The good news first. Indian mobile industry is certainly one of the most promising markets in the world. In spite of a global telecom slowdown, according to Morgan Stanley, this industry is expected to show a CAGR subscriber growth of 73 percent through 2001-2005. VOICE&DATA’s own estimates predict a revenue growth of 35-40 percent in the current fiscal.

And now the bad news. ARPU of Indian mobile operators has been showing a gradual decline, with more subscribers being added at the lower end and tariffs going southwards.

In this context, it is being felt that mobile applications and content could be the way to boost ARPU. Heightened competition both in the GSM and CDMA space are only going to reinforce the need of a differentiator in the form of content and applications.

Though some groundwork has been done in this aspect, the Indian mobile content/applications experience has hardly begun. India is slowly though surely discovering the utility of SMSing. Operators today are experiencing traffic of up to half-a-million SMS in their individual networks. Yes, most of it is peer-to-peer SMS, and value-added services constitute less than 10 percent of the traffic. WAP has been a non-starter so far.

VOICE&DATA recently invited a packed panel of industry leaders from the mobile content/applications community as also from the cellular operator community in India. The idea was to get them together on a common platform and raise the important issues plaguing the nascent mobile Internet industry. The purpose was to create better understanding of each other’s expectations and foster true relationships and joint efforts.

The Top View 2002 event comprised two parts. The first part saw top executives representing the four major segments of mobile Internet, making presentations highlighting the aspirations and issues of their segments. Taron Mohan of Phoneytunes represented mobile ring tones and logos; TN Prabhu of Times Internet represented mobile news and information services; Vishal Gondal of Indiagames represented the mobile gaming community; and Sanjay Goyal of Asia Cybernet represented the Wireless Instant Messaging community.

The panel discussion that followed was moderated by Sanjay Sharma, GM, mobile Internet applications and solutions, Ericsson India. The panelists from the operators side were Rohit Bhatia of Airtel, Balu Nayar of Hutchison, Rajat Mukarji of Idea, and Savinder Sarna of Spice Communications. The content side was represented by Raj Chainani of Ruksun, Dilip Venkatraman of India Today Group Online, Neeraj Roy of Hungama, Atanu Mandal of Cellnext and Jawahar Sabapathy of HP India. The discussion as planned out came out with several underlying concerns and issues. In the course of discussion, many conflicts came to view. What was apparent by the time the discussion was over was that both the operators and the content providers needed to understand each other much better. A call for joint initiative and meaningful partnership was the final message of the evening.

Operators: Content is King … Really?

Dilip Venkatraman  general manager, sales and brand development India Today Group Online  Voice surely is the most critical thing. But, just because I have a landline I don’t keep talking. Same with the mobile. There is going to be a stage where content will be one of the major drivers of revenues.

l Rajat Mukarji
Everybody here is talking about content being the king. But if an application provider comes to you without content, what do you do? To a certain extent, if content is king then the kings of content would rule for a while.

l Balu Nayar
‘Content is king’ is really going to be an empty statement if you don’t say who owns the content. The guys who own the content are the guys who own the users who generate the 

content. We’ve got Yahoo! and MSN. They are the ones who own the content. It is not the person who sits in the middle.

Does Content Give Returns?

l Sanjay Sharma
If you look into the lifecycle of any product, you only start making money after a period, once you reach a mass-market stage. You do not make money with 10,000, 20,000 or even 1 lakh SMS per month. How is the operator going to make  money. He is taking a risk.

Jawahar Sabapathy solutions architect HP India When an application comes, it requires activation, provisioning and billing. Investment in billing can sometimes be much more higher than the price that is actually going to be paid for the content.

