While India boasts of one of the fastest growing markets
for mobile phone usage, it also has one of the lowest ARPUs. How do
you think Indian telecom players can survive in the long
run?
Bharti Airtel, India's top mobile phone carrier recently reported a
12 per cent drop in average revenue per user (ARPU) per month, a
key gauge for profitability, in the Q4 results. The telecom market
in India is experiencing an interesting period, with more than 15
cellular providers in the country on already deployed or deploying
2G and 3G technologies on different portals, majority of the
service providers are in customer acquisition mode. This means
India has one of the lowest ARPUs globally, and declining ARPU
driven by intense competition remains a big concern for the
operators.
However, we predict that this will change soon due to some of the
following factors:
a) Mobile Penetration is growing close to 90 percent.
b) Customer acquisition strategy is currently being reviewed
c) Voice revenue is declining
d) Service providers in India have paid huge amount of money for 3G
spectrum
e) Data services will be the next big thing in the Indian
context
f) Mobile Number Portability is already in place in the country
Indian end users are looking for better quality, service and
experience for which they are willing to pay a premium. Hence, all
operators will need to examine tangible differentiators to sustain
in this cut throat market as well as retain and attract the most
promising customers.
Two other factors also need to be considered:
There is polarization of ARPUs in countries like India. So the
newest subscribers, often being in lower social-economic classes,
will always be greater in number, and will continually pull the
average spend (ARPU) downwards. But the higher spenders are still
there, they haven’t gone anywhere. So there is this
polarization between high spenders and low spenders that is
actually increasing over time. In fact, in 2010 approximately 9 per
cent of subscribers were responsible for 29 per cent of revenues in
India, and furthermore 29 per cent of subscribers were responsible
for 70 per cent of revenues. So firstly, it’s about targeting
the higher data services at these higher spenders who do have
disposable income.
Secondly, for lower spenders, and especially those who rarely use
data, we need mechanisms that lower the barrier to primarily, data
usage and then provide small steps forwards in usage. For example,
our product, Openwave Passport does exactly this, targeting small
spenders (or no spenders) such as, “
One hour of Internet
usage for one rupee” and then, once the peoples’
online interests become apparent, it starts to target specific
niches, e.g. “
Five downloads of Bollywood MP3’s for
two rupees,” etc. It comes down to understanding where
people are today and what small steps they might take from there
– rather than expecting them to sign a 12-month contract.
ABI Research indicates that application downloads in Asia
will surpass 2.4 billion in two years time, generating 20 per cent
of the world’s total available market. Could you give us some
indicative figures for India?
According to research firm IDC, India is one of the key drivers in
the smart phone market, experiencing exponential growth every year.
This makes India a giant market with mobile applications being
built immensely. Informate Mobile Intelligence recently reported
that number of visitors to App stores in India has increased by 108
per cent in a year.
India has one of the highest populations of young people in the
world, and since they are expected to be the biggest consumers for
mobile applications in the near future, we believe the Indian
market will account for 40 per cent of the total Asian application
download markets.
However, mobile application development in India is still in a
nascent phase. As more smart phones are sold substantially, mobile
apps need to be created in a way that they can be used across
cheaper platforms and all platforms. Mobile app developers need to
identify tools that can straightforwardly run their applications in
a platform independent manner. Tools like HTML5 enable applications
to run within the mobile browser, and although still at a
relatively new stage, is expected to bring about major changes in
the mobile market. Inline browser apps are inherently simple (just
HTML, JS, and CSS), inline (occur within the user’s browsing
experience with no need to break the flow), and relevant.