What Onmobile has to say on current VAS scenario.

No structural impact seen on VAS due to 3G roll outs

OnMobile has deployed its infrastructure to supports 3G products like video on demand & IVVR on several operator networks. However, the initial 3G revenues consists of charges for mobile broadband and operators are yet to cover pan-India, which implies product usage (& hence revenues) would take some time to fructify for OnMobile. Moreover, telcos have diverted a sizable chunk of ad spends towards creating awareness on 3G services which has had an impact on VAS promotional activity. Company has indicated such a phenomenon has a temporary dampening effect on revenues, but is unlikely to lead to any long-term structural shift away from VAS. 

Int’l revs to help diversify India-centric business

OnMobile is now live in 6 Latin American countries, as part of its Telefonica deployment and covers 80-85% of population. It has achieved ~1.5% penetration rate in large markets like Brazil, Mexico & Argentina; encouragingly, Lat-Am RBT ARPUs are ~2-3x that for India. International revenues have also risen from 25% to 32% in the past 4 quarters, which helps diversify what is hitherto an India-centric business.

   

Q4 results an aberration; growth momentum likely to continue

Q4 FY11 domestic revenue fell 12% qoq due to a change in the contractual scope whereby content management was removed from its responsibilities at a major telco, leading to a ~10% qoq contraction in topline; Ex-such change, sequential revenue is flat-company attributed this to a seasonally lean period for capex orders at its European units and newly acquired Dilithium (video products) business as well as weakness in European economy. We believe Q4 results do not form part of broader trend and expect growth momentum to resume as international revs ramp up led by Telefonica deployments.

Attractive valuation supports our BUY

OnMobile is set to report increased traction in revenues driven by leadership in domestic business and upsides from Telefonica and Vodafone deals. It has guided for Rs600-800mn in capex in the current fiscal, comfortably supported by ~Rs1.9bn in operating CF in FY12. Stock trades at 9.8x FY13 PER which provides an attractive entry point, in our view; maintain BUY. 

Valuation summary

Y/e 31 Mar, Rs. m	FY10	FY11E	FY12E	FY13E
Revenues	4,544	5,372	6,598	8,246
yoy growth (%)	11.8	18.2	22.8	25.0
Operating profit	831	1,206	1,544	2,111
OPM (%)	18.3	22.4	23.4	25.6
Pre-exceptional PAT	423	867	1,085	1,383
Reported PAT	428	892	1,085	1,383
yoy growth (%)	(49.8)	108.5	21.7	27.4
EPS (Rs)	3.7	7.8	9.2	11.7
P/E (x)	31.5	15.2	12.5	9.8
P/BV (x)	1.8	1.6	1.4	1.3
EV/EBITDA (x)	14.0	10.8	7.8	5.5
ROE (%)	5.9	11.4	12.2	13.7
ROCE (%)	7.5	11.8	14.4	17.7

Source: Company, India Infoline Research

Three ways Google can work with mobile operators to relieve network congestion

Google’s YouTube consumes 17% of all mobile data traffic, but Google is reportedly willing to help mitigate some of that impact

At some point, carriers and Internet content providers were bound to sit down and have a heart-to-heart over the devastating impact video and other high-bandwidth services are having on carriers mobile data networks. According to Bloomberg, we’ve reached that point: Google is in talks with some of the world’s largest operators about reducing the impact YouTube and other video services have on 3G and mobile broadband networks.

The choice of ambassador from the Internet industry is apt. Google isn’t just a powerhouse when it comes to mobile services and software, its YouTube division is the single largest culprit when it comes to eating up mobile bandwidth. Traffic management vendor Allot Communications’ most recent survey of its wireless customers networks found that YouTube alone accounted for 17% of all mobile data traffic, and 45% of all mobile video traffic in the second half of 2010—and it’s rapidly growing. In Europe and developed parts of Asia, YouTube is now more than 20% of mobile data traffic, according to Allot.

Bloomberg quoted YouTube executive Andrey Doronichev as saying that YouTube is exploring congestion mitigation policies with a number of operators and handset makers, though he declined to name the specific companies. In a separate story, Bloomberg reported that France Telecom was in talks with Google over similar issues.

