Sunday, July 10, 2011
China Mobile puts more pressure on Unicom
Safaricom’s mobile money services rakes in N1.34trn
...As MTN prepares to launch mobile money
Nigeria’s telecom operator, MTN prepares to launch mobile money services in August 2011 in a bid to re-enact the success story of Safaricom, a telecom company based in Kenya. Safaricom runs the biggest money service in Kenya called “M-Pesa,” following its transaction of a Sh727.8 billion (N1.34 trillion) last year.
BusinessDay learnt that when MTN mobile money service is launched, it is expected to cover 40 million subscribers, mostly the high number of unbanked Nigerians that it will bring into the scheme, which will make it the biggest in Africa. The launch will coincide with the take-off date for the national mobile money scheme being superintended by the Central Bank of Nigeria.
Less than 20 percent (28 million) of Nigeria’s 140 million people currently operate bank accounts. The country’s 24 commercial banks reportedly have a network of less than 4,000 branches. Meanwhile, there are over 90 million active phone lines in the country, with over 95 percent of them being mobile lines.
The M-PESA service which the MTN mobile money will be fashioned after enables users to send and receive money through their mobile phones. The Central Bank of Kenya report shows that the M-Pesa service in Kenya saw over 305 million transactions carried out in the year, according to 2010 annual bank supervision report.
The report notes that “M-Pesa was still the most widely used method of mobile money transfer as evidenced by the 305.7 million transactions effected and valued at Sh727.8 billion in the year.
This means that on average, the service moved Sh2 billion daily. “This is huge but it’s possible…people are using a lot of mobile money now,” said Telkom Kenya’s communication manager Angela Mumo. The figure is likely to rise even further this year, according to Safaricom’s chief executive officer, Bob Collymore. “The numbers are certainly increasing,” said Collymore on phone yesterday. “Everybody is using M-Pesa.”
Person-to-Person transactions for March 2011 stood at Sh47 billion,(N80.8 billion) according to figures released during the investor briefing in March.
Since being launched in March 2007, M-Pesa’s popularity has been growing from strength to strength. For instance, the number of users grew from 6.1 million in 2009 to 9.4 million in 2010 and 13.8 million users as at March 2011. On revenue side, Safaricom made some Sh11.78 billion(N20.78 billion) from M-Pesa last year up from Sh7.56 billion( the previous year, a 56 per cent growth.
According to Safaricom’s annual report for the year ended 31 March 2011, Cumulative value of transactions from inception is Sh828 billion. M-Pesa competes with services such as Airtel Money, Orange Money and Yu-cash. “In only four years of existence of mobile phone money transfer services, four mobile operators have enrolled over 15 million customers,” the CBK report says.
According to Mumo, Orange Money transacted over Sh50 million on the first month of launch late last year but the figure could now be over half a billion. “Orange Money allows bigger transactions and that is why we want to partner with Saccos,” Mumo said.
The popularity of M-Pesa has seen the service attract international recognition. The service won the Mobile Money for the Unbanked Award at this year’s Global Mobile Awards 2011 in Barcelona, Spain. The service is also being tried in other countries. In Tanzania, where the product was launched by Vodacom, M-Pesa has 1,6m active and 7 million registered users.
The service has however failed to pick in South Africa where it was launched in August last year in partnership with Vodacom. Last month, Vodacom disclosed that it has only managed to register about 100, 000 M-Pesa users in SA so far. Vodacom said M-Pesa has fallen short of its expectations for the product. When it unveiled the product, Vodacom said it expected to sign up 10 million customers within three years. source
Airtel 3G International video calling service for India
A month after the Indian government set a deadline to put a monitoring mechanism in place for intercepting video calling on a real-time basis, Airtel has come up with its latest offering for the same. The announcement of the Airtel 3G International video calling service follows the launch of its 3G services in the north eastern belt earlier this month.This new service claims to connect India with more than 227 countries and allows users to share important moments of their lives in real time with people abroad through 3G. Customers of the company’s 3G services can now take advantage of the Airtel internet on 3G to make international video calls and share information instantly.
Atul Bindal, President of Mobile Services, Bharti Airtel elaborated by saying, “At Airtel, it is our constant endeavor to introduce services that enrich the lives of our customers. As we take the lead in launching International Video Calling on 3G in India, this marks the beginning of a new era of next generation communication in the country – one that will help mobile customers break the barrier of boundaries and instantly connect with their personal and business network across the world. Given the high demand of video calling services seen since the launch of Airtel 3G services, we are confident that our customers will see great value from the availability of this capability for international calls as well. We invite our 3 million plus Airtel 3G customers to enjoy this exciting experience.”
To make ISD video calls, the receiver as well as the sender is required to use 3G network and possess a front facing camera in their 3G handsets. By virtue of this service, callers can interact face-to-face with their friends and relatives residing in any country where this service is applicable.
The Airtel 3G International video calling service is priced at Rs. 20 per minute for countries like UAE, Singapore, Malaysia, Saudi Arabia and Oman. While for Canada, Bangladesh and USA, the price is Rs. 14 per minute.source
Saturday, July 2, 2011
Top 10 gadgets
Apple iPhone 4
Said to be the world’s thinnest smartphone, it was launched in India this May. It has a 3.5-inch retina display and 5-megapixel camera.
Price: Rs 35,000
Motorola Xoom
tablet PC, though smaller in size, has
Price: Rs 40,000
source
Said to be the world’s thinnest smartphone, it was launched in India this May. It has a 3.5-inch retina display and 5-megapixel camera.
Price: Rs 35,000
Motorola Xoom
tablet PC, though smaller in size, has
PC-like functionalities. Set to hit the market anytime soon, Xoom, powered by Android platform, has a 10.1-inch HD display, 1GHz dual-core processor, a five megapixel rear-facing camera and a two megapixel front-facing camera.
Price: Rs 40,000
Samsung Galaxy S2Launched this June in India, it is one of the most sought-after Android phones. It has 32GB built-in memory, a 8 megapixel camera, HD video playback and recording.
Price: Rs 30,000
Price: Rs 30,000
New Mac Book AirThis has been touted as the laptop of the future. Apple’s two new MacBook Air-11.6-inch and 13.3-inch have replaced mechanical hard disks and optical drives with internet services and solid state flash storage. It supports up to seven hours of battery life and up to 30 days of standby time.
Price: Starts at Rs 59,900
Price: Starts at Rs 59,900
Sony Playstation VitaThis portable entertainment system offers motion and touch-based next generation gaming. It has a 5-inch multi-touch display at the front and a multi-touch pad on the rear. Offering new game play experiences, it features two analog sticks, which enable a wider range of game genres.
Price: Starts at Rs 12,500
Price: Starts at Rs 12,500
Samsung Google Nexus S
This legendary high-end smartphone that arrived in April has a 4-inch contour display and runs on Google 2.3 Gingerbread OS, powered with 1GHz Hummingbird processor with 16GB internal memory.
Price: Rs 30,400
This legendary high-end smartphone that arrived in April has a 4-inch contour display and runs on Google 2.3 Gingerbread OS, powered with 1GHz Hummingbird processor with 16GB internal memory.
Price: Rs 30,400
Apple iPad 2
Apple left the cat out of the bag in May, and it surpassed competitors with its fine display quality. The new version is thinner, faster and lighter than the previous one.
Price: Starts at Rs 29,500
Apple left the cat out of the bag in May, and it surpassed competitors with its fine display quality. The new version is thinner, faster and lighter than the previous one.
Price: Starts at Rs 29,500
BlackBerry PlayBookOne of the most sought-after gadgets of the year, it hit Indian markets earlier this week. Featuring Wi-Fi support, it is available in 16 GB, 32 GB and 64 GB models. The 7-inch tablet is flat, black, and minimal in its design. It claims to provide Flash and HTML applications for a smooth browsing experience. It also has multi-touch capacitive display screen and dual camera.
Price: Starts at Rs 27,990
Price: Starts at Rs 27,990
Nintendo Wii U
Unveiled in June, this next-generation game console features a 6.2-inch touchscreen controller. It can display information or provide different experience on its screen that is not visible on the TV.
Price: Yet to be announced
Unveiled in June, this next-generation game console features a 6.2-inch touchscreen controller. It can display information or provide different experience on its screen that is not visible on the TV.
Price: Yet to be announced
source
Pricing A Gig For Data
They are not alone in this dilemma. Operators worldwide have been scratching their heads for the past decade in an attempt to decide the optimal pricing model for data.
