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AML - IAMAI Report on Evolution of Mobile VAS in India 2011-07
 

AML - IAMAI Report on Evolution of Mobile VAS in India 2011-07

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This summary report document is a word document format of the much larger report that Analysys Mason and IAMAI have prepared. The detailed report is available for purchase on IAMAI’s website – ...

This summary report document is a word document format of the much larger report that Analysys Mason and IAMAI have prepared. The detailed report is available for purchase on IAMAI’s website – www.iamai.in and is an
in-depth guide to each of the specific sub-segments within the mobile value added services ecosystem.

Dr. Subho Ray, President IAMAI stated, " This is the first ever study in India which charts the evolution of the mobile value added services industry, maps the future growth potential and makes practical suggestions on what needs to be done by various stakeholders set this industry on a ‘take off’ mode. We are confident that this will become the industry's guide for the next 10 years"

This report has focused on the following:
• The Indian Mobile VAS Opportunity
• Policy and Market Enablers
• Key Trends in the Mobile VAS industry in India
• Key Growth Areas in Services and Applications
• Mobile VAS Industry Growth Forecasts

Profiles of the report sponsors are also included at the end of the report, along with profiles of 40 leading players in the Mobile VAS value chain.
The key findings of the report are as follows:
• Carriers are increasingly focusing on non-voice services to drive revenue growth as voice services become commoditized. During the next five years, VAS ARPU will increase by 48%, which will compensate for the 14% decline in voice ARPU. As a result, overall ARPU will stabilize and decline by only 4.5% between 2011 and 2015.
• Mobile data will emerge as the next ‘killer application’, accounting for 32% of total incremental wireless revenue – primarily driven by the latent demand for connectivity, which wireline broadband has been unable to address because of availability issues.
• Mobile commerce will represent an INR20 billion revenue opportunity by 2015.
• Utility services that can provide a scalable, technology-enabled solution to issues around access to information, opportunity and infrastructure (for example, healthcare, education and agricultural/husbandry advice) can add significant value and, as a result, enhance the value proposition for users – particularly those in rural areas.
• Mobile video has been promoted as the key differentiator on 3G networks, but the limited amount of allocated spectrum (5MHz) and associated capacity constraints will limit video-based services in specific segments and geographies.

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    AML - IAMAI Report on Evolution of Mobile VAS in India 2011-07 AML - IAMAI Report on Evolution of Mobile VAS in India 2011-07 Document Transcript

    • FOREWORDDear Reader, The present version of the report contextualizes the primary question: “What should be done in order forWe are delighted to present to you this comprehensive the industry to move ahead?” in the light of “what hasreport on the past, present and future of that enigma been in the past and what can be in the future”. So thewhich is known as the mobile value added services focus essentially is on urging stakeholders to collaborateindustry in India. In the enclosed pages, we have in charting the path forward for the industry. And, inattempted to lay bare before you the story of the genesis attempting to do so, we have suggested “a particular” wayand evolution of this industry, the roadblocks that it faces, that we believe will be acceptable to all stakeholders. Theand the opportunities that it presents to all stakeholders. larger appeal here, obviously, is a call for collective andMore importantly, we have taken much pain to suggest a effective action since this industry cannot flower with anpractical way to put this industry on a virtuous cycle to attitude of “more of the same” any longer.ensure sustainable progress and to identify the areas thatwill truly see tremendous growth. With this report we have set our best foot forward with the best interests of the industry and users, and weYou will appreciate that such a “first of its kind” report sincerely hope you will appreciate the direction that hascannot be the work of a single group. It is collective been outlined.effort, and we have benefitted from detailed conversationswith and feedback from more than 50 stakeholder Thank You.organizations including telecom operators, governmentagencies, mobile value added services companies, handsetOEMs, applications developers and, last but not the least,users. We would like to acknowledge our gratitude to allof them.We should also clarify that what you see before you is Dr. Subho Raya “distilled” version of the much larger report that PresidentAnalysys Mason and IAMAI have been working on Internet and Mobile Association of Indiafor more than six months. The larger and much moredetailed report is prepared almost as a step by step guideto each of the specific sub-segments within the mobilevalue added services ecosystem. In case you are seriousabout harnessing the data and services opportunity that Kunal Bajajthe telecom industry presents today, the larger report can Partner and Director Indiabe suggested as “essential reading”. Analysys Mason Evolution of Mobile VAS in India iii