The content provider is also taking a risk. The question is: Are they being compensated for the risks they are taking?

l Rajat Mukarji
Frankly in none of the services that have been launched have I ever seen a business case. I don’t think there is a business case. I don’t think there will be a business case for a long time to come. It is still far too small a segment. Nevertheless, every service provider is going ahead with developing new products. Service providers are seeking out a number of content 

providers to develop new services. It is only the desire to create a service differentiation that is driving this.

l Neeraj Roy
A more relevant discussion here could also be why neighboring countries have more subscribers. In today’s context we are talking of 5-6 million. But what is it that can really trigger India to have a user base of say 25-30 million. Obviously, applications are not likely to standalone take us there.

l Dilip Venkatraman
What SMS has done for us is that we have effectively transformed one-way mediums into two-way mediums. This is 

Atanu Mandal managing director and chief executive officer Cellnext Content providers have been there for some time and so have been the operators. Then why hasn’t this thing taken off? Both the sides need to go through a paradigm shift in their own thinking process.

something that has to be noted. The India Today Group now has a fantastic channel that is interactive and instantaneous, reaching out to our 40 million customer community. The 6.8 million mobile users are covered in this. Therefore this is something which we just cannot ignore. Voice surely is the most critical thing. But, just because I have a landline I just don’t keep talking. Same with the mobile. There is going to be a stage where content will be a major driver of revenues. 

l Jawahar Sabapathy
In Philippines, the president was changed through SMS. So, how do we take India from 5.5 million for 8888 to a figure of about 18 million which is being shared by the two operators there. Again the break-up of P2P versus applications-driven SMS would still be 90:10. But, 10 percent of 18 million is lot of money.

Raj Chainani chief executive officer Ruksun Service providers  are not sure whether they want to be a pipe or not. They are not sure if they want to own the content.  They want to be there first. But they also want to play it safe.

l Raj Chainani
In my opinion, the ones who take a little bit of risk end up winning the race. But asking service providers to take further risks is like blasphemy. But the fact remains. If you want to increase ARPU by introducing these services, you have got to do it.

l Balu Nayar
We do have premium services based on SMS—ring tones and logos… The arrangement works very well. There is enough money for the middle entity and there is money for the ultimate content provider also. That’s worked well with us. But, why are we talking only about SMS when it comes to application. We have got an extremely good applications platform going on voice. You can give it a fancy name… probably voice portal. But he gets everything he wants there. These are the areas where you can charge higher rates than the normal SMS.

Big Challenge Is Marketing

l Sanjay Sharma
The consumer is most critical. We need to understand him. We must know what the youth segment wants. We must know what the middle-aged segment wants. There are many segments that we need to understand for the different type of content and applications that we bring in. Is the consumer willing to pay Rs 50 for a gaming applications? We need to think about it.

l Rohit Bhatia
We do a lot of marketing and that’s what creates the impression that we have deep pockets and a lot of money and that we are a kind-of FMCG company. But each of the services that are mentioned have to be marketed and that is tough. In this market, there still are people who do not use an SMS. Why SMS? 8888 service is quite popular. Why did it succeed? Because, there was a media powerhouse behind it constantly reminding about 8888.

Neeraj Roy,  managing director and chief executive officer Hungama.com Today, the technology is being thrust upon us. We need to find out which is the critical service and then put all effort in it.

l Neeraj Roy
The consumer does not buy a product, or service. He buys convenience. He buys things which he or she understands. Yes, SMS is getting popular among the younger generation. But I think there is a need to distinguish between services and find out what works. And then go out into the market to get to the critical mass. The consumer is not a geek. So we have to educate with a greater focus on a few applications rather than doing all kinds of content.

What are the ways in which cellular operators and content/application providers can collaborate for mutual benefit. And what are their concerns and reservations?

n Exclusivity and Revenue Share

Balu Nayar  general manager value-added services Hutchison Telecom India ‘Content is king’ is going to be an empty statement if you don’t say who owns the content. The guys who own the content are those who own the users who generate the content. It is not the person who sits in the middle.

l Rajat Mukarji
An application provider comes running to an operator with an idea. The operator says: you have an idea but I have to think about it. The content guy is in a hurry. So he goes to another operator. Then again to another operator. And by the time the first person is ready to market, the third person is also ready to market. So in effect, you have lost all the fizz of going to the market first. I am not asking for exclusivity. No, I don’t think that will work. But, I think when the content developer develops a product, he should probably work with one operator and then stretch it out. It doesn’t works any other way.

l Raj Chainani
This thing of content providers talking to a service provider and going to another. Yes, this happens. It is a fact. We as a content provider cannot afford to wait. Neither do we have deep enough pockets. Even then, for the content side or the applications side, the returns have to be commensurate.

l Balu Nayar
We took a decision. Whether to go with a middle person who will give access to a lot of portals or to go with one guy who owns the content. Strategy is about sacrifice. And we said we will go with one guy and we will make that work. We spoke to our consumers. The joint partnership works far better than where the ultimate customer, the user, is not involved at all.