The consensus seems to be that they still haven't got the pricing right. CEOs such as Vodafone's Vittorio Colao remark with frustration that heavy data usage congests networks with users often paying less than their monthly voice and SMS contracts.
To put things in perspective, let's look back a decade when many of us were looking to justify the very high prices of 3G licences in Europe and North America. We produced models showing 3G subscribers would pay around $10 to watch a football or cricket match on their tiny 3G handsets (which barely existed then). What a load of nonsense that proved to be.
But that period of frenzied financial modelling started a pricing debate which is still raging today.
A decade on, we now have a range of versatile and powerful devices from which we can enjoy data and video. In addition to the 3G mobile handset and laptop, we now have the broad range of tablets, led by the iPad, which are fuelling data growth.
Instead of watching streamed football matches, we are now watching video on demand via YouTube and accessing practically any Internet site in the world at a time of our choosing.
For the operator, the download of bandwidth intensive data can congest networks which, as users in the likes of Mumbai and Delhi know, are often clogged at peak times just with voice and SMS traffic.
The rollout of 3G infrastructure over the past year by India's leading operators has helped alleviate congestion somewhat but as the rate of 3G subscriber growth accelerates, networks will start to become congested once more.
Thus the dilemma facing operators price a gigabyte of data to attract subscribers and stimulate usage but not to the extent of clogging networks.
Today in India, the 3G players seem to be pricing 2GB of data per month at a price of around 750 rupees ($17). This rate seems reasonable in the UK for example my data tariff with Vodafone is £12.50 per month ($19).
In Hong Kong a very mature and highly competitive market it is now possible to obtain an unlimited data package for US$14 per month.
There are differences between the UK/Hong Kong and India 3G markets though. The UK market is mature, with around 36 million 3G subscribers as at April 2011. Hong Kong had 6 million subscribers at the same date. India's 3G market only started in early 2011.
Here is where the dilemma kicks in. The UK and Hong Kong operators should theoretically be aiming to cool off usage through edging up data tariffs whereas their Indian peers should be stimulating usage. Yet the tariff packages are broadly the same.
These prices are for domestic data usage. When travellers want to use their devices on overseas travel, data tariffs can be incredibly high similar to international voice charges 20 years ago.
As an example, I was surprised to have been charged £25.50 ($39) per day by Vodafone for a maximum of 500MB of data when on a recent business trip to South Africa. And this was over VodaCom Vodafone's 65 percent owned subsidiary.
So Vodafone are probably underpricing me in my home market but grossly overcharging me when I travel overseas.
India's operators are busy analysing relatively mature 3G markets internationally for pricing guidance. But as the above example shows there are still substantial inconsistencies in supposedly mature markets.
The message for potential 3G subscribers in India is get signed up now. Network operators want your business and tariff levels compare reasonably on an international basis.
Be careful though when using your device overseas for mobile data as your bill for daily usage will dwarf your domestic monthly bill, at least for now.
The writer is the global head, telecoms, media and technology at Standard Chartered. The views expressed are the author's own.source
Thursday, June 30, 2011
The dispute between defence and telecom on vacating spectrum must end
After the ministries of defence and telecom agreed, in May 2009, to make 45 MHz of spectrum used for defence purposes available for commercial 2G and 3G mobile services, there has been regular exchange of letters between the two ministries, but no action to release spectrum. The ministry of defence says that its commitment was subject to the department of telecom ( DoT )) laying a Rs 10,000 crore optical fibre network for it and, further, waiving any charges for spectrum use for defence purposes.
These conditions have not been met and so Defence is not in a position to release any spectrum now. At a time when the number of subscribers continues to grow at a rapid pace and spectrum availability squeezes telecom companies' ability to offer quality service, this is not an acceptable state of affairs. When two ministries of the government are unable to reach an agreement on a matter that concerns both of them, it should be resolved through an intervention by the Prime Minister . And the matter brooks no delay.
The effort should be to provide every Indian with highspeed data connectivity, for India to realise the productive potential of her 1.2 billion people. Developed countries are making sound progress in this regard; the French now deeming broadband access a fundamental right and the US rolling out a national broadband plan to provide every home with 100 Mbps connectivity (in India, mere 256 kbps still qualifies as broadband). It is also criminal to permit state-owned broadcaster Prasar Bharati to squat on a huge swathe of spectrum that it uses for analogue terrestrial broadcast.
There is every need to fully fund and accelerate Prasar Bharati's desultory digitalisation programme, so as to release additional spectrum for mobile networks. India has to target achieving a high-speed data network reaching all parts of the country, on which voice is just one functionality. For meaningful inclusion of the poor in the growth process, such data networks are imperative, to provide banking, health and education services. Wireless would be an integral part of it. The PM must ensure availability of the needed spectrum, amidst the squabbles among his ministers.
These conditions have not been met and so Defence is not in a position to release any spectrum now. At a time when the number of subscribers continues to grow at a rapid pace and spectrum availability squeezes telecom companies' ability to offer quality service, this is not an acceptable state of affairs. When two ministries of the government are unable to reach an agreement on a matter that concerns both of them, it should be resolved through an intervention by the Prime Minister . And the matter brooks no delay.
The effort should be to provide every Indian with highspeed data connectivity, for India to realise the productive potential of her 1.2 billion people. Developed countries are making sound progress in this regard; the French now deeming broadband access a fundamental right and the US rolling out a national broadband plan to provide every home with 100 Mbps connectivity (in India, mere 256 kbps still qualifies as broadband). It is also criminal to permit state-owned broadcaster Prasar Bharati to squat on a huge swathe of spectrum that it uses for analogue terrestrial broadcast.
There is every need to fully fund and accelerate Prasar Bharati's desultory digitalisation programme, so as to release additional spectrum for mobile networks. India has to target achieving a high-speed data network reaching all parts of the country, on which voice is just one functionality. For meaningful inclusion of the poor in the growth process, such data networks are imperative, to provide banking, health and education services. Wireless would be an integral part of it. The PM must ensure availability of the needed spectrum, amidst the squabbles among his ministers.
Altruist Group acquires stake in Vegam Solutions
The Altruist Group, which owns the mobile marketing firm Mobile2win, has acquired a minority stake in the Mumbai-based value-added services (VAS) provider Vegam Solutions. Altruist has not disclosed the valuation and the percentage of stake acquired in the company.
Vegam Solutions offers voice-based gaming services. The VAS firm has already developed 10 games related to racing, card games and puzzle-based games, based on the Interactive Voice Response (IVR) system. The firm will distribute or make available its games through various telecom operators.
"The gaming service is targeted towards mobile users who do not own high-end phones or smartphones. To begin with, we have tied up with Tata Indicom and Tata Docomo to offer voice-based gaming services. Later, we will tie up with more operators," says Ingersol Jayakumar, founder, Vegam Solutions, in conversation with afaqs!. Prior to this, Jayakumar was national business head, VAS, Tata Teleservices.
Speaking to afaqs!, Rajiv Hiranandani, executive director, Altruist, says, "The investment is in the form of seed capital and aimed at kick-starting the foray of this company into voice-based gaming solutions." He indicates that Mobile2win will offer voice-based gaming solutions to marketers, as well.
Hiranandani adds, "Mobile VAS is a dynamic industry and the objective of this investment is to also get more entrepreneurs into the fold, thereby keeping up the pace of innovation and new ideas."
Jayakumar also reveals that Vegam Solutions plans to venture into the retail space of the value-added services business. He says, "We will make available various value-added services such as caller tunes, ringtones, wallpapers and other content subscription services of various operators on a single platform in the mobile and web space." source
Tuesday, June 28, 2011
Facebook Music Will Be a Transformative Event for Streaming and Mobile Services
Leaked information about a very elaborate integration of streaming music services into the Facebook platform has created quite a buzz in the music industry over the last few days and it's easy to see why. In the same way that Facebook embraced gaming to extend its social networking reach, it appears to be on the verge of adding a social networking element to the music listening experience and the implications for the industry are enormous.
One need only look to the impact Facebook has had on the gaming industry, where a company like Zynga (game developer that earns revenue almost exclusively through Facebook) went from startup to multi-billion dollar company in less than three years. The success of Zynga and other companies that develop social network inspired and distributed games has led to an enormous flow of capital into the companies that are operating in the social media gaming space, with over $1 billion in funding flowing into these companies in 2010. Facebook's embrace of gaming spawned the birth or rebirth of several companies with near half billion dollar or more valuations including Zynga, Playdom, PopCap, and now hundreds of other startups that took in a record $1.05 billion in funding last year.