What will those network bandwidth sparing policies or technologies look like? Bloomberg’s sources didn’t name specifics, but Allot marketing director Jonathan Gordon shared several possibilities with us:

1) The most direct method would be to simply have content providers compensate operators for the traffic they consume on their networks through revenue sharing deals, Gordon said. That’s probably the least likely scenario. Google would set a pretty dangerous precedent if it started paying operators for access, and it could also set itself on unequal footing with content providers who didn’t choose pay carriers for carriage. But operators could make such agreements more appealing to content providers if they offered something in return. YouTube might be exempted from data caps or metering, allowing unlimited use, if Google compensated the operator for every byte consumed. Operators could also prioritize YouTube traffic over other video on their networks to earn their fees, though such policies could easily run afoul of net neutrality.

2) The second method would be to cache YouTube and other Google content closer to subscribers, essentially extending Google’s content delivery networks (CDNs) into the mobile network, Morgan said. Wireless vendor Ericsson is already working with CDN company Akamai on such capabilities (CP: Ericsson, Akamai partner on mobile cloud acceleration). Using CDNs would alleviate a lot of traffic in operators’ transport and core networks, and possibly even the backhaul network if CDNs were pushed to the cellsite or aggregation node, but would do little to help out with the biggest—and most expensive—point of congestion, the radio access network. Customers, however, would definitely experience better video as there would be fewer bottlenecks up to the cell site, Gordon said.

3) The third method is video optimization or traffic shaping, which is still controversial but ultimately inevitable as networks become overloaded. Gordon pointed out that much of the video traffic on the network isn’t optimized for the device it’s being sent to, resulting in a lot of data being tossed out once it reaches its terminus. “The network can recognize the type of device on the fly, and, for example, transmit to an iPhone a lower quality stream than it would, say, an iPad,” Gordon said. . Since the video stream has only been downgraded to the maximum useful resolution of the device, customers would see no difference between an optimized and an un-optimized stream. While bandwidth is being limited, customers might actually experience better quality video, given higher quality streams have to fight their way through over congested networks, Gordon said.

Operators could take optimization one step further—and here’s where it gets controversial—by dynamically upgrading and downgrading video quality as network congestion levels on the network change. In such a scenario, the iPad user might only get an iPhone-quality YouTube stream if the cell it happened to be in was crowded. Operators would certainly face protests on net neutrality grounds, but Gordon said operators could avoid this by making it an opt-in service. Many customers might be willing to agree to such video constriction if it spared their data plans, Morgan said. Why pay full price for choppy video?
But carriers may ultimately implement such shaping policies network-wide, arguing that they benefit their subscribers as a whole. “It’s a trade off,” Gordon said. “Do consumers want high-quality video that stops and stutters, or do they want lower resolution video that streams normally?”

What route Google and the operators take—or even whether their talks amount to anything—remains to be seen. Bloomberg reported that compensation for access is off the table in Google’s discussions with France Telecom. That would mean some kind of network policy or traffic shaping solution is the most likely candidate, unless their exploring alternative access methods like Wi-Fi. Either way, any agreement between an operator and Google to mitigate network congestion would be of enormous import in this industry. It could even head off the almost inevitable showdown between operators and the content providers that use their networks.source

Mobile Service Helping Indian Farmers

A new mobile service is helping Indian farmers weather tough agricultural times, working to lower the suicide rates of those who struggle to make ends meet.

The new service, called "mKrishi," offers farmers in India information on everything from weather and crop diseases to where they can sell their produce, making their difficult lives a little bit easier. Arun Pande of Tata Consultancy Services' (TCS) Innovation Labs and his team are still perfecting mKrishi, which has so far debuted in four Maharashtran villages.

MKrishi enrollees use cameras equipped with cell phones and specialized software to snap and send in pictures of their crops. Experts from agricultural universities and companies then analyze the photos with a web application, offering instant advice to the farmers via text messages and voicemail on what pesticides to use or weather to expect.

For the weather reports to work, farming villages must set up sensor networks and weather stations to provide experts with localized data. Crop disease forecasting is more difficult because the sensors cannot measure all the various factors needed to predict when plants will become ill or suffer an insect attack. Still, mKrishi won MIT's Technology Review Grand Challenge this year for alerting farmers whenever possible to the threat of crop diseases.

"We expect preventive measures will reduce the cost of expensive pesticide once the disease is set in," Pande said.

MKrishi has so far helped cotton, grape, potato and soybean farmers in four villages to increase productivity and decrease pesticide use. The Grape Growers Association, fertilizer manufacturers and NGOs are now eager to use mKrishi, spurring Pande's team into talks with each group over potential partnerships.