    • List of Sponsors to be provided by IAMAI]Letter [NBED Platinum Sponsor Gold Sponsors iv Evolution of Mobile VAS in India
    • Peer Review Steering CommitteeWe would like to thank the peer review steering committee for dedicating their time to this initiative and helping toidentify the key issues to focus on. Producing this report would not have been possible without their inputs and feedback. • Parag Kar VP, Government Affairs, Qualcomm (India & South Asia) • PG Ponnapa Chief Executive Officer- India/Asia Pac, MPortal • Sanjay K Goyal Founder & CEO, ACL Wireless • Dr. Subho Ray President, IAMAI • Vijay Shekhar Sharma Chairman & MD, One97AcknowledgementsWe would like to acknowledge the following people for their extraordinary contributions • Anand Virani Business Development Lead, Services Ecosystem, Qualcomm (India & South Asia) • Chirag Jain Vice President - Marketing & Business Development, Webaroo • Mohit Narain Business Director, ACL Wireless • Rakesh Mahajan Independent Consultant Evolution of Mobile VAS in India v
    • Executive Summary1. The Indian non-voice market is at an inflexion point, the inability of carriers to drop prices significantlyand the growth opportunity remains significant combined with the limited purchasing power of incremental users.We believe that access to relatively higher speed dataon HSPA, EVDO and LTE networks, and a renewed 3. However, various market and policy enablers arefocus of carriers on the mobile data opportunity will required in on-deck VAS, off-deck VAS and SMS channelshelp drive growth in the Indian non-voice market in the to realize this growth opportunityimmediate future. We see the foundational elements As in any rapidly growing ecosystem, there existfor such an inflexion point falling in place with operational issues which limit market efficiency andimproving data access speed, increasing penetration of consumer welfare. For the on-deck MVAS deliverysmartphones and feature-phones as well as increasing model, the issues are centered around the absencematurity of the content ecosystem. The opportunity of a governing body to address operational issuesfor growth of non-voice revenues in India remains such as MIS reconciliation and dispute resolution.significant, as has been witnessed in multiple other The issues affecting the off-deck VAS delivery modelemerging markets, especially after the introduction of are structural in nature, with the low penetration of3G. However, unlike most other markets, India will financial instruments such as credit & debit cardsbe a mobile-first market with the latent demand for resulting in the carrier being the predominant meansmobile data being fulfilled by internet access through of reaching and billing mobile subscribers. In addition,mobile handsets, tablets and other forms of CCDs there are operational issues around interoperability,(connected computing devices). with D2C providers required to negotiate bilateral2. Similar to other mobile-first markets, mobile agreements and system integration with individualinternet (handset plus dongles / CCDs) will drive growth carriers. Similarly, for the SMS channel, absence ofin non-voice revenues while traditional services stabilize handsets with a common local language standard limits the penetration of SMS, which in turn limits theAs in other mobile-first markets with no legacy reach of mobile enabled services to the mass market,infrastructure for internet access, the growth in including for services like education and health. Fornon-voice revenues in India will be primarily driven the rapid growth of the mobile VAS ecosystem inby mobile data access. The mix of devices (handsets, India, these issues need resolution, either throughdongles and other connected computing devices) market mechanisms or by regulatory intervention.driving this market growth will depend on theeconomics and maturity of the underlying technologies 4. From a market perspective, a self-regulating body(HSPA, EVDO and LTE). In contrast to growth in the for settling issues between market participants can be andata market, we believe that the share of traditional effective way to address on-deck challengesservices will begin to stabilize or decline due to multiple For commercial agreements between carriers, whodemand and supply side constraints. We believe that are licensed entities, and mobile VAS providers, whoSMS penetration will begin to stabilize unless issues are non-licensed entities, regulatory interventionaround local language on handsets is resolved, while for monitoring MIS reconciliation and similar suchCRBT penetration will stagnate primarily due to vi Evolution of Mobile VAS in India