Of course, the funding record set in 2010 will likely be exceeded by a substantial margin in 2011 if current trends continue. Facebook's social media gaming became an industry in itself and the companies that were early to the party are now worth hundreds of millions on the low end and as much as $10 billion (Zynga's reported valuation from recent $500 million funding) on the high end. When you consider the far reaching appeal of music generally and consider the fact that 46 of the top 100 pages on Facebook are music related, one gets the sense that music could rival gaming in its ability to get users to interact more and spend more time on the site. We believe such a move by Facebook management reflects this understanding, along with its recognition that an integrated music offering could substantially increase the value of Facebook prior to its IPO next year.
In his GigaOM article earlier this week, Om Malik listed several features that Facebook may be planning, based on its contacts with several music services -
* In the left-hand column, right where Facebook lists Photos, Friends, Places, Groups, Deals, Pages, and Games, you will find a new tab called Music. This tab will show up if a user has listened to music with one of Facebook’s partner music services.
* Clicking on this new tab will open a page called Music Dashboard.
* The Persistent Playback/Pause Button at the bottom of the Facebook page, where currently you have the chat icon. This button essentially is like a quick snapshot and controller of the music experience.
* A page with snapshot of all the songs you have listened to on any specific service and also your top tracks and the number of times you have listened to those tracks.
He also indicated that the music dashboard would offer notifications that show if your friends have listened to songs recommended by you or on your profile, a list of songs heard and recommended by your friends, a list of "Top Songs" from friends, Top Albums from friends, recent listens from your friends, and a "happening now" ticker that shows what is happening in your social and musical universe, including songs that your friends are playing.
While the discussions that have followed the Facebook Music revelations this week have usually included Pandora (NYSE: P), Last.fm and other popular internet radio type services, we believe that the features described necessarily would require "on demand" licensing that allows a listener to choose a specific song to be played, as distinct from Pandora style services' DMCA licensing that restricts the number of times a given song, artist or songs from a particular album can be played within a given time period. While there are certainly iterations of these projected Facebook Music features that could weave in a user's Pandora, SiriusXM (Nasdaq: SIRI) or Last.fm style listening, such features would be very limited in scope under their current licensing and would almost serve to highlight the advantages of using one of the "on demand" services.
Thus, we believe that a Facebook Music offering in any way similar to what is currently being discussed would require integration with the "on demand" streaming music services . This could be a windfall for the companies that already have the necessary US licenses to offer "on demand" music streaming from the Big Four music labels, as Facebook will almost overnight make their services a "must have" Facebook application that could achieve that status virally in a fraction of the time it took for Apple's (Nasdaq: AAPL) iTunes to achieve its lofty status. To say that this would be transformative for these companies would be an understatement and one need only look to the ascension of Zynga and the companies that were early participants of the Facebook gaming phenomenon to understand why.
Given the likely impact a Facebook Music offering will have on building the market for streaming music services, we could envision a scenario similar to what occurred with social media gaming companies evolving, where we begin to see an enormous flow of capital and a huge upward adjustment to the valuations accorded to the players in that space. The one major difference that makes this situation unique and potentially more of a blockbuster for the on demand streaming music companies is that there are currently only five of them and the barriers to entering that space are quite large.
The largest barrier to entering this space is obtaining the necessary "on demand" streaming licenses from the Big Four music labels. It has been widely reported that the European streaming music service Spotify has procured three of the four licenses necessary and that they are aiming for a July launch in the US, but it has taken Spotify almost 2 years past the original expected launch date to get the licensing deals done. Google (Nasdaq: GOOG) reportedly tried for over a year to work out a licensing deal with the labels before walking away and Amazon (Nasdaq: AMZN) found the process so daunting that they are tying to circumvent the process altogether. If some of the most creative minds (not to mention the best financed) in the American industry cannot easily obtain these licenses, it's quite unlikely that we will see a large crop of competitors emerge to fragment the market for "on demand" streaming music.
There are currently only five companies that are operating under US licenses that allow "on demand" streaming and Spotify will likely be the sixth. All of these companies should benefit tremendously as the "buzz" around a Facebook Music offering will likely be a rising tide that raises all ships and even makes consumers that are targeted through non Facebook channels more familiar with and likely to buy into the concept (renting access to all music vs. ownership of a small number of songs). Further, we believe this move by Facebook could create a market for streaming music services that is vastly different (particulary in terms of mass market consumer adoption) than what we see today, and in the process create billions in value for existing streaming music companies. Here is a quick breakdown of each of the six companies, ranked in order of US subscribers -
1) Rhapsody is a Joint Venture between Viacom's (VIA) MTV and RealNetworks (Nasdaq: RNWK) and is generally considered the grandfather of streaming music services because it has been operating a streaming music service for over a decade. Rhapsody is also the largest "on demand" streaming service in terms of subscribers with a reported 750,000, the majority of which it has acquired through more traditional marketing channels. Rhapsody has been slow to offer the more innovative social media integration features that the smaller players in the space have offered. Regardless, the company will be a huge beneficiary of the expansion of this market that we expect to occur with the introduction of Facebook Music and it could not come at a better time as the company is rumored to be preparing for an IPO in the first half of 2012.
2) Napster has the second largest base of users in the US and it is wholly owned by retail powerhouse Best Buy (BBY). Though it will certainly benefit from the industry's rising tide, the lack of social media features and conglomerate speed innovation will likely put Napster lower on the list of who will benefit the most from a Facebook Music service. It has also occurred to us that Napster may be only slightly more popular than the Winklevoss twins down at Facebook HQ (given the Sean Parker factor).
3) Kazaa has the third largest base of subscribers (80,000 range) and among the best social media integrations with features that allow you to follow your Facebook friends or other Kazaa users, see what they are listening to and play songs from their playlists. Kazaa's cutting edge social media offerings and its name recognition (we wonder how many of Facebooks' 750 million users were among the 800 million who downloaded the original Kazaa) give it the potential to be one of the biggest winners of the Facebook Music service.
Atrinsic (Nasdaq: ATRN) acqquired the Kazaa music service recently and it is expected to change its name to Kazaa in a few weeks. Additionally, the company just hired music industry veteran Stuart Goldfarb (CEO who guided the online transition of BMG Music Club and Columbia House) to be Kazaa's CEO and original Skype board member Mark Dyne is Kazaa's largest shareholder and a member of its BOD. Kazaa may benefit from being one of only two streaming music services to be publicly traded (Pandora is the other) and it is the only publicly traded "on demand" streaming music service.
4) MOG - With industry Rock Star David Hyman, a board stocked with industry heavy hitters and a service that offers very competitive social media interaction options, the tiny MOG should be a big beneficiary of Facebook Music. The company does not release its subscriber numbers, but we believe them to be a fraction of the size of Kazaa, Napster and Rhapsody due to the 20112 revenue projections given in its recent funding pitch and industry scuttlebutt that puts its subscriber count at about 20,000. MOG has been front and center as an innovator and is making an aggressive push with auto manufacturers.
5) Rdio - RDIO is like MOG in many respects, though it is perhaps even a step ahead in terms of social media features. Rdio offers all of the social media interaction features of Kazaa, but is even more user friendly for certain aspects (like creating playlists). Rdio has been one of the leading innovators in the space and its highly regarded leadership (CEO Drew Lerner) and backers (Skype Founders Friis and Zennstrom) should push Rdio to the front of any significant industry developments (like Facebook Music) and we expect Rdio to be among the biggest winners.
6) Spotify - last on this last only because it has no paying US subscribers as of this writing, we fully expect Spotify to quickly ascend this list and see it as the most likely to be the "Zynga" of the group, if one such dominant player is to emerge. Spotify already has the largest base of subscribers (1 million as of the last report) of any of the services, though it has only been offered in Europe. Spotify already has significant integration with Facebook for its European subscribers and more importantly, key executives of Facebook have invested in Spotify and many of the early reports about Facebook Music suggested that Spotify might be the only service offered. With its recent round of funding ($100 million) by several very high profile venture capitalists and the media's love affair with the service, we would not be surprised to see Spotify take a disproportionate share of the streaming music market we expect to evolve around Facebook.