If mKrishi had been developed earlier, it might have saved the nearly 20,000 recorded Indian farmer suicides in 2009. As the corporate chemical industry began to control seed supplies starting in 1997, prices rose and many farmers found they couldn't afford to grow anything. As it stands today, one Indian farmer kills himself every 30 minutes for want of any avenue to make an adequate living.

MKrishi can't heal the plight of Indian farmers overnight, but it may at least prevent them from ending their lives in despair. This in turn could encourage the next generation to stay and farm the land rather than leaving it to become migrant workers in a big city.

"Today's rural youth is aware of the prosperity in cities through print and television media, and they're moving away from the family farms, which are being sold off," Pande says. "This is creating a vicious cycle of reduction of farm land, fewer farmers to till the land, lower income from farms, migration of rural families to cities."

This cycle continues to spawn slums in over-crowded cities, hasten the loss of traditional culture and separate family members from one another. If mKrishi succeeds in making farmers' jobs easier, it could potentially help reverse this trend, drastically improving both India's economy and its society.source

Mobile Wallet From Google

With the advancement of technology, Google has recently unveiled its latest Mobile Wallet service. Google describes this service as tomorrow’s top shopping experience.

This is an Android application which enables one to pay for things they buy with their debit and credit cards by using their handsets.

This app comes with a near field communication which helps one to turn their phone to a virtual wallet. It helps one to store debit/credit card, offer coupons, loyalty cards, and cinema/train tickets.

Google has also promised that in the near future this app will also enable one to store their driving licence on it.

While purchasing daily goods like milk, chocolates and newspapers, one will just have to wave their handset before the terminal.

In case of higher value transactions one will have to enter a pin on the handset itself. Google has joined hands with MasterCard, Citibank, First Data and Sprint to test the technology.source

No 3G video calling on iPhone 4 in INDIA

Users in India can make video calls using WiFi, but not over 3G as the application that enables the service has been locked by Apple.

The Apple iPhone 4, which is being regarded as the most unique device, is not capable of making video calls over a 3G mobile network despite being a 4th generation smartphone.

Users in India can make video calls using WiFinetworks, but not over 3G as the application which enables the service is locked by Apple.

The Apple spokesperson in India said, "FaceTime, the application that allows video calling on the Apple iPhone 4, is a closed user application that allows people having iPhone or compatible Apple hardware like the iPad 2 and forth generation iPod touch running FaceTime application to have video calling."

"3G cannot be used to make these video calls; only WiFi data is supported by the application. The application allows seamless connectivity between other Apple products though," he added.

iPhone 4 nevertheless has all the necessary hardware, including a front facing camera and 3G capable quad frequency network band, to allow 3G video calling over the mobile network.

Many applications like Frring, Tango me and Oovoo can be used as third party solutions to curb this problem of calling over 3G mobile networks.

Along with that, these applications offer both free and paid services and allow cross platform compatibility as well, which means that an iPhone 4 user can call another iPhone, or even another operating system that supports these third party applications.

There were some issues related to video calling with Frring but with the new update for the iPhone 4, Frring users on iPhone 4 get to make better quality video calls.

source

Dance, music learning goes online!

Times are changing. Earlier, it was distance learning in traditional education. Now, it is learning music and dance online! Especially by those Indians who stay abroad but want to keep their ties with the rich cultural heritage of their country intact. Video conferencing via Internet, 3G technology, YouTube and many such mediums are increasingly making this trend popular.

Gone are the days when music and dance were learnt in Gurukuls. Poorva, a scientist in Chicago, who took a fancy for music after a surgery, learnt it for a while in Patna. She told TOI, "Music helped me a lot in my recovery, and now that I am going back to Chicago I would be taking my lessons from my guru via video conferencing. I am taking along with myself lots of his CDs and DVDs so that I can practice music there by my own."

Jaspreet Kaur, a vocal singer who learnt music here for two years from 2001 and is now settled in Australia after her marriage, keeps in regular contact with his guru here with the medium of webcam.

Rajiv, a singer and director of Ninad Centre of Arts, an NGO that teaches music and dance, says most of his students who have moved out of Patna, maintain regular contact either via phone or Internet, "I even e-mail some of the recordings to my students as required, said Rajiv, adding, "Technology has changed the whole scenario of learning music. With the invention of digital instruments like tanpura, tabla and nagma machine, learning music and dance at home has become very simple. Students can practice even in absence of qualified instrument players." These instruments are available in market for Rs 5,000 to Rs 6,000.