    • operational issues is not feasible. In such a market issues and facilitate the allocation and management of aconstruct, self-regulation involving all ecosystem central short code registry systemparticipants has been an effective means of addressing In the current market structure for short codes andcontractual issues and commitments, as can be seen premium numbers, a D2C provider needs to negotiatefor the advertising market in India through the commercial terms with individual carriers and thenestablishment of a body such as the ASCI (Advertising follow that with system integration before being ableStandards Council of India). We propose that such to offer a uniformly accessible service by consumersan industry council should have members from across carriers. In addition, in a majority of the cases,the carrier industry associations such as COAI and the carrier has a strong influence in determiningAUSPI, mobile VAS provider organizations and other the end user pricing of the D2C service to preemptstakeholders as representatives on a governing board. cannibalization of its own offerings. Such a modelThe members of this council will include carriers, inherently limits consumer choice, and also creates ahandset OEMs, technology platform providers as well significant barrier to the growth of the D2C ecosystem.as MVAS providers. This board can draft guidelinesfor MIS reconciliation between mobile VAS providers We recommend that TRAI should establish a Centraland carriers to protect the interests of all parties, and Short Code (CSC) agency as a licensed entity to becan also act as a forum for grievance redressal, and governed by them. Licensing of the CSC agencycould issue directives for action. will allow it to enter into agreements with other licensed entities (cellular service providers). The CSC5. From a policy perspective, we believe that following a agency will issue the short code to an MVASP (at amodel of market determined revenue share with no specialVAS license is the best route predetermined price), and will communicate the same to all UASL licensees. The carriers will thenMultiple models for potentially regulating mobile VAS have to process the activation of these short codesproviders, including bringing them under a licensing in a pre-defined timeframe, across all circles. Thisframework were evaluated. In the scenario of a licensed framework can potentially dictate the pricing ofmobile VAS provider, the regulator can potentially off-deck enablers (access, hosting and billing) usingregulate revenue shares and other interconnection a modular approach to the different componentsagreements between the carrier and MVAS providers. involved, allowing VAS providers to choose the accessHowever, an evaluation of the pros and cons of the services that they need. The formulation of a “ratelicensing model suggests that it will result in significant card” for the services provided by the carriers canoperational and financial overheads on MVASPs, be done by TRAI under the interconnection regimewithout the equivalent upside. We also note that in consultation with carriers through an acceptableeven in other emerging markets that have witnessed methodology (e.g. on a cost plus basis).growth in non-voice revenues, there is no precedent oflicensing of MVASPs. Additionally, if revenue shares 7. It is also recommended that a common standardare regulated through setting a floor, the incentive for for local language characters should be mandated on all handsets sold in India to facilitate growth in SMSMVASPs to innovate to target higher revenue sharesgets significantly impacted. We therefore propose Since incremental mobile subscribers are comingthat the MVASPs may be kept outside the licensing from semi urban and rural areas, there is a demandframework and revenue shares should remain market for Indian language support on handsets. Variousdetermined and competitive. encoding schemes and other mechanisms are currently in use for sharing local language content, but there6. We recommend establishing an agency under the are interoperability issues across devices. We proposedirection of TRAI to help address off-deck adoption Executive Summary vii
    • mandating a standard like the one developed by services, the most valuable will be services providing aCeWIT for local language support on device, as well replacement to infrastructure, such as mobile-health,as mandating the incorporation of this standard on all mobile-education and mobile-banking. We believehandsets sold in India. that carriers are well positioned to make a substantial social impact by leveraging their retail distribution8. Resolution of above issues also becomes imperative reach and offering banking, payments and domesticfor maintaining market efficiency and balance of power in remittance services for the urban and rural poor. Thethe evolving VAS value chain only limiting factor in driving the adoption of utilityThe VAS value chain has become significantly complex as well as financial inclusion services is the multipleover the last few years, with the emergence of new stakeholder partnerships required by carriers inservice providers such as handset OEMs, new revenue developing the market ecosystem, which necessitatesmodels such as ad-support as well as a shift in the level significant effort and time, and sometime