Those wishing to invest in this space have very few options. Venture capital funding of the two smaller players MOG and Rdio have already pushed their valuations to the $20 - $30 million range, these valuations are dated and the recent flow of money into the media space generally (ie Pandora's $2 billion+ IPO) suggest that the valuations would be much higher IF there were a public market price available to price the shares. Investors may have an opportunity to get exposure to this space later this year, or early next year, if Spotify and/or Rhapsody move forward with an initial offering, but these will likely be at valuations that fully reflect the value that Facebook Music is creating, although a sub $10 billion Spotify IPO valuation would arguably leave a little left on the table for retail investors (at least according to Daniel Ek's "tens of billions" valuation).
Kazaa is currently the only publicly traded company in the on demand mobile/streaming music space. It is very closely held (the Big 4 Music Labels, insiders and affiliated hedge funds own over 80% of the shares) and there are only 1.1 million shares in its public float. Its currrent market cap ($15m as of the close on Friday) has not grown to match the others in the space, likely due to its lack of recognition (its name change to Kazaa is likely still several weeks away), lack of Wall Street analyst coverage and the fact that it is so small and so closely held that it would be difficult for an institutional investor to build a position that would be meaningful. Thus, the investing options to take advantage of this move by Facebook are few, but it could be quite rewarding tor those who are able to get equity in one of these five players before their valuations reflect it.
In summary, we believe the launch of Facebook Music will be a transformative event for the nascent mobile/streaming music services sector and we expect the existing "on demand" streaming music companies to be the biggest winners. If Facebook indeed takes these steps, it will likely catapult the existing streaming music services like Spotify, Rhapsody, Napster, Kazaa, MOG and Rdio from their current music buff/early adopter user base to a mainstream "must have" application used by millions that could rival Facebook's game offerings as the most used apps on the Facebook platform.
We believe that a Facebook Music dashboard that incorporates the "on demand" streaming music companies will result in a staggering increase in the number of subscribers to those services and possibly make all of them worth a multiple of their pre-Facebook Music valuation, possibly creating the next Zynga or at least several new billion dollar companies.source
Disclosure: I am long ATRN.
Additional disclosure: Author is registered as an accredited investor with Second Market and has made bids to acquire stakes in Rdio and MOG.
One need only look to the impact Facebook has had on the gaming industry, where a company like Zynga (game developer that earns revenue almost exclusively through Facebook) went from startup to multi-billion dollar company in less than three years. The success of Zynga and other companies that develop social network inspired and distributed games has led to an enormous flow of capital into the companies that are operating in the social media gaming space, with over $1 billion in funding flowing into these companies in 2010. Facebook's embrace of gaming spawned the birth or rebirth of several companies with near half billion dollar or more valuations including Zynga, Playdom, PopCap, and now hundreds of other startups that took in a record $1.05 billion in funding last year.
Of course, the funding record set in 2010 will likely be exceeded by a substantial margin in 2011 if current trends continue. Facebook's social media gaming became an industry in itself and the companies that were early to the party are now worth hundreds of millions on the low end and as much as $10 billion (Zynga's reported valuation from recent $500 million funding) on the high end. When you consider the far reaching appeal of music generally and consider the fact that 46 of the top 100 pages on Facebook are music related, one gets the sense that music could rival gaming in its ability to get users to interact more and spend more time on the site. We believe such a move by Facebook management reflects this understanding, along with its recognition that an integrated music offering could substantially increase the value of Facebook prior to its IPO next year.
In his GigaOM article earlier this week, Om Malik listed several features that Facebook may be planning, based on its contacts with several music services -
* In the left-hand column, right where Facebook lists Photos, Friends, Places, Groups, Deals, Pages, and Games, you will find a new tab called Music. This tab will show up if a user has listened to music with one of Facebook’s partner music services.
* Clicking on this new tab will open a page called Music Dashboard.
* The Persistent Playback/Pause Button at the bottom of the Facebook page, where currently you have the chat icon. This button essentially is like a quick snapshot and controller of the music experience.
* A page with snapshot of all the songs you have listened to on any specific service and also your top tracks and the number of times you have listened to those tracks.
He also indicated that the music dashboard would offer notifications that show if your friends have listened to songs recommended by you or on your profile, a list of songs heard and recommended by your friends, a list of "Top Songs" from friends, Top Albums from friends, recent listens from your friends, and a "happening now" ticker that shows what is happening in your social and musical universe, including songs that your friends are playing.
While the discussions that have followed the Facebook Music revelations this week have usually included Pandora (NYSE: P), Last.fm and other popular internet radio type services, we believe that the features described necessarily would require "on demand" licensing that allows a listener to choose a specific song to be played, as distinct from Pandora style services' DMCA licensing that restricts the number of times a given song, artist or songs from a particular album can be played within a given time period. While there are certainly iterations of these projected Facebook Music features that could weave in a user's Pandora, SiriusXM (Nasdaq: SIRI) or Last.fm style listening, such features would be very limited in scope under their current licensing and would almost serve to highlight the advantages of using one of the "on demand" services.
Thus, we believe that a Facebook Music offering in any way similar to what is currently being discussed would require integration with the "on demand" streaming music services . This could be a windfall for the companies that already have the necessary US licenses to offer "on demand" music streaming from the Big Four music labels, as Facebook will almost overnight make their services a "must have" Facebook application that could achieve that status virally in a fraction of the time it took for Apple's (Nasdaq: AAPL) iTunes to achieve its lofty status. To say that this would be transformative for these companies would be an understatement and one need only look to the ascension of Zynga and the companies that were early participants of the Facebook gaming phenomenon to understand why.
Given the likely impact a Facebook Music offering will have on building the market for streaming music services, we could envision a scenario similar to what occurred with social media gaming companies evolving, where we begin to see an enormous flow of capital and a huge upward adjustment to the valuations accorded to the players in that space. The one major difference that makes this situation unique and potentially more of a blockbuster for the on demand streaming music companies is that there are currently only five of them and the barriers to entering that space are quite large.
The largest barrier to entering this space is obtaining the necessary "on demand" streaming licenses from the Big Four music labels. It has been widely reported that the European streaming music service Spotify has procured three of the four licenses necessary and that they are aiming for a July launch in the US, but it has taken Spotify almost 2 years past the original expected launch date to get the licensing deals done. Google (Nasdaq: GOOG) reportedly tried for over a year to work out a licensing deal with the labels before walking away and Amazon (Nasdaq: AMZN) found the process so daunting that they are tying to circumvent the process altogether. If some of the most creative minds (not to mention the best financed) in the American industry cannot easily obtain these licenses, it's quite unlikely that we will see a large crop of competitors emerge to fragment the market for "on demand" streaming music.
There are currently only five companies that are operating under US licenses that allow "on demand" streaming and Spotify will likely be the sixth. All of these companies should benefit tremendously as the "buzz" around a Facebook Music offering will likely be a rising tide that raises all ships and even makes consumers that are targeted through non Facebook channels more familiar with and likely to buy into the concept (renting access to all music vs. ownership of a small number of songs). Further, we believe this move by Facebook could create a market for streaming music services that is vastly different (particulary in terms of mass market consumer adoption) than what we see today, and in the process create billions in value for existing streaming music companies. Here is a quick breakdown of each of the six companies, ranked in order of US subscribers -
1) Rhapsody is a Joint Venture between Viacom's (VIA) MTV and RealNetworks (Nasdaq: RNWK) and is generally considered the grandfather of streaming music services because it has been operating a streaming music service for over a decade. Rhapsody is also the largest "on demand" streaming service in terms of subscribers with a reported 750,000, the majority of which it has acquired through more traditional marketing channels. Rhapsody has been slow to offer the more innovative social media integration features that the smaller players in the space have offered. Regardless, the company will be a huge beneficiary of the expansion of this market that we expect to occur with the introduction of Facebook Music and it could not come at a better time as the company is rumored to be preparing for an IPO in the first half of 2012.
2) Napster has the second largest base of users in the US and it is wholly owned by retail powerhouse Best Buy (BBY). Though it will certainly benefit from the industry's rising tide, the lack of social media features and conglomerate speed innovation will likely put Napster lower on the list of who will benefit the most from a Facebook Music service. It has also occurred to us that Napster may be only slightly more popular than the Winklevoss twins down at Facebook HQ (given the Sean Parker factor).
