Ahmedabad: Telcos are about to complete 10 years of their existence in India and the current scenario is vastly different from what it was in the earlier years of the decade.
Tariff structures have become unrecognisable from the prohibitive formats the industry started with and we now have four or more operators per circle. The scenario today is characterised by more calls, more customers, more operators, and more services.
In this happy state of affairs, the one casualty has been the margins. Accordingly, telcos have been forced to revamp their revenue models and while voice is still the prime money-spinner, a discernible shift to data services has already taken place.
The phenomenon has seen the birth of several applications service providers (ASPs), specialising in providing Internet-to-mobile solutions. These B2B players are playing a determining role in popularising data services as they mediate between content providers and service providers.
Chirag Patel, head honcho of Net4Nuts, the Ahmedabad-based mobile messaging solutions company, says: "Mobile operators today are facing falling average revenue per user (ARPU) because of voice service price wars and these markets need a movement to data services to increase business opportunities.
"While telcos are experiencing significant growth, they are also facing fierce competition, as tariffs are lowered to win more customers. The subsequent churn is reducing profit margins, despite the increase in customer volume, and customer retention is now a vital ingredient in a successful network. The way out is to offer more and more value-added services (VAS) in the form of data."
Mobile telephony providers agree that data services are going to be an important revenue stream in the days to come. Says F B Cardoso, CEO, BPL Mobile: "In the current scenario VAS [non voice/data services] does not contribute much to the service revenue. With voice revenues coming under pressure worldwide, operators are increasingly focusing on new applications other than voice to generate revenues. As a result, non-voice revenue is going to contribute more than 15-20 per cent of the total service revenue in the days to come."
Agrees Sukanta Dey, chief marketing and commercial officer, Idea Cellular: "Globally, data revenue contributes 7-20 per cent to the revenue of telcos. The same trend will follow in India where we will see a major upswing in data revenue in the next 12 months."
As of now, however, the Indian cellular services market is primarily driven by voice traffic, with data services accounting for a minuscule 2-4 per cent. Peer-to-peer SMS service forms the bulk of these data services.
Says Harit Nagpal, vice-president, corporate marketing, Hutch: "The share between voice and data traffic is unlikely to change significantly, at least for the next one year. Of course, data service as a revenue stream is going to grow multi-fold, due to the high size data getting downloaded on mobile handsets like video downstreaming, picture downloading and Bollywood clippings. These services will take a much higher space than the current SMS service, which only consists of 150 characters."
The future of data services, however, lies in the integration of various applications into the subscriber's business and work requirements as well as entertainment demand. Says Atanu Mandal, managing director and CEO, Cellnext Solutions Ltd, the mobile Internet solutions and services company of the Escorts group: "Data services will also be driven by the mobile workforce, which is hallmark of several sectors. The main drivers of data services include sales executives, people in multilevel marketing, field technicians, delivery staff, and workers in the areas of healthcare, retail and manufacturing."
Adds Pankaj Sharma, DGM, marketing, Essar Cellular: "The success of data service also depends on how efficiently we are able to establish and market MMS. I forecast 4-5 per cent contribution by data services by the third year of their launch, to the total revenue."
The contribution of ASPs to the enhancement of data as a revenue driver is also going to be critical. Says Patel: "ASPs in India are more than ready to face the data service challenge. We, at Net4Nuts, for instance, gained global credibility with our first offering, Avtaar, which enables delivery of personalised data over a host of devices like a browser, mobile handset, PDA or fax.
"In keeping with the demand for data services, we are now offering comprehensive messaging solutions. For instance, we have e-SMS, which is a marriage of the killer application of the Internet, that is, email, to the killer application of the mobile handset, that is, SMS. Accordingly, subscribers of telcos can send email in the form of an SMS or SMS in the form of an email. We are also providing the facility of sending SMS and email in multiple languages. Besides, we have G-SMS, which is a group messaging facility and can take the form of one-to-one, one-to-many and many-to-many."
Creating end-to-end solutions for enterprises has largely meant focusing on the messaging domain and delivering the messages on the mobile. Says Atul Saran, country manager, India, EFI, which recently acquired a middleware company, Unimobile Electronics: "Our Unimobile Mobile Messaging Platform allows complete management of all mobile services and delivers messages to mobile users on their mobile devices through the Unimobile Intelligent Network.
"Industry segments that we have had successes in include the financial segment, travel and airline segment, media (print and television) and the high-tech segments; with horizontal applications including field service, corporate communications, sales force automation and marketing campaigns."
In the days to come, the mobile workforce is expected to expand greatly. "This workforce has a critical need to access data while on the move. Fortunately, with the advent of GPRS/3G networks in India, enterprises are now evaluating how they can have smarter mobile devices with more data management capabilities. Limitations of space and content form are in the process of being addressed," says R Ravi, CTO, Air2Web.
The advent of more and more sophisticated versions of the existing GSM technology plus altogether new technology is also enabling telcos to provide greater clarity and a congestion-free network, which is conducive to a greater data flow.
Says Sharma: "New Technologies like GPRS and EDGE also enable customers to send and receive data at a faster speed. In India operators are already moving to GPRS and shortly EDGE will also be explored and implemented. With GPRS and EDGE network in place, customers will be using their mobile more often as a computer in order to download pictures and mails and browsing through sites.
"Besides, enhanced productivity by sales force automation on mobile phones, watching video clippings, downloading games are on the anvil. The future of mobile telephony will also see m-commerce using payment gateways. In a nutshell, the mobile handset will complement the computer, ensuring more data usage."
In quest of volumes
Sharma says GSM and TDMA operators will be able to deliver third-generation mobile multimedia services using existing network frequencies, bandwidth, carrier structure and cell planning process. GPRS facilitates several new applications that have not previously been available over GSM networks due to the limitations of speed of circuit switched data (9.6 kbps) and message length of the short message service (150-160 characters).
"GPRS will fully enable the use of Internet applications you are used to on your desktop from Web browsing to chatting over the mobile network," says Ravi. Data application is expected to go one step further. Says Cardoso: "Data application will not be restricted to Internet content but will also extend to some vertical segments like telemetry and telematics. Telemetry solutions include services like remote meter reading and measurement while telematic solutions would include services like ARVT [automatic remote vehicle tracking]."
Obviously, mobile telephony has undergone a metamorphosis and the coming days promise even greater excitement. The only challenge is going to be ensuring volumes.