Applications providers don’t like exclusivity. But if you marry too many partners, nobody is going to respect you at all. It is very simple.

Savinder Sarna,  head, value-added services,  Spice Communications The exclusivity arrangement is doing  a lot of bad to operators. It is doing bad in terms of  the revenue that they are generating out of this stuff.

l Savinder Sarna
The exclusivity arrangement is doing a lot of harm to the operators. If a content provider comes to us today, he is demanding a revenue share of about 40-45 percent. Minimum is 40. If it continues this way, this could be a major hindering factor. May be the content providers can get into a common agreement with several operators and look at volumes for getting revenues.

l Audience Voice
Why has the revenue sharing model evolved? It is because operators find a win-win situation in it. They have a zero start-up or a very small nominal start-up fee to give the content providers. I am sure content providers would like to take a one-time hefty amount in the beginning rather than the 20-25 percent revenue share. The operator must appreciate what the content provider is coming to. It is not that content provider is the king or anything. Content and technology have to go hand-in-hand.

Rajat Mukarji  vice-president, customer operations  Idea Cellular I debunk the theory that the mobile content/applications is a brave new world. It isn’t. It is total confusion. Complete lack of clarity. But we are all in it. Everybody is in it. And we cannot afford not being there.

l Atanu Mandal
There was the issue from the operators side about exclusivity. Like access, if they start looking at content as something that will drive their growth, then how important is exclusivity in that sense. Indiatimes is already providing many services over SMS. They will graduate to MMS and then to GPRS. That will pump in a lot of money for operators. Star TV will soon join in. And others will follow. Isn’t it great for operators to get their network filled up? It’s more revenue for them. So, does exclusivity really matters?

l Sanjay Sharma
The rule of the game is, ‘Where is the money?’ and we need to make money. Now who creates value proposition? It is simple demand-supply. If there are ten guys supplying the same content and there are two operators, definitely the card is on the latter’s side. It’s normal business. We don’t have to even think about it.

n Trust

l Sanjay Sharma
Do we trust each other? Signing a contract or an MoU is not enough. It is investing and committing to each other both short-term and long-term. We can only be successful if we share what we make. The service provider should understand that the content provider is putting so much effort, and so he should make some money. The content provider should also see that the operators are marketing his products.

l Atanu Mandal
The service providers and content providers have to draw their boundaries. If Indiatimes is marketing the service, the operator should act as a pure channel partner. The expectations on the revenue share is definitely going to be higher. And the acceptance of this fact is slowly starting to happen among the operators.

l Dilip Venkatraman
Meaningful partnerships have to be struck wherein both the parties share the burden of marketing. Yes, the infrastructure is already there. Now, we should work together.

Operational Challenges

Rohit Bhatia,  head (product development)  Bharti Tele-Ventures (Mobility) If some more depth can come from the content/application providers in understanding the situation of the operator, it will do everybody a lot of good.

l Rohit Bhatia
Deploying all these services is a huge investment for operators. Also, having deployed it we face issues of service provision, customer-care and support. Each call to the customer care costs us money. My feeling is that such things are not looked into.

l Rajat Mukarji
Till about a month ago, I don’t recall a billing package that could do differential billing. And you know that SMS is the primary carrier. If you cannot do differential billing then you are stuck at giving every SMS at Re 1 or Rs 3.

l Jawahar Sabapathy
When an application comes, it requires activation, provisioning and billing. Investment in billing can sometimes be much more higher than the price that is actually going to be paid for the content itself.

Nareshchandra Laishram