3) Kazaa has the third largest base of subscribers (80,000 range) and among the best social media integrations with features that allow you to follow your Facebook friends or other Kazaa users, see what they are listening to and play songs from their playlists. Kazaa's cutting edge social media offerings and its name recognition (we wonder how many of Facebooks' 750 million users were among the 800 million who downloaded the original Kazaa) give it the potential to be one of the biggest winners of the Facebook Music service.
Atrinsic (Nasdaq: ATRN) acqquired the Kazaa music service recently and it is expected to change its name to Kazaa in a few weeks. Additionally, the company just hired music industry veteran Stuart Goldfarb (CEO who guided the online transition of BMG Music Club and Columbia House) to be Kazaa's CEO and original Skype board member Mark Dyne is Kazaa's largest shareholder and a member of its BOD. Kazaa may benefit from being one of only two streaming music services to be publicly traded (Pandora is the other) and it is the only publicly traded "on demand" streaming music service.
4) MOG - With industry Rock Star David Hyman, a board stocked with industry heavy hitters and a service that offers very competitive social media interaction options, the tiny MOG should be a big beneficiary of Facebook Music. The company does not release its subscriber numbers, but we believe them to be a fraction of the size of Kazaa, Napster and Rhapsody due to the 20112 revenue projections given in its recent funding pitch and industry scuttlebutt that puts its subscriber count at about 20,000. MOG has been front and center as an innovator and is making an aggressive push with auto manufacturers.
5) Rdio - RDIO is like MOG in many respects, though it is perhaps even a step ahead in terms of social media features. Rdio offers all of the social media interaction features of Kazaa, but is even more user friendly for certain aspects (like creating playlists). Rdio has been one of the leading innovators in the space and its highly regarded leadership (CEO Drew Lerner) and backers (Skype Founders Friis and Zennstrom) should push Rdio to the front of any significant industry developments (like Facebook Music) and we expect Rdio to be among the biggest winners.
6) Spotify - last on this last only because it has no paying US subscribers as of this writing, we fully expect Spotify to quickly ascend this list and see it as the most likely to be the "Zynga" of the group, if one such dominant player is to emerge. Spotify already has the largest base of subscribers (1 million as of the last report) of any of the services, though it has only been offered in Europe. Spotify already has significant integration with Facebook for its European subscribers and more importantly, key executives of Facebook have invested in Spotify and many of the early reports about Facebook Music suggested that Spotify might be the only service offered. With its recent round of funding ($100 million) by several very high profile venture capitalists and the media's love affair with the service, we would not be surprised to see Spotify take a disproportionate share of the streaming music market we expect to evolve around Facebook.
Those wishing to invest in this space have very few options. Venture capital funding of the two smaller players MOG and Rdio have already pushed their valuations to the $20 - $30 million range, these valuations are dated and the recent flow of money into the media space generally (ie Pandora's $2 billion+ IPO) suggest that the valuations would be much higher IF there were a public market price available to price the shares. Investors may have an opportunity to get exposure to this space later this year, or early next year, if Spotify and/or Rhapsody move forward with an initial offering, but these will likely be at valuations that fully reflect the value that Facebook Music is creating, although a sub $10 billion Spotify IPO valuation would arguably leave a little left on the table for retail investors (at least according to Daniel Ek's "tens of billions" valuation).
Kazaa is currently the only publicly traded company in the on demand mobile/streaming music space. It is very closely held (the Big 4 Music Labels, insiders and affiliated hedge funds own over 80% of the shares) and there are only 1.1 million shares in its public float. Its currrent market cap ($15m as of the close on Friday) has not grown to match the others in the space, likely due to its lack of recognition (its name change to Kazaa is likely still several weeks away), lack of Wall Street analyst coverage and the fact that it is so small and so closely held that it would be difficult for an institutional investor to build a position that would be meaningful. Thus, the investing options to take advantage of this move by Facebook are few, but it could be quite rewarding tor those who are able to get equity in one of these five players before their valuations reflect it.
In summary, we believe the launch of Facebook Music will be a transformative event for the nascent mobile/streaming music services sector and we expect the existing "on demand" streaming music companies to be the biggest winners. If Facebook indeed takes these steps, it will likely catapult the existing streaming music services like Spotify, Rhapsody, Napster, Kazaa, MOG and Rdio from their current music buff/early adopter user base to a mainstream "must have" application used by millions that could rival Facebook's game offerings as the most used apps on the Facebook platform.
We believe that a Facebook Music dashboard that incorporates the "on demand" streaming music companies will result in a staggering increase in the number of subscribers to those services and possibly make all of them worth a multiple of their pre-Facebook Music valuation, possibly creating the next Zynga or at least several new billion dollar companies.source
Disclosure: I am long ATRN.
Additional disclosure: Author is registered as an accredited investor with Second Market and has made bids to acquire stakes in Rdio and MOG.
Africa calling for mobile operators
As operators in India look to offer mobile banking services for the unbanked in the hinterland, it would be pertinent to take a cue from the experiences operators have had while trying to push the service in African countries.
A Harvard Business School (HBS) study looks at the learning of operators in South Africa and Kenya to arrive to a firm conclusion — do not assume that folks at the base of the pyramid need the same types of services that their urban counterparts vie for!
Joint venture
Early this year, the largest bank and the largest mobile operator of the country — the State Bank of India and Airtel — had announced a joint venture for precisely this service to provide banking services to the country's millions of unbanked people. Other operators and banks, too, are eyeing the same space. The HBS case study could provide a lesson or two.
‘Mobile Banking for the Unbanked' by Prof. V. Kasturi Rangan and research associate Ms Katharine Lee looked at two different mobile financial service models — one in South Africa and the other in Kenya — targeted at what we in India would call the below-poverty-line population of the two countries.
WIZZIT, a third party start-up in South Africa, entered the mobile banking market in 2004. With the mobile phone penetration rate almost hundred per cent in South Africa due to operators that offered low-cost handsets and pre-paid services, the company thought it would be a “noble and viable business model in bringing banking to the poor.”
What actually happened was far from the aim. One, consumers did not take to the subscription model offered, as the poor are averse to paying for services they may not use. Second, the project ran into regulatory roadblocks as the South African Government allowed only licensed banks to take deposits, and that too at a hefty fee of around $34 million. When the start-up looked around for a suitable partner, the top-tier banks turned them down. They were then forced to turn to a second-tier bank, and the case study shows that even by 2009 WIZZIT could not make any profits. However, Kenya's M-PESA was luckier. Launched by mobile operator Safaricom (along with Vodafone), the initiative was initially built as a financial service for the poor, and a money-transfer application for microfinance organisations to collect loan payments.
M-Pesa's strategy
But soon after launching the service in 2007, the company realised that customers were not interested in it. What they wanted was a means to transfer money home. So, M-PESA quickly repositioned its service with the slogan, ‘Send Money Home,' turning the venture into a success.
The repositioning was done after a thorough probe into what customers really wanted. In Kenya, such as in India, a majority of the population lives in rural areas, but the banks and the jobs are situated in the cities. While in India many use the postal money order or friends and relatives to send money to their villages, in Kenya workers would seal their wages in an envelope and pay a courier to send it to the village, which meant paying for bus fare and loss of a workday.
When M-PESA realised that money transfer is what customers needed, it created a distribution channel by using local kirana stores as franchisee agents for the company, to enable customers to transfer and receive money conveniently.
At the push of a button
To transfer money, the customer had to hand over the money to the agent, plus a transfer fee. Through a computerised process, secured by passwords and PINs, the agent would transfer the payment to the customer's phone. The customer would then simply press ‘send' for it to reach the family member. The family member on the other end would then go to the agent in the village and cash the money from the phone.
As Prof. Rangan's case study points out, companies need to intimately know their target consumers and take the trouble to understand what they are looking for. By January 2010, M-PESA's efforts had paid off. It had acquired some nine million customers and more than $600 billion has been transferred through the service, garnering revenues of about $100 million. source
Entertainment VAS to Drive the Overall Indian MVAS Market
Indian mobile VAS market has been growing at a rapid pace for the past few years. Apart from subscriber’s base growth, various other factors including innovation, scale, value chain supremacy, and insight into the evolving VAS user base supported VAS players to achieve astonishing revenue results. The research found that segments, especially entertainment VAS have been showing tremendous growth performance and emerged as a potential investment area for players. Moving forward, entertainment VAS is anticipated to grow at 30.5% CAGR during 2010-2014, thus outpacing almost all the MVAS segments growth by strong margins.
