216 crore to GOVT from penalties on TELCOS

The government has collected nearly Rs 216 crore in penalties from new telecom service providers for not rolling out their networks within the stipulated timeframe after getting licence and spectrum.

"We have received Rs 215.6 crore as liquidated damages from the new service providers for missing out roll-out obligations out of total Rs 342.6 crore demand till January 21," Telecom Secretary R Chandrasehkar told PTI.

The DoT had issued 119 notices to new telecom operators for missing their network roll-out obligations last month and imposed hefty penalties on them.

He further added, "The companies who had moved to TDSAT are also expected to pay this (liquidated damages) as soon as possible."

As per sectoral regulator Trai's guidelines, in case showcause notices were issued for cancellation of licences, the operators would be given 60 days time to respond to the notices before a final decision is taken.

In the case of penalties imposed for for missing roll-out obligations, the operators were supposed to make payment within 15 days of the notice.

As per the conditions of the licences, the licencees were required to roll-out their services in 90 per cent of service areas in metros and 10 per cent in district headquarters within 12 months (52 weeks) from the date of award of licences.

Earlier, telecom tribunal TDSAT had asked Uninor and Videocon Telecom to pay a part of the penalty imposed on them for missing their roll-out obligations.

TDSAT's interim order followed a plea from Videocon challenging the demand notice issued by the DoT, which sought liquidated damages (LD) over the telecom firm's failure to roll out services within the stipulated period of one year after the grant of a licence.

The DoT had issued the notices to Videocon on January 1, demanding LD for four circles.

In a similar case, TDSAT had directed Uninor to pay 60 per cent of the penalty amount demanded by the DoT over the service provider's failure to roll-out services in 18 circles.

As per the conditions of the Unified Access Service Licence (UASL), the telcos are required to roll-out their networks within one year from the date of allocation of spectrum.

According to the agreement, in case new licencees fail to roll-out services within the stipulated period, the DoT is entitled to impose LD on the operators, or even cancel their licences.source

MNP kicks off a lot of BUZZ created !!!, but few shifting yet

 After waiting for at least five years, most Indians finally got the ability to change their mobile service provider without changing their number on Thursday, but very few actually did, said industry watchers.
But that didn’t stop the phone companies from trying to generate as much buzz as they could, both online and offline.

 After waiting for at least five years, most Indians finally got the ability to change their mobile service provider without changing their number on Thursday, but very few actually did, said industry watchers.
But that didn’t stop the phone companies from trying to generate as much buzz as they could, both online and offline.
Mobile number portability (MNP) was the talk of the Indian microblogosphere, as the move came into effect. #MNP topped the list of trending topics for India, while “mobile number portability” was third.

A lot of the tweets were generated by the telcos themselves. Bharti Airtel Ltd (@airtel_in) promised potential crossover customers “a nice surprise ;-)” and later quoted a Hindustan Times MNP survey as saying that one in three consumers would switch to it. Meanwhile, Tata DoCoMo (@tatadocomo) cited a survey by @indiasurveys (which conducts surveys on Indian news issues on Twitter) that said 50% of all Airtel’s consumers would switch to its services.
Tata DoCoMo, which had the most aggressive Twitter campaign by far, also initiated a hashtag campaign named #switch2TataDoCoMo, which it inserted into all its tweets on MNP. A typical tweet by the company read, “f ur lookin to switch then ensure its to a #3G ready network, who believes in cool offers..aka us ;-) #Switch2TataDoCoMo #MNP”. The firm also adopted an informal tone in its replies to individual tweeters, often referring to them as “buddy” or “pal”.
Idea Cellular Ltd, which ran an aggressive television campaign asking people to “Get Idea”, was also active on Twitter, though not in quite the same manner as Tata DoCoMo.
Vodafone Essar Ltd (@vodafone_in) also had a restrained approach, although the company had been running a campaign to get consumers to switch to its services over the last few days. There was barely any mention of #MNP, with the company choosing to respond to customer queries and complaints instead.
Meanwhile, consumers used the opportunity to either praise or hit out at their mobile phone operators, with many of them announcing who they were planning to switch to and why. One user @krrish_vn said, “Every service provider hav their own probs..Lets see who take advantage...and who loses....Anyway Bsnl will lose a valble customer.nd its me”. There was also a lot of hilarity over a text message sent by Airtel to its consumers, which thanked customers for being on “India’s network” and the usual number of quips, slogans and witticisms. The top tweet for #MNP by @krishashok read “Can I get Aircel’s coverage, Airtel’s call centre, Vodafone’s EDGE and BSNL’s bill?”
The MNP wars were not restricted just to Twitter. Vodafone, Tata DoCoMo and Airtel have all bought advertising space on Google that appears on the result pages on searches for either MNP or mobile number portability.
Telcos went into overdrive offline as well. Many have rolled out massive advertising campaigns, while some of the operators have launched aggressive below-the-line campaigns as well.
“Many of the operators have been pushing their existing discounts along with promises of free gifts among other things,” said a telecom expert with one of the larger consulting firms. “Initially, many of them are launching mass-market schemes to attract the initial movers en masse. Later, the operators will launch specific, targeted schemes,” added this person, who did not want to be identified.
One winner that seems to be emerging from the battle is the distributor.
“The operators have started offering the distributors some Rs150-200 for every ported subscriber, while they are also looking at trade schemes,” a Mumbai analyst said. Trade schemes refer to gifts and rewards for distributors who push certain products to consumers. “One operator is offering subscribers a free watch to port,” he added, asking not to be identified.
There may be some impact on the prepaid market thanks to the distributor push, but that won’t last for long, experts said.
In any case, there didn’t seem to be much of an impact on the consumer base on the first day.
“Most subscribers that are looking to port have decided to wait a few days. There is a novelty aspect to the whole thing and many who have decided to move are weighing their options,” said a senior executive with one of the larger telecom firms, who did not want to be identified.
“There is a general inquisitiveness among the consumers and many are looking into the various offers. But the operators have gone into overdrive with their marketing schemes,” a second Mumbai-based analyst said, speaking on condition of anonymity.source