Vikrant Pandey, 14, currently studying at Oshawal high school in Kenya, had taken three-year vocal music training during his stay in Patna. He now uses various DVDs, YouTube and mobile phone to learn music. "Whenever we have to give any performance in Kenya, we sing on phone to our teacher and he guides us from Patna. Technology has made it possible for us to continue and learn music without many compromises."

Shefali Mishra, who has done graduation in Kathak from Patna and is now doing MBBS at Kolhapur, said, "It is difficult but various videos available at YouTube make it easy. Now, when we have 3G-enabled mobile phones, we can even see our gurus performing live for us and teaching us 'mudras' and explaining each time we make a mistake. Skype is also a big relief."

Neelam Chaudhary, a famous Kathak dancer and disciple of Pandit Birju Maharaj, says, "Learning music and dance in the initial or final stage is possible by such mediums. But to get full 'talim' through such media is impossible. For perfection, teacher's guidance and company is necessary." Chaudhary, a senior government official, also runs a dancing school for youngsters in the city.

Another famous Kathak dancer from Patna who is now settled in London, Stella Uppal has set up a dancing school in which some of the city youngsters take dance classes by applying modern technology.

source

Docomo's 3G Wi-Fi hub

Why buy a personal 3G SIM card when you can buy one of Tata Docomo's new 3G Wi-Fi hubs? It allows you to connect upto 5 wireless devices at 3G speeds!

What is it?

Your very own gateway to freedom. Freedom from wires and freedom from buffering. If you have tried to view a YouTube video of the baby getting scared of his sneezing mom, you'll know what we mean. This pocket device will work as a portable router for up to five devices and can connect using either a CDMA Tata Photon Plus SIM card or a 3G SIM as well. Either way, you will get enough bandwidth to watch your favourite videos without cooking dinner while they load!

So what's new?

We have had internet USB sticks for a while now and more recently, even 3G versions of them. But the 3G Wi-Fi Hub flexes its muscles by being able to shoulder the load of multiple devices connected to it. Any sort of Wi-Fi enabled device can be connected in a jiffy and while speeds may be compromised depending on number of devices, our tests with four connected devices showed a drop of speed from 1.3Mbps to 350kbps on the Photon Plus SIM card. However, streaming videos was a pleasing experience with almost no buffering of standard-def uploads.

Can I use 3G yet?

Sure you can, but not in some parts of the country yet, including Mumbai. But sweat not, since this device is ready for both CDMA and 3G. If you live in a city that is still off the map for Tata Docomo 3G, just use the Photon Plus SIM card and still get greater than normal speed for surfing and maintaining your virtual farm.

How long until it runs out of juice?

The claimed battery life of four hours was almost met by our own tests and we exhausted the unit after about three hours and a few minutes. It can be charged via USB or a traditional power outlet without any interruption in the signal strength. Very nifty.

So, you're making me buy one?

You could get faster speeds via LAN-based Wi-Fi but for travel and portability, this is ace.

Verdict

Easy to connect, simple to use and with tariff plans that won't make you bankrupt, it's hard not to recommend this pocket-friendly Wi-Fi hub.