The research has found that the entertainment VAS segment is expected to dominate the MVAS market in the next 4-5 years. The perceived value of entertainment VAS is outpacing the associated costs and consumers are using these services on a regular basis. Further, entertainment MVAS offerings are getting regional touch as the developers and operators are increasingly adopting regional languages, preferences, and providing VAS in the local formats. This strategy is expected to create win-win situation for both operators and consumers and will intensify the market developments in coming years.
Besides entrainment VAS, other segments, such as Information VAS, Commercial VAS have registered excellent market expansion, on the back of emergence of modern handsets and smartphones. These segments have helped the industry to increase its penetration in both urban and rural areas. It is estimated that, a slight percentage increase in MVAS penetration will considerably enlarge the revenue figures of market players.
Our report “Indian MVAS Market Forecast to 2014”, has been authored to evaluate future growth potentials of India mobile value added service market. The report provides extensive research and analysis on MVAS historical, current, and projected market trends. It thoroughly includes statistics/information on MVAS segments, such as information VAS, entertainment VAS, and m-commerce VAS to provide a deep understanding on the market dynamics. It also segregates MVAS market in urban and rural categories and includes statistical analysis on the same. The report also provides segment wise forecasts based on correlation of past drivers, challenges, and opportunities for expansion, thus enabling clients to access projected market trends and make informed decisions. source
The research has found that the entertainment VAS segment is expected to dominate the MVAS market in the next 4-5 years. The perceived value of entertainment VAS is outpacing the associated costs and consumers are using these services on a regular basis. Further, entertainment MVAS offerings are getting regional touch as the developers and operators are increasingly adopting regional languages, preferences, and providing VAS in the local formats. This strategy is expected to create win-win situation for both operators and consumers and will intensify the market developments in coming years.
Besides entrainment VAS, other segments, such as Information VAS, Commercial VAS have registered excellent market expansion, on the back of emergence of modern handsets and smartphones. These segments have helped the industry to increase its penetration in both urban and rural areas. It is estimated that, a slight percentage increase in MVAS penetration will considerably enlarge the revenue figures of market players.
Our report “Indian MVAS Market Forecast to 2014”, has been authored to evaluate future growth potentials of India mobile value added service market. The report provides extensive research and analysis on MVAS historical, current, and projected market trends. It thoroughly includes statistics/information on MVAS segments, such as information VAS, entertainment VAS, and m-commerce VAS to provide a deep understanding on the market dynamics. It also segregates MVAS market in urban and rural categories and includes statistical analysis on the same. The report also provides segment wise forecasts based on correlation of past drivers, challenges, and opportunities for expansion, thus enabling clients to access projected market trends and make informed decisions. source
One97 Invests In Data Roaming Provider LeapSky Wireless
Mobile VAS company One97 Communications* has made an undisclosed investment in Singapore based LeapSky Wireless, which had developed JumpSurf, a device which provides cheaper international data roaming to customers through bulk data deals with Telecom operators across geographies. One97 MD Vijay Shekhar Sharma informed MediaNama that the company will take a significant minority stake in LeapSky, at a pre-revenue stage. The investment is part of the $100 million Mobility Fund, that it committed, with SAIF partners last year.
How JumpSurf Works
JumpSurf is similar to portable MiFi devices – it converts operator network data connectivity into WiFi, but the value lies in switching from the home-operators International Roaming Tariff’s to local data tariffs through separate arrangements. Sharma points out that at present tariffs, the cost of 1GB data in Singapore can go upto Rs 6 lakh. With JumpSurf, he claims, it will be even cheaper than what the operator charges locally, since the company has bought data in bulk. LeapSky has a patent-pending on its ‘identity management’ technology.
Plans
At the moment, the device is able to convert 3G to Wifi, but going forward it will be upgraded to support LTE/WiMax networks, for higher data transfer speeds.
Data bundling agreements have been finalized in Malaysia and Singapore, as of now, and will be extended to other markets in due course of time. Talks are on with operators in different markets, including India, for more tie-ups. One97, Sharma says, will play a role in marketing and sales, and will facilitate in reaching out to operators that it works with.
Interestingly, the product will be offered through telecom operators. Siva Sai N, the founder of LeapSky Wireless informed that the product will be first introduced to the enterprise segment, and later extended to consumer market.source
How JumpSurf Works
JumpSurf is similar to portable MiFi devices – it converts operator network data connectivity into WiFi, but the value lies in switching from the home-operators International Roaming Tariff’s to local data tariffs through separate arrangements. Sharma points out that at present tariffs, the cost of 1GB data in Singapore can go upto Rs 6 lakh. With JumpSurf, he claims, it will be even cheaper than what the operator charges locally, since the company has bought data in bulk. LeapSky has a patent-pending on its ‘identity management’ technology.
Plans
At the moment, the device is able to convert 3G to Wifi, but going forward it will be upgraded to support LTE/WiMax networks, for higher data transfer speeds.
Data bundling agreements have been finalized in Malaysia and Singapore, as of now, and will be extended to other markets in due course of time. Talks are on with operators in different markets, including India, for more tie-ups. One97, Sharma says, will play a role in marketing and sales, and will facilitate in reaching out to operators that it works with.
Interestingly, the product will be offered through telecom operators. Siva Sai N, the founder of LeapSky Wireless informed that the product will be first introduced to the enterprise segment, and later extended to consumer market.source
Monday, June 20, 2011
Project Spartan: Mobile Music on FaceBook
Facebook is apparently planning to launch a new music initiative by partnering with Spotify and other music services, GigaOm reports. That alone isn’t surprising, since focusing on music and media makes complete sense for Facebook after finding success with games.
But Facebook’s music initiative gets a lot more interesting if we consider it alongside last week’s reveal of Project Spartan, an HTML5-driven mobile Facebook platform that could end up housing a slew of web apps. The combination of Project Spartan and Facebook’s new media focus could lead to a robust mobile music service that would take advantage of existing services like Spotify, Last.FM, and Rdio, while also becoming yet another thorn in Apple’s side.
On the desktop side, Facebook is gearing up to introduce a new Music Dashboard that will serve as the hub of your social music life, according to GigaOm. The Dashboard will house music recommendations, a steady stream of your friends’ music activity and the like. Facebook is also planning to introduce a persistent play and pause button that will sit near the chat icon while you’re browsing the site.
Now imagine those features replicated in a snappy HTML5 mobile environment. While Facebook’s new music focus will certainly find its fans on the desktop side, on mobile devices it has the potential to be the new go-to spot for finding and sharing music. And since Facebook is in talks with existing music services, there’s a good chance that it will be free as well (at least, initially).
Last week, we also learned that Facebook was working on a snazzy new photo sharing app, which tells us that the company is clearly aiming to improve its mobile offerings. With streaming music on the rise, Facebook could cement itself as a leader in that arena as well.
The door is also wide open for Facebook to lay claim to the mobile streaming music marketplace, since Apple still hasn’t launched a true streaming music service yet (both iCloud and iTunes Match offering music synchronization, but not streaming). And with the participation of existing music services, Facebook could end up being a major threat to both Amazon and Google’s cloud music ambitions.source
Sunday, June 19, 2011
Low-cost banking on mobile
Two engineers from the country’s premier engineering institution decide to venture out on their own and create social impact. In the process, they create Eko, a service that fosters financial inclusion. The banking service leverages community relationships for increasing the reach of basic financial services. It provides a safe gateway for funds deposits and withdrawals. The service is meant especially for people from low-income backgrounds. Read how Eko has pioneered banking services for the country’s large unorganised sector in the second of the five-part series from India Brand Equity Foundation’s Innovations from India: Harbingers of Change ![]()
India has a large working population. Based on estimates, India has a workforce of about 540 million people that participate in economic activities. Out of this, approximately 6 per cent serve in the organised segments of the public and private sectors, while the rest serve in the unorganised segments.The organised workforce is well addressed by regular banking channels. However, not much is known about the reach of banking channels within the unorganised sector. This sector comprises the owners of over 35 million micro, small and medium enterprises, farmers and landless labourers. The last two categories are known to have the least access to banking and other financial services. In other words, these customers are considered unviable by banks. This lack of banking reach creates a situation in which even the basic financial needs (such as insurance, credit/loan requirements) of these consumers are not met by an institutional setup. So most of the time, they are left at the mercy of the local money lenders, who charge astronomically high interest rates. Therefore, a need has always been felt for a no-frills bank that can offer basic banking services to these segments of the population.