reducesof control by various participants. With increasing speed-to-market for some of these services.adoption of mobile internet, handset OEMs have beenexploring opportunities to offer D2C services and 10. Finally, we believe that mobile internet adoption will result in a proliferation of data enabled servicesapplications through application stores as well as retail and applications around video, advertising, community,channels (mobile banking). In parallel, faced with entertainment and enterprise mobilityincreasing competition in the voice market, carriershave been exerting their control over the mobile VAS Video has long been hailed as the potential ‘killervalue chain to reduce operating expenses. Some of application’ on 3G networks, with global 3G carriersthese initiatives include integrating VAS platforms offering a portfolio of video based services. However,into the core network, and significantly diluting the with limited spectrum allocation in India, we believerole of technology platform providers. This is in turn that data intensive video applications will remainputting pressure on technology providers to introduce muted. On the other hand, we believe that penetrationnew variants of traditional services such as CRBT, as of mobile data access in conjunction with risingwell as integrate backward to increase their share of the sales of smartphones and feature-phones will enablecarrier spend on VAS. Initiatives to foster growth of the the growth of a vibrant applications ecosystem. ThisD2C ecosystem will help maintain market efficiency will also include social networking and communityby introducing further competition and incentivizing applications, either as an extension of their onlineinnovation. avatars or customized for a mobile-first user base. Some of the business applications will allow enterprises9. Among the emerging services, we believe that mobile to m-enable their field force and harness the benefitscommerce and utility services will have a significant social of faster turn-around time and reduced workingimpact capital. Finally, data and smartphone adoption willThere have been multiple pilots and stakeholder also substantially improve users’ gaming experienceinitiatives for driving adoption of utility services which and hence adoption, and also foster new business andcan provide a scalable, technology enabled solution monetization models for mobile music.to existing issues around access to information,opportunity and infrastructure. With the increasingavailability of quality data access and better devices,there is an opportunity for service providers to enhancethe quality and deepen the penetration of theseservices in urban as well as rural areas. Among these viii Executive Summary
    • Executive Summary ix
    • Table of Contents 1. The Indian Mobile VAS Opportunity 2 2. Policy Enablers Required for Growth of the Mobile VAS Ecosystem 8 3. Trends in the Mobile VAS Industry 18 4. Key Growth Areas: Services and Applications 28 5. Forecasts 46 Annexure: Sponsors’ Profiles 54 Evolution of Mobile VAS in India xi
    • 1. The Indian Mobile VAS Opportunity
    • 1. The Indian Mobile VAS OpportunityGlobal experience suggests that India has a latent demand for connectivity that can empower it as a‘mobile first’ data market. While historically, VAS in India lags behind other markets, enablers acrossthe ecosystem (devices, content and access) are now coming together to support a growing demandfor mobile data and applications. Supported by these structural enablers, we believe that the mobileVAS industry will hit an inflexion point in the next couple of years. With the right market and policyimperatives, the mobile VAS1 market can grow to an INR 671 bn industry and contribute 31% tooverall wireless revenues in 2015Globally, carriers have witnessed significant growth Until now, the introduction of 3G has been one ofin mobile non-voice revenues, with a clear dominance the inflexion points for adoption of mobile non-voiceof mobile data, especially in markets that have a services, with the exception of markets such aslatent demand for internet connectivity China. A study of seven emerging markets illustrates that after introduction of 3G, the yearly growth inWith voice becoming a commodity across global share of non-voice revenues has been dependentmarkets and with carriers focus on non-voice services on underlying structural parameters such as PCgrowing, facilitated by availability of 3G & 4G access penetration, fixed line base and internet penetration.technologies, rising penetration of smartphones and The share of non-voice revenues is the highest fora vibrant applications and services ecosystem, the countries where internet and PC penetration is highcontribution of VAS revenues is increasing across – indicating that users have easily translated theiremerging as well as developed markets. Leading fixed online experience onto the mobile. For thesecarriers in developed and emerging markets have illustrative markets, the contribution of non-voicemobile non-voice services contributing to as much revenues has increased by ~4% per annum fromas 50% and 35-40% of their total wireless revenues, the year of launch of 3G, which is double that forrespectively. While a comparison of India with the ‘mobile-first’ markets where the PC and internetdeveloped markets might not be fair, we believe that penetration has been lower at the time of 3G launch,an understanding of the key trends and drivers of as seen in Figure 1.1.mobile VAS in emerging markets can help betterinform the future of the mobile non-voice market India is similar to the ‘mobile-first’ markets ofin India. Indonesia and South Africa that have witnessed 1. In the context of this report, “VAS” and “MVAS” both refer to all services other than voice, and are used interchangeably with the term “non-voice” Evolution of Mobile VAS in India 2