Price: Rs 5999

source

Location-Based Services: Market Forecast, 2011-2015

CAMBRIDGE, Mass., June 1, 2011 /PRNewswire/ -- Although mobile operators continue to lose control over location information with the increased adoption of GPS, the strong growth in global location-based services presents some potentially significant revenue opportunities for them if they focus on the right areas, according to a new report from Pyramid Research (http://www.pyr.com/).
Location-Based Services: Market Forecast, 2011-2015 provides a detailed overview of the current status and size of the location-based services market. It takes a specific look at the positioning of the mobile operators within the value chain and how they can leverage their assets to take a stake in this growing opportunity. Several services are analyzed, but the biggest focus is on navigation, the largest in terms of revenue where various business models are establishing themselves and a range of different players are focusing their efforts, creating a dynamic and fast-changing market segment. Other services such as people finding and local search are also covered. Case studies are provided of operators in all geographic regions to provide a range of different examples and market approaches.
Download an excerpt, or purchase the report here: http://www.pyramidresearch.com/store/Report-Location-Based-Services.htm?sc=PRN060111_RPLBS
"Following many years of high expectations, the location-based services market is finally coming of age. Revenue is expected to reach US$10.3 billion in 2015, up from $2.8 billion in 2010," according to Jan ten Sythoff, Analyst at Large for Pyramid. "There are a number of different factors driving market growth, including increasing GPS and smartphone adoption, success of new business models, continued growth of mobile advertising and the wider coverage and higher speeds of mobile networks," adds ten Sythoff.
Growing adoption of GPS devices is the key driver, helping a whole host of different applications and services to grow. "For mobile operators, this is an opportunity to drive new revenue streams, but it is also a threat because it means access to location information is no longer their monopoly. In 2008 operators gained around 80 percent of all location-based service revenue. This has fallen to around half, but the total market has grown more than fivefold," he says.
Navigation, local search and people-locating services are the key areas for operators to target because this is where we believe they are best positioned. "There are important regional differences in the location-based services market that mobile operators needs to pay attention to," notes ten Sythoff. "Developed markets in APAC with very high GPS penetration, such as Japan and South Korea, are progressive in offering location-based services, people finding and advertising in particular while emerging regions such as Africa & the Middle East and Latin America have much lower GPS and smartphone penetration, and consequently there are fewer opportunities for location-based services," he indicates. Regulatory factors are driving investment into some markets while some operators are launching location-based services to differentiate in competitive markets such as Nigeria.
Location-Based Services: Market Forecast, 2011-2015 is part of Pyramid's research report series, and is priced at $3,495. Download an excerpt, or purchase the report here: http://www.pyramidresearch.com/store/Report-Location-Based-Services.htm?sc=PRN060111_RPLBS.
Contact:
Jennifer Baker, +1-617-871-1910, jbaker@pyr.com

SOURCE Pyramid Research

Percept Knorigin signs deal with Alcatel Lucent to provide digital content

(IANS) Indian digital media company Percept Knorigin (PK) said Wednesday it had signed an agreement with French telecom firm Alcatel Lucent to expand the distribution of digital entertainment content to its subscribers across India.
"PK will use Alcatel-Lucent's digital media store (DMS) to enhance its web and mobile entertainment service, which is offered to consumers through partnerships with telecom service providers such as Bharat Sachar Nigam Limited, Mahanager Telephone Nigam Limited and Bharti Airtel," the company said in a statement.
Digital media store simplifies the distribution of applications and multimedia content across any network to any connected device including PCs, mobile phones and TVs.
The company's services like Adchakra, Cinecurry, HelloTV and 51010 dial-a-video has experienced rapid growth of nearly 300 percent last year. Therefore, to meet the increasing demands the company needs a robust digital media platform that could fulfill the requirements of mobile and web service providers.
With more than 1.2 billion people, India provides an enormous potential audience for the company's entertainment content.
"We were looking at a scalable service which can keep pace with the great growth we experienced last year, one that can provide us with the capability to create services across mobile phones, tablets and laptops," said Viraj Malik, managing director and chief executive officer, Percept Knorigin.
"Our deployment of Alcatel-Lucent's digital media store will provide an all-in-one solution to the challenges service providers face in terms of content, platforms and business operations," he added.
Digital media store will enable service providers offering PK services to establish personalised portals supported by merchandising tools.source

Wait Could Be Longer For Better 3G Services

The promise of high-end phone services by mobile firms through the much-hyped third generation (3G) telecom technology seems to have hit a roadblock as customers complain of frequent call drops and inconsistent internet speeds.

Experts say it could take between six and nine months for the service to stabilise.

