Out of desperation, innovation is born

When you are pushed against the wall, innovation happens. Or so it seems. In Indian telecom for example, where every basic resource is usually stretched to its thinnest, companies are motivated to find new sources of revenue wherever they can.

 

A prime example of such innovation occurred last week, as the cricket crazy nation launched its own cricketing Oscars: Indian Premier League Tournament [IPL Tournament for short]. IndiPolls set up a group of quiz questions voted on via deliberately missing calls for given phone numbers.

 

But if any sector needs to innovate new revenue streams, it's the mobile industry, where disruptive pricing in cellular voice plans - namely per second billing - has put severe pressure on margins. This charging scheme quickly caught on after Tata DoCoMo made the first move in September last year. Some of the new operators responded with sub-paisa billing [less than 1/100 of a Rupee per sec; 1 USD=47 Indian Rupees and 1 Rupee =100 paisa]. The resulting large scale subscriber additions have not had a proportionate effect on revenue growth. VAS revenue as a percentage of overall mobile revenue has grown, but slashed GPRS tariffs and reduced VAS plans have caused a noticeable dip in last two quarters.

 

Since voice commoditization is a foregone conclusion, operators are now beginning to focus on app stores as a way to retain consumer stickiness, reduce churn and hopefully increase revenues. A slew of App store initiatives have been unleashed driven both by OEM-branded stores (LG, NOKIA and Blackberry RIM) and operator-owned app stores (Airtel, Aircel, Reliance ADA). Everyone wants to create the Indian-version of an Apple App Store success story.

 

Meanwhile, Indian mobile VAS ISVs have reached critical mass. Leading VAS companies such as OnMobile are touching revenues of about $100 million, with about 27-30% revenues coming from international operations. Comviva, IMI Mobile, One97, Spice Digital are close behind - with at least one or two of them likely to go IPO this year.

 

 

With a growing number of mobile data users, Indian operators have the next big opportunity to focus on rich media and personalized content delivered intelligently through social networks - provided they work with the right platforms. Devices are capable, content is available, users are ready and hopefully 3G will be finally here soon. If all is well, this year we should see revenue generation from mobile ads, social networks and location apps bring new hope and boost bottom lines.