    • growth in mobile data (within VAS) to address a markets have mobile internet access as the primarylatent demand for connectivity that was present due driver for growth of non-voice revenues, as canto lack of infrastructure and affordability issues. be seen in Figure 1.2 for carriers across variousAlthough the share of non-voice revenues in these emerging markets.markets increases at a relatively lower pace, these Figure 1.1: Share of Non-Voice Revenuesa by Carrier for Global Carriers2 60% 1 Messaging Driven Market • Messaging dominant markets with high base of non-voice revenues • Philippines 45% High Growth post 3G 2 30% • Markets that have witnessed an China: ~4.8%, average changec of ~4% per year 28.2% since 3G • Malaysia, Brazil Malaysia: 21.8%, 15% 64.1% Moderate Growth post 3G Brazil: ~16%, 3 • Markets that have witnessed an S Africa: 8.2%, 45.0% 8.7% average changec of ~2.5% per 0% year since 3G Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 • S Africa, Indonesia, Thailand & China China Unicom d Vivo, Brazil Globe, Philippines Smart, Philippines e Maxis, Malaysia AIS, Thailand Telkomsel, Indonesia MTN, South Africa Vodacom, South Africa f Launch of 3G Services Legendb: Country: PC Penetration, Internet Penetration Source: Analysys Mason, © Wireless Intelligence 2011 Figure 1.2: Trend of Non-Voice Revenue and Mix (Messaging vs. Data and Others)3 % of Non – Voice 30.4% 33.6% 12.1% 19.4% 28.0% 30.0% 14.2% 23.4% Revenue 11% 12% 44% 37% 62% 56% 35% 52% 76% 91% 63% 53% 56% 38% 44% 37% 24% 9% Q1 2009 Q3 2009 Q1 2009 Q2 2010 Q1 2009 Q1 2010 Q1 2009 Q2 2010 Maxis Vivo Telekomsela Vodacom Data Messaging Others Source: © Wireless Intelligence 2011 2 . a. Non-voice revenues includes revenue from messaging, data usage and other non-voice related activities; b. PC penetration figures are for 2005 and Internet Penetration figures are as of 2006; c. Average yearly change in share of non-voice revenues (within total revenues); d. China Unicom was considered rather than China Mobile, because the latter launched 3G with TD-SCDMA while the former did so with W-CDMA / HSPA; e. Smart launched 3G services in Q1’06; f. Vodacom launched 3G services in Q4’04 3 . a. For Telekomsel – some share of other VAS included within data 3 The Indian Mobile VAS Opportunity
    • The mobile data and VAS market in India has been Overall consumer experience was one of the primelagging other markets, but is expected to hit an inhibitors for adoption of mobile VAS in India,inflexion point in the near future which in turn has a number of contributing factors in the form of device feature set, speed of dataUnlike the wireless voice market, the growth of access, availability of relevant content, and the rightnon-voice has been slower in India in comparison to end user pricing structure. If we review the trendsother emerging markets, as can be seen from Figure in these areas in the recent past, it appears that a1.3 for some leading carriers. majority of these constraints will be addressed in the Figure 1.3: Share of Non-Voice Revenues for Select Carriers in Emerging Markets4 60% Globe, Philippines 50% 40% Maxis, Malaysia 30% Telekomsel, Indonesia China Mobile, China 20% Vodacom, South Africa Idea, India 10% Airtel, India Vodafone, India 0% Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Source: © Wireless Intelligence 2011, Company Reports Figure 1.4: Demand and Supply Side Trends5 Share of GPRS Enabled Handsets in Total The Indian Music Industry Revenues by Handset Sales Component (2010) 65% Others 10% Digital Music 51% 41% Physical Music 2009 2010 49% 1 Data (2.5G) Plan Tariffs (INR)a Active Mobile Data (GPRS) Users in India 450 75 30 90 2008 2010 CY2008 CY2010 Source: Analysys Mason, Industry Inputs, FICCI Frames 2010 . Non-voice revenues includes revenue from messaging, data usage and other non-voice related activities 4 . a. Estimated price for entry level plan with unlimited monthly data usage 5 The Indian Mobile VAS Opportunity 4