Anuj Kumar, a Delhi-based banker, preferred switching back to the 2G network after he got exasperated by deficient service and inconsistent network coverage.
"Problems of call drops increased once I switched to 3G network. The voice quality also became very poor. I was left with no option but to switch back to the basic network. In my line of job uninterrupted calls are a must," Kumar told IANS.
Pratibha Srivastava, a sales manager with a leading private bank, had similar grievance.
"The connectivity on the 3G network is very, very poor, especially when a person is on the move. While the network disconnects frequently, the voice quality is also not good at all," said Srivastava.
Among the nine-million odd people who are estimated to have opted for 3G services in the country, there are many others like Kumar and Srivastava who are facing similar problems with their services across the country.
The private telecom operators who shelled out billions for buying spectrum claim that every new technology needed some time for maturing and becoming consistent. According to them it was a matter of time for consumers to experience the promised quality of 3G.
But Telecom Regulatory Authority of India (TRAI) Chairman J.S. Sarma does not agree with the claims of operators.
"It is high time customers start getting quality services for the money they are paying. You cannot go on saying that the problems are caused due to initial phase launch for so long. Such excuses can be accepted for a week or so," Sarma told IANS.
"We also need to look into what kind of investments these people are making," Sarma said and added that the telecom watchdog was looking into the matter and would come out with a quality check very soon.
Mahesh Uppal, a telecom analyst and director of consultancy ComFirst India, maintains the networks are having problems because they were moving customers from 2G to 3G.
"Even I am having problems with the 3G network. I feel that this is because the networks are in a transition phase. Therefore some hiccups are probably expected. These companies are moving into 3G in an incremental way," Uppal told IANS.
On the other hand the telecom operators say that every new technology takes time to find its feet and so it is with 3G.
"You have to realise integrating new technology with an older one takes time -- 3G is like going back to square one. Operators almost have to build an entire network," said Rajan Matthews, director general of Cellular Operators Association of India (COAI).
"The operators will take almost 6-9 months to straighten out things."
Though the telecom watchdog does not have a record on the specific number of customers who have switched from 2G to 3G so far, some telecom operators have revealed their data individually.
While the dominant player Airtel currently has over two million 3G subscribers, Idea Cellular has one million across the country. On the whole, there are 811 million mobile phone subscribers in the country.

Jaideep Ghosh, director, KPMG advisory services, too, agrees with operators. Since the technology was new to India and companies were still in the implementation phase, some technical glitches were bound to come up, he said.

"Some operators launched it six months back and some are still in the process across all the circles. So it will be too early to a conclude that the services are good or bad," Ghosh told IANS. "We should wait till all operators launch full-fledged services."

A few operators also blame scarcity of spectrum to be a hitch for the service providers not being able to perform efficiently.

"The larger problem is not 2G or 3G but spectrum allocation. If you do not have enough spectrum, how would you be able to provide better services?" queried a senior official with a leading telecom operator.

Tata DoCoMo was the first private player to launch the 3G services in the country -- in November 2010. Bharti Airtel, Reliance Communications and Idea Cellular are among the other operators who have launched their 3G services across the country.

Third generation telephony services are supposed to allow faster connectivity with some new applications such as Internet TV, video-on-demand, audio-video calls and high-speed data exchange.source

From Generation To Generation

The lure of 3G notwithstanding, telecom players have a long road ahead if they are to monetise it
That which is well built
will never be torn down.
That which is well latched
cannot slip away.
Those who do things well
will be honoured from generation to generation
Tao Te Ching
The auction of 3G or ‘third-generation’ spectrum has been followed up by the rollout of services that will enable the delivery of a range of next generation services — video streaming, movie downloads, video calls and so on. With as much as Rs 67,719 crore invested by operators in 3G spectrum, they are bound to follow Tao Te Ching’s wisdom in introducing 3G services in the market.