In an initiative that was focused on addressing this need, Abhishek Sinha and his brother, Abinav Sinha, both alumni of the Birla Institute of Technology (BIT) at Mesra (Bihar), decided to start a mobile-based banking service. They had begun their professional journeys by working for reputed companies in the IT services industry. In 2002, Abhishek co-founded Six DEE Telecom solution, a telecom value-added services company. This company focussed on the online mobile prepaid recharge platform. Abhinav joined Six DEE as product manager. However, both of them exited Six DEE in 2007.
Then, in February 2009, both of them launched Eko in Delhi.
India has a large working population. Based on estimates, India has a workforce of about 540 million people that participate in economic activities. Out of this, approximately 6 per cent serve in the organised segments of the public and private sectors, while the rest serve in the unorganised segments.In an initiative that was focused on addressing this need, Abhishek Sinha and his brother, Abinav Sinha, both alumni of the Birla Institute of Technology (BIT) at Mesra (Bihar), decided to start a mobile-based banking service. They had begun their professional journeys by working for reputed companies in the IT services industry. In 2002, Abhishek co-founded Six DEE Telecom solution, a telecom value-added services company. This company focussed on the online mobile prepaid recharge platform. Abhinav joined Six DEE as product manager. However, both of them exited Six DEE in 2007.
Then, in February 2009, both of them launched Eko in Delhi.
Below are the drivers for their initiative in the mobile-based banking services delivery space:
To lower the cost of financial transactions. Mainstream banks and financial institutions prefer customers of a particular income profile. This is because the cost of serving a particular client is substantiated by potential earning from that client.
To simplify the delivery of financial transactions at the front-end. Banking and financial services are limited by the presence of financial channels (that is, bank branches, ATMs and so on). Eko’s vision was to leverage the most easily available and most easily accessible device, the mobile phone, for delivering banking services.
To develop a business model that is extremely scalable. Since Eko was focussing on people with a very low income profile (earning $1 to $2 per day), it wanted to create a model that would be able to achieve economies of scale.
At the same time, the Reserve Bank of India (RBI) came out with a regulation on mobile banking services as a means for social inclusion. The regulation by RBI had a guideline which stated that non-profit companies can only become a ‘business correspondent’ akin to an outsourced bank branch. In addition, the RBI also came out with another regulation that allows grocery stores, petrol pumps and similar retail outlets to be appointed as sub-agents of business correspondents.
These regulatory precursors helped SBI and Eko to come together and offer no-frills mini-savings accounts. These accounts allowed customers to maintain zero account balance, which is the opposite of conventional consumer banking practices. Under the arrangement between SBI and Eko, it became possible for mini-savings bank account holders to deposit, withdraw, remit and check balances using SMSes.
The Eko model
Here are the key attributes of the model that has been adopted by Eko:
Here are the key attributes of the model that has been adopted by Eko:
Leveraging the trust of community enterprises. Eko has partnered with local mom and pop stores, chemists and other such retailers who are trusted by the local population. These local retail stores act as mini bankers or customer service points (CSPs) in the ecosystem. The Eko customer walks into any of the retail outlets licensed to operate as an authorised CSP in the area. These local retailers help customers to open accounts, and facilitate transactions such as deposits, withdrawals and transfers of money.
Targeting the low-income population. The banking service targets customers with an income from $65 to $323 (about Rs 2,900 to Rs 14,500) per month. The key drivers for targeting this income segment was that they were either unbanked (that is, not using banking channels) or were underbanked (that is, no access to banking or very limited use of banking).
Providing a secure gateway. Eko customers type the bank’s short code, then an asterisk, then the mobile number of the person they are paying, then an asterisk, then the amount, followed by another asterisk. Account holders get booklets with pages of 11-digit codes. Seven digits of these are random numbers, with four randomly placed black marks, where the person enters his or her PIN. Eko has also partnered with VeriSign to ensure secure transactions.
Leveraging a customised banking platform. Eko has developed a low-cost banking platform called “Simpli Bank” which allows real-time transactions. Simpli Bank is a leaner version of a core banking platform, which helps in reducing the cost of providing banking services to the people.
The service has been designed to be very simple to use and execute. The following steps explain how a customer of Eko can make a deposit:
Step 1: The customer walks into a CSP.
Step 2: The customer asks the CSP to make a deposit.
Step 3: The CSP punches in a code *539*customer mobile number* amount to be deposited*signature code # (The signature code is a transaction code. These codes are given to customers in a booklet).
Step 4: Once the transaction has been completed, both the customer and the CSP receive a confirmation SMS.
Step 5: Upon receiving the SMS, the customer pays cash to the CSP. Simplified system, lower transaction costs
This innovation by Eko has helped deliver a lot of benefits to unbanked citizens. Currently, Eko has about 75,000 to 80,000 people as savings account customers. These customers are based out of the NCR region (includes Delhi, Gurgaon, Ghaziabad and Noida), Bihar and Jharkhand (states in east India with a huge migrating workforce). Almost 2,000 people transact currency amounting to $43,000 (about Rs 19.3 lakh) on a daily basis using the mobile commerce channel, from about 500 CSPs.
This innovation by Eko has helped deliver a lot of benefits to unbanked citizens. Currently, Eko has about 75,000 to 80,000 people as savings account customers. These customers are based out of the NCR region (includes Delhi, Gurgaon, Ghaziabad and Noida), Bihar and Jharkhand (states in east India with a huge migrating workforce). Almost 2,000 people transact currency amounting to $43,000 (about Rs 19.3 lakh) on a daily basis using the mobile commerce channel, from about 500 CSPs.
Eko also started remittance services in the middle of 2010. This has helped the migrant workforce to send money to their homes without having to open a savings account. All that they need is the bank account number of the person to whom they would like to transfer the money. Since the launch of this service, Eko has seen almost 2,000 to 3,000 people using this service exclusively, on a per day basis.
The cost per transaction using Eko’s system is $0.1 (Rs 4.5), while in a bank branch it would be $1.5 (about Rs 67) per transaction. The service is available to customers on all mobile phones, including the most basic models. It does not require WAP/GPRS or any application to be downloaded on the phone. A person can open an account at the nearest CSP with zero deposit, and can save up to $2,200 (or Rs 1 lakh). A potential customer does not have to go through the regular process of enrollment while opening a bank account. All that is required to open a savings account is a photograph, ID proof (such as a voter ID card) and a personal mobile phone.
Eko’s customer base has grown rapidly. Eko started operations in February 2009 with 17 CSPs and less than 10 customers. By October 2010, it was able to acquire 75,000 to 80,000 customers and 500 CSPs.
The business model is also very simple and sustainable. Eko is paid for every customer it acquires and for every transaction that is processed. The CSP gets 10 per cent of the transaction. Eko’s initiative has started generating revenue. It has been able to generate $28,000 (Rs 1.3 million) and expects to generate $2.6 million (Rs 120 million) per annum.
Going forward, Eko plans to set up 500,000 such licensed outlets in two years. It has received a grant under the Consultative Group for Assisting the Poor (CGAP) Technology programme. The CGAP is housed at the World Bank, but operates as an independent entity. It is a consortium of 33 public and private banks in the world. The technology fund is co-funded by the Bill and Melinda Gates Foundation.source
Real Time Directions on Mobile with Tata DOCOMO's Location Based Services
-- Navigation and positioning are crucial to so many activities and yet the process has always been quite cumbersome and inexact. Over the years all kinds of technologies have tried to simplify the task, yet it may not have been as successful, to be adopted conveniently by the user. Therefore keeping in line with the brand premise of keeping things simple, TATA DOCOMO, the GSM brand of Tata Teleservices Limited has launched 2 new Location Based services called Route Finder and Smart Pilot. For both the services, Tata DOCOMO has tied up with NAVTEQ, the leading global provider of digital map data and location content in 760 cities across and all 3G circles. source
Some of the NextGen features of Route Finder include:
To access Route Finder service, customer will have to send sms to 533331 mentioning the destination to reach. The service is charged at introductory price of Rs.5 per successful query-response, there are no additional data charges for accessing maps. This service is available to all 3G customers, and works on all handsets.
