labels: telecom, marketing - general, writers & columnists, it features
Footloose and wire-freenews
Probir Roy
01 September 2003

Mumbai: The ''China phenomenon'' in the wireless world is now being witnessed in India — marked by an explosion of the wireless market. The results are in — and the numbers are impressive.

Cellular operators in India are expected to earn $8 billion in revenue by 2007, up from $1.5 billion in 2002. Data, which currently contributes $0.8 billion towards their revenue, is slated to expand to $1.36 billion — or 17 per cent of the total revenues — by 2007, according to Gartner. India has a little over 16-million cell phone users today.

This booming scenario is true for Asia as a whole. Asia now accounts for 36 per cent of the world''s telecom market (up from 21 per cent in early 1991, and expected to reach 50 per cent in 2007), 33 per cent of the world''s Internet user base (225 million Internet users, or an average of 6.3 users per 100 inhabitants), 95 per cent of the world''s 3G mobile users, 47 per cent of the world''s ADSL broadband Internet users, and seven of the world''s top 10 most profitable telecom operators (International Telecommunications Union, 2002). It also has the world''s largest regional user base of cell phones and is also a pioneering player in cutting-edge 3G and 2.5G markets.

Opportunities and challenges
The wireless explosion has opened up a wide spectrum of opportunities and challenges for different segments of society: consumers, technology vendors, the media, businesses and regulators.

Consumers
Although stock market valuations project gloom-and-doom scenarios for a number of wireless players in India, consumers have never had it so good in terms of access options, pricing competition and communications convenience.

They are rapidly taking to data services like SMS due to the low cost of messaging, ease of use in noisy environments, the ability to communicate unobtrusively during meetings, communication options during urban traffic grid locks and long-train commutes, roaming agreements across nations, and the proliferation of premium services (downloadable ring tones, news alerts, sports scores, stock updates, targeted ads).

Technology vendors
Business travellers, managers at multiple sites, students on campuses, sales personnel, and even families using multiple online devices at home are the target market for the burgeoning wireless networking industry.

Patents for standards, protocols, chipset designs and wireless applications are major source of revenues on the intellectual property rights (IPR) front. The challenge is to generate and protect IPR while also making it affordable for use by players at various points of the wireless value chain.

For instance, in Asia, China, the world''s largest cellular market with over 180-million wireless subscribers, has a lot to gain by influencing existing wireless IP standards and even creating its own ones, such as TD-SCDMA, which is less costly than CDMA2000 and WCDMA systems.

Media industry
Cross-fertilisation between wireless and other media like television and the Internet is providing new sources of data traffic and evolving newer and more lucrative business models.

The show Who Wants to be a Millionaire drew over a million SMS messages from viewers in just one day for a network operator in Europe. In some markets, MTV lets users vote via SMS for which video they want to watch next. At a P2P level, over 150 million SMS messages were sent in 2002 on Father''s Day in the Philippines. Valentine''s Day is another big draw for SMS users.

Many of the leading portals (like Yahoo in Singapore and India) have launched SMS services for instant messaging via gateways on their websites, and downloadable ring tones as well (Catcha in Malaysia). The Indian Express newspaper even tied up with the Arab news channel Al-Jazeera to provide users with SMS news alerts during the recent US-Iraq war.

McDonalds in Australia has effectively used permission-based SMS marketing to promote incremental sales during lean periods. Cleo magazine in Singapore also offers SMS ads for members who sign up for the Cleo Club service operated by N2N Consulting.

Telecom operators
Mobile operators are seeking to increase ARPU (average revenue per user) by promoting P2P traffic (which accounts for an estimated 90 per cent of today''s SMS usage) as well as premium SMS offerings (such as group chat, buddy lists, permission marketing, machine-to-machine communication).

Payment plans can be per message, by data volume, by subscription, or some combination of the above. Prepaid plans are becoming popular among budget-conscious parents who want to control their children''s usage of mobile phones, travelling businessmen, and providers of premium services.

But numerous questions still haunt mobile operators. During hard economic times, will users cut back on SMS usage — or cut back on movies and other recreational spending? What is the optimal pricing ratio for SMS in comparison with voice tariffs? How can the SMS user base and SMS traffic be boosted — while also increasing ARPU? How should the transition be managed between SMS and MMS, between GSM and 2.5G or 3G? What is the best revenue-sharing model between content providers and mobile operators?

Businesses
Wireless media have significantly transformed organisational communications and business workflow, ranging from calendering and alerts to customer relationship management and logistics coordination. At the multi-enterprise collaborative supply chain level, mobile applications can improve speed, cost and accuracy considerations in procurement, supply-chain execution (fulfilment) and measurement (asset visibility), and service management (field-force automation).

While PCs and workstations have come under some criticism for ''tethering'' knowledge workers to their desks, wireless technologies may be the perfect answer to ''mobilising'' the workforce by letting them capture and harness key information and knowledge attributes wherever they are, whenever they want, and however they want.

Strategies focused on knowledge mobilisation via handheld devices and wireless networks — ranging from Pocket PCs and cell phones to WLANs and RFID tags — can take knowledge management to an entirely new plane, putting road warriors and field workers in the centre of the information and communications world via mobile portals and on-demand expert services.

Regulation and legislation
Beneath the hype and hope of mass consumer market adoption and enterprise uptake of wireless technologies, major tectonic shifts are taking place on another front: IPR, or the creation of technologies, content and applications that can be licensed for lucrative royalties at various points of the wireless ecosystem.

Wireless operators, chipset manufacturers, application developers, content aggregators and the entertainment industry are now in bed together trying to figure out how to ensure that licensing of mobile content can build healthy revenue streams.

Music publishers, according to industry estimates, received over $71 million by supplying handset ring-tones last year. The challenge for the content industry is to exploit such new markets, while also safeguarding IPR and avoiding ''mobile Napsterisation.''

The rapid proliferation of multiple wireless technologies along with the realities of scarce spectrum can lead to numerous challenges for regulators, ranging from license allocation to the setting of tariffs.

The issues raised will need to be systematically addressed in the next few years, and perhaps even proactively, to pre-empt what has happened in the broadcast business, where legislation is attempted to be back-ended into a dynamic technology-centric business, albeit with disastrous results.

The need of the hour in India is a comprehensive convergence policy and a law knitting together communications, broadcast media and content like in the US.

 


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