Bharti Airtel is using experiential marketing wherein it has several red-coloured “3G buses” on the move in major cities. Users can step into these buses and have a firsthand experience of 3G mobile services like mobile TV, video calls, high-speed downloads and so on. Its print and outdoor ad screams: ‘Airtel 3G is here’. Tata DoCoMo, known to have one of the largest footprint in retail stores amongst telecom operators, is turning thousands of its shops into “experience stores”. Consumers can walk in and experience services like video SMS, video streaming, mobile television, ultra-high-speed data transfers, route-finder, and live aarti. This assisted experiential marketing would help in making the millions who have not used GPRS yet more familiar with what 3G is all about.
Many of us are familiar by now with Superhero ZooZoo flying all over our TV screens. That was Vodafone’s 3G launch strategy, that is, use its much-appreciated TV ads to announce the introduction of 3G services in India. Superhero ZooZoo stands for the brand personality of 3G — Faster, smarter and better — and helps educate subscribers on this new technology in a simple manner. The different things Superhero ZooZoo does in the TVC indirectly point to the quality of the 3G network that Vodafone aspires to offer. Vodafone is also offering free time-bound 3G trial to its current GPRS subscribers. This not only serves the purpose of pre-purchase service trial but also provides Vodafone with valuable usage data from which it can infer which services are more sought after, how the data consumption is likely to change after mass introduction of 3G services and so on.
On the other hand, Reliance is focusing more on partnerships to offer popular value-added services. It has tied up with Universal Music Group so as to offer music streaming and is promoting its new App Store on Reliance 3G that enables you to get directions while on the road, tips on cooking and yoga, and so on.
Lessons from PSUs
There are some lessons to be learned from BSNL/MTNL in terms of 3G strategies that did not work well. Users found their 2G to 3G SIM card exchange system complicated since one was required to send an SMS as “M3G120” to 53733 and confirm the SMS you get back as “M3G120 Y” to 53733. BSNL’s strategy of offering 3G services at the same price as 2G perhaps weaned subscribers from competition. However, this did not lead to higher data average revenue per user (ARPU) vis-à-vis the 2G network. (In Japan, innovative data plans and highlighting the relevance of 3G services have enabled high penetration and data ARPU.) Moreover, MTNL and BSNL were not able to provide enough marketing thrust to 3G services, thus leading to a lack of awareness of their 3G services. It must not be forgotten that the target customers for a service like 3G prefer young and energetic brands like Airtel and Vodafone.
To provide critical insights in order to close in on a strategy for the deployment of 3G services, the eTech Group@IMRB, active in the area of telecom-related market research for several years now, recently carried out a Syndicated Study on 3G Mobile Services in India christened “The World Of 3nity”. The first round of the study has been conducted amongst as many as 10,000 mobile subscribers and 1,520 establishments across top cities such as Delhi, Mumbai, Chennai, Kolkata, Pune, Ahmedabad, Bangalore and Hyderabad. The study also covers views of several industry experts on the India 3G market. Mobile operators seem to be on the right track since as many as 72 per cent of mobile users assume understanding usage of 3G services would be complicated and someone would need to demonstrate it to them first.
The study reveals that only 9 per cent own a 3G-enabled handset, but 82 per cent are willing to switch to a new (3G-enabled) handset to avail 3G services, provided it lies in the Rs 4,200- 6,400 price band. This is in line with the fact that Indian handset manufacturers have already started offering 3G-enabled handsets at ‘middle class affordable’ prices. With a plethora of handsets in the market, the bigger issue is the pricing of the 3G services. As we know, India is a price-sensitive market and for 3G to percolate to the masses the price would need to be quite low and attractive — to start with. However, that is unlikely to happen given the huge cost of spectrum which itself is scarce and the fact that some of the winners are operating in the low-ARPU voice market.
The consumer segment study was carried out using random sampling with a minimum quota for some aspects such as SEC A, B, C & D and subscribers of the 3G spectrum winners while. The fieldwork was completed in December 2010.
As per the IMRB study, 32 per cent are aware of 3G mobile services. Amongst those who are aware, as many as 93 per cent associate video calling with 3G. Here is what an industry expert says about other 3G services: “Purely utilitarian stuff like traffic signal, map, directions, facilities, restaurants and purely entertainment stuff like gaming, infotainment will be very big. Casual gaming will dominate.”
Video versus voice
The report also reveals even more interesting information — that while video calling may be the most awaited 3G application, the main reason people would consider subscribing to 3G services is that 73 per cent of mobile subscribers believe it will mean better voice quality. Experts believe that in the first instance, 3G will be used by many operators to improve their overall network quality and retain voice customers.
Video calling could well emerge as the next big mobile application. Even the unlettered can use it to communicate. However, there are certain constraints — both sides need a double camera phone. It is ironical that rural citizens who require high-speed applications (telemedicine, e-education) the most can afford them the least. In Korea, the government accelerated the adoption of 3G with subsidies for operators as well as mobile phone manufacturers. In India too, the government and industry would need to work together to take 3G to the villages.
The business segment study was done purposely amongst those involved with mobile/telecom decision-making. In case of SMEs, mobile usage is restricted to voice. Besides, messaging is also used especially by small enterprises. However, awareness of specialised enterprise applications such as ERP and CRM on mobile was found to be abysmal. In order to increase penetration of 3G amongst enterprises, it is important to create higher awareness about how they can utilise 3G for business purposes.
We have seen in global markets that it takes time for 3G to transcend from a technology to becoming a household need. The recent rollout of 3G in China has seen only 4 per cent adoption after two years of aggressive marketing by the players and evident government backing. Since none of the operators have a national footprint we are likely to see partnerships being forged amongst operators to weave together a national offering. And with consolidation in the telecom industry on the cards in the next few years, only time will tell who religiously followed Tao Te Ching’s wisdom.

The author is Group Business Director, IMRB

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