Smart Pilot is a unique, SMART mobile based voice guided navigation service which offers information as well as navigation details to reach any destination across India. Smart Pilot application helps customers to navigate with intuitive, voice guided, step-by-step directions. With this service, they can also avail options like setting destinations by address search, searching point of interests like ATMs, petrol pumps, railway station etc and also can find places on interactive maps. To use the service, the user downloads an application on the phone, just by sending 'smart pilot' as a keyword to the tollfree shortcode 53333.
"Tata Teleservices commitment to simplifying and enriching people's lives is manifest in this fun and simple offering for the fast growing for location-based services domain. We collaborated with NAVTEQ as they fulfilled our requirements for accurate mapping data while offering a robust Points Of Interest (POI) database with millions of POI, including restaurants, places of worship, shops and hotels that we can utilize to create these applications," Mr Shailendra Singh, COO, MP & CG , Tata DOCOMO, said. "We believe in offering services that are technically simple and convenient, which add value to every subscriber regardless of the handset capability, it is only then that the facility will be used to the fullest."
"A recent NAVTEQ research on mobile navigation showed that consumers who commute by foot or public transit spend as much as half of their commute using their mobile phones. The study also revealed that consumers who have had positive interactions with GPS technology provides a strong foundation for interest in location based services. We believe that Route Finder and Smart Pilot are two powerful applications that will enable an increasing number of India consumers to start experiencing the benefits of navigation, essentially savings in time, fuel and money." said Rajat Tandon, director - sales, NAVTEQ India.
Smart Pilot service is particularly useful for going to places with long and complex routes, multiple intersections and turns with the unnamed roads. It also offers multiple options, including total distance time; graphical & interactive icons for turns, manual navigation, route plotted on map and simulate navigation to see all actual turns taken. Additionally, customers can save their favorite locations/routes and also share the same with their friends. What's more! There will be no data accessing charges, post subscribing to the Smart Pilot service.
The subscription charges of Smart Pilot application are Rs 10 per day (non-renewable) and there are 3 different channels through which customers can subscribe the service namely, SMS channel where in customers can simply send SMS to 53333 (toll free). Post the same, customers will get a link to download the application; while there will be no cost for downloading the same. IVR channel can be availed by simply dialing IVR short code 155223 (toll free) to subscribe to the application. Customer Care SMS channel is the third method where in customers can send SMS 'SUB SMART PILOT' to 155223(toll free). The service can be accessed on all GPS enabled handsets with activated internet Plan /facility.
Notes to Editor
About TATA DOCOMO
TATA DOCOMO is Tata Teleservices Limited's telecom service on the GSM platform-arising out of the Tata Group's strategic alliance with Japanese telecom major NTT DOCOMO in November 2008. Tata Teleservices Limited has received a license to operate GSM telecom services in 19 telecom Circles and has also been allotted spectrum in 18 of these Circles. It has rolled out its GSM services in Tamil Nadu, Kerala, Orissa, Karnataka, Andhra Pradesh, Madhya Pradesh-Chhattisgarh, Haryana-Punjab, Kolkata, Rest of West Bengal, Jharkhand, Bihar, UP East, UP West, Gujarat, Himachal Pradesh and Rajasthan, while Tata Teleservices (Maharashtra) Limited has launched GSM services under the TATA DOCOMO brand in the Mumbai and Rest of Maharashtra Circles. TATA DOCOMO has become the first Indian private operator to launch 3G services in India in all the nine telecom Circles where it won the 3G license. In association with its partner NTT DOCOMO, the brand finds itself suitably positioned to leverage this first-lover advantage. With 3G, Tata DOCOMO stands to redefine the very face of telecoms in India. Tokyo-based NTT DOCOMO is one of the world's leading mobile operators-in the Japanese market, the company is the clear market leader, used by over 50 per cent of the subscribers.source
Experience easy Navigation with Route Finder and Smart Pilot services, Powered by NAVTEQ; Location Based services available to all 3G prepay and postpay customers
Bhopal, Madhya Pradesh, June 18, 2011 /India PRwire/
Route Finder service is simple and useful, accessible on SMS and facilitates the end-user to get directions to the desired place from his/her current location in the form of an SMS or a link (as per the phone capability of the customer). Customers with data-enabled phones will get directions as via link and while clicking on that link, customers will be able to visually see the static map indicating the route from current to selected location. Users without data-enabled phones will get directions as text messages.Some of the NextGen features of Route Finder include:
- Automatic source-location detection without user input;
- User-friendly results; and
- Results delivered in SMS as well as via link, depending on handset capability of the customer
To access Route Finder service, customer will have to send sms to 533331 mentioning the destination to reach. The service is charged at introductory price of Rs.5 per successful query-response, there are no additional data charges for accessing maps. This service is available to all 3G customers, and works on all handsets.
Smart Pilot is a unique, SMART mobile based voice guided navigation service which offers information as well as navigation details to reach any destination across India. Smart Pilot application helps customers to navigate with intuitive, voice guided, step-by-step directions. With this service, they can also avail options like setting destinations by address search, searching point of interests like ATMs, petrol pumps, railway station etc and also can find places on interactive maps. To use the service, the user downloads an application on the phone, just by sending 'smart pilot' as a keyword to the tollfree shortcode 53333.
"Tata Teleservices commitment to simplifying and enriching people's lives is manifest in this fun and simple offering for the fast growing for location-based services domain. We collaborated with NAVTEQ as they fulfilled our requirements for accurate mapping data while offering a robust Points Of Interest (POI) database with millions of POI, including restaurants, places of worship, shops and hotels that we can utilize to create these applications," Mr Shailendra Singh, COO, MP & CG , Tata DOCOMO, said. "We believe in offering services that are technically simple and convenient, which add value to every subscriber regardless of the handset capability, it is only then that the facility will be used to the fullest."
"A recent NAVTEQ research on mobile navigation showed that consumers who commute by foot or public transit spend as much as half of their commute using their mobile phones. The study also revealed that consumers who have had positive interactions with GPS technology provides a strong foundation for interest in location based services. We believe that Route Finder and Smart Pilot are two powerful applications that will enable an increasing number of India consumers to start experiencing the benefits of navigation, essentially savings in time, fuel and money." said Rajat Tandon, director - sales, NAVTEQ India.
Smart Pilot service is particularly useful for going to places with long and complex routes, multiple intersections and turns with the unnamed roads. It also offers multiple options, including total distance time; graphical & interactive icons for turns, manual navigation, route plotted on map and simulate navigation to see all actual turns taken. Additionally, customers can save their favorite locations/routes and also share the same with their friends. What's more! There will be no data accessing charges, post subscribing to the Smart Pilot service.
The subscription charges of Smart Pilot application are Rs 10 per day (non-renewable) and there are 3 different channels through which customers can subscribe the service namely, SMS channel where in customers can simply send SMS to 53333 (toll free). Post the same, customers will get a link to download the application; while there will be no cost for downloading the same. IVR channel can be availed by simply dialing IVR short code 155223 (toll free) to subscribe to the application. Customer Care SMS channel is the third method where in customers can send SMS 'SUB SMART PILOT' to 155223(toll free). The service can be accessed on all GPS enabled handsets with activated internet Plan /facility.
Notes to Editor
About TATA DOCOMO
TATA DOCOMO is Tata Teleservices Limited's telecom service on the GSM platform-arising out of the Tata Group's strategic alliance with Japanese telecom major NTT DOCOMO in November 2008. Tata Teleservices Limited has received a license to operate GSM telecom services in 19 telecom Circles and has also been allotted spectrum in 18 of these Circles. It has rolled out its GSM services in Tamil Nadu, Kerala, Orissa, Karnataka, Andhra Pradesh, Madhya Pradesh-Chhattisgarh, Haryana-Punjab, Kolkata, Rest of West Bengal, Jharkhand, Bihar, UP East, UP West, Gujarat, Himachal Pradesh and Rajasthan, while Tata Teleservices (Maharashtra) Limited has launched GSM services under the TATA DOCOMO brand in the Mumbai and Rest of Maharashtra Circles. TATA DOCOMO has become the first Indian private operator to launch 3G services in India in all the nine telecom Circles where it won the 3G license. In association with its partner NTT DOCOMO, the brand finds itself suitably positioned to leverage this first-lover advantage. With 3G, Tata DOCOMO stands to redefine the very face of telecoms in India. Tokyo-based NTT DOCOMO is one of the world's leading mobile operators-in the Japanese market, the company is the clear market leader, used by over 50 per cent of the subscribers.source
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