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3G riding on too much expectations?
By Ojas Sharma
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Saturday, 09 January 2010, 19:50 IST |
6 Comments
25,000-35,000 crore from the sale, and with only three spots up for grabs the winning telecom providers will be under lot of pressure to earn quick revenue to fill up the 3,500 that they will have to invest.
Indian telecom industry has been going through dramatic changes in past few months in terms of new operators and the price wars. The issue was addressed in the Mobile India 2010 at 2nd International Conference on Communication Systems and Networks (COMSNETS), where experts from telecom industry, operators, developers and Value Added Service (VAS) companies came together to share their insights.
In India, telecom operators play a central role in the industry. Experts feel that the current ecosystem is not scalable as developers are still struggling to find their way to customers past the operators. As compared to few other markets, VAS companies have to heavily rely on the operators for the success of their product and company. Keeping this in mind, companies have to really think about a "killer application" which will be readily accepted. "As an operator I am always looking for something that will change customer's life. We (operators) are not interested if an application improves the life of 25-30 thousand people. But we are interested if it affects the life of 2.5 million people," said Sandeep Sawhney, Head of New Products and Innovation, Aircel.
Sawhney said developers have only been able to make applications which make an impact on very small segment which in turn will not bring any sufficient revenue for operators. Another problem that the VAS space has been unable to overcome is to think beyond applications for voice and SMS. "Out of 100 percent revenue six percent is from VAS. Out of this six percent 5.5 percent revenue was made on applications based on Voice and SMS," said Dilip Mehta, from IIM Bangalore.
Speaking on the other major problem faced by VAS companies Mehta says the basic reason a VAS company has to go through the operator is because Indians are a bit reluctant to use their credit cards for payments and various rules and regulations bog down the developers to directly sell their product to the customers, without the help of operators. Mehta firmly believes that for operators, development of VAS companies is the most viable option for earning revenue and expanding the market as the price advantage will soon disappear.
The year 2009, can be easily called the year of smartphones worldwide. But, the situation has not been the same for India, which still does not have majority of the high end smartphones like Motorolla Droid, Apple iPhone 3GS, Blackberry Storm 2 and the latest Google's Nexus One. Alok Goel, Head of Mobile products, Google India believe that 2010 will see the smartphone market flourish in India due to the entry of 3G services. He says Indian telecom industry has gone through four major stages in last 20 years. The PCO stage - to home landline stage - to mobile stage and finally the smartphone stage. "Smartphone will soon become an identity that you will carry all the time," he comments.
Majority of the VAS companies are startups. Experts feel that, these companies have not been keeping the customers in mind. Sanjay Swami, CEO of mCheck, one of the few successful startups in the VAS space, says that developers should be realistic on what they are making. There should be a uniqueness in the product and it should be sustainable. Mehta, who is advisor at NSRCEL in IIMB has been working with lots of startups. He says the basic problem is that majority of the startups have been founded by engineers who don't really focus on the customers. "Customer is never wrong in this business. If you feel a customer is wrong then you are in wrong business," says Vishwanath Alluri, CEO of IMI Mobile.
The 3G auction was scheduled to happen on 14th January. But now it has been postponed (again) to February. There is no doubt that once 3G services is available it will have the cheapest rates in the world. But would a customer need this high speed internet access on mobile, and whether a customer is willing to pay extra for these extra services is still not known. So far, BSNL 3G has been launched in many cities and has receives mild response. The customer can only hope that after the price war on tariffs for voice, there will be price wars on data plans as well. If this happens, then only 3G will be able to make the expected impact in India.