    • next couple of years, and result in a seamless content • Content: Increasing availability of content foraccess and consumption experience for mobile users consumers across the board is further helpingin India, as seen in Figure 1.4. enrich end user experience. This content includes access to carrier run application stores as well • Devices: The emergence of the feature-phone as application stores available on handsets (such category, which allows a smartphone like as Android, iTunes and Nokia app stores) and experience at affordable prices for mass market independent application stores (such as GetJar). consumers, has had a significant impact on The wide variety of popular applications in the adoption of mobile internet. The feature-phone area of entertainment and communication (e.g. category is being driven by the entry of local music and SNC apps), as well as models which Indian handset OEMs, with a data enabled phone allow for free, ‘freemium’ and paid downloads available at below INR 2,000. An estimated 65% have helped enhance the utility of mobile devices of devices sold last year were GPRS enabled, up and quality of engagement with end users. A study from 51% in 2009, and data enabled devices (both conducted by one of the leading handset vendors GPRS and 3G) now constitute ~70-80% of the in India suggests that the most popular apps to installed handset base. In addition, many of these download are music (41%), social networking devices have a QWERTY keyboard, embedded (41%), business (27%), photo / personalization applications, embedded browsers and multimedia (22%) and games (22%)7. In the non-app segment, capabilities, which as a whole offers a good online music based services (full song download, music experience for mobile first users at an affordable streaming and mobile radio among others) have price point. witnessed reasonable adoption, with Indian carriers such as Airtel claiming to be the largest • Access: The availability of affordable digital music distributor in India8. feature-phones is also aided in a significant manner by the introduction of sachet pricing • Carrier focus: With the penetration of CRBT plans for mobile internet, as well as the availability stabilizing at about 18% levels, and no significant of these services in more than 150,000 villages growth in any other mobile VAS category, mobile across India. There are an estimated 100 mn active internet has emerged as a clear focus area of Indian data users in India as of today, and mobile internet carriers. In some cases, mobile internet access contributes to as much as CRBT revenues for some and tariffs have been leveraged as a differentiator carriers. Carrier price plans for data are available to ramp up subscriber acquisition. With India for as low as INR 48 for a 2GB monthly plan and being a mobile-first market (a recent survey INR 10 per MB for pay-as-you-go plans 6. suggests that for over 40% Indians, a mobile is the only means of internet access9), carrier focus Additionally, while network capacity was and the availability of affordable devices, access constrained earlier, the launch of 3G networks and content, the non-voice ecosystem is poised is expected to relieve some congestion and to grow considerably in the coming few years. offer additional bandwidth for richer mobile This is reflected in the fact that mobile data page applications and services, at least for customers in views have grown an estimated 218% over the last tier 1 cities and CBDs (Central Business Districts). year alone10. However, current 3G data pricing is at a premium to 2.5G data pricing and is expected to remain so In parallel to the above market enablers, policy in the near future, which can limit uptake in the enablers will be required to help realize the full initial years. potential of mobile VAS in India 6 . Carrier Tariffs 7 . Nokia App Store data, February 2011 8 . As disclosed by Airtel Deputy CEO, May 2009 9 . Survey by Opera, March 2011 10 . Opera Mobile Web report, May 2011 5 The Indian Mobile VAS Opportunity
    • Figure 1.5: Mobile VAS Market Potential (INR bn) 31% 31% 27% 22% 18% 16% 671 603 480 368 291 213 2010 2011 2012 2013 2014 2015 VAS Revenue (INR bn) MVAS Share of Total Revenue Source: Analysys Mason, Industry InputsMobile VAS has the potential to be an INR 671 for the market to resolve while others would benefitbn business by 2015, contributing to 31% of total from policy intervention. On-deck VAS providerswireless telecom revenues in India, as can be seen in at times face hurdles in MIS reconciliation andFigure 1.5. dispute resolution in addition to skewed revenue shares. Off-deck VAS providers are challenged by This growth will largely be driven by India emerging a lack of alternate billing mechanisms along withas a ‘mobile first’ market for internet access, with carrier control over pricing and revenue, and delaysthe mobile becoming the primary means of access in premium number integration. Challenges in SMSto the internet for a large section of the population. adoption are mainly due to the lack of a standardThus the contribution from mobile data is expected encoding scheme for local language SMS and theto reach 54% of total MVAS revenues by 2015 consequent interoperability issues between handsets.(inclusive of data access revenues from donglesand CCDs – connected computing devices), and We believe that there are potential areas ofemerge as the single largest piece. As an INR 671 market intervention through self-governance andbn industry, MVAS also has the potential to have appropriate policy frameworks which will allow themultiple second order impact on areas such as entre- Indian market to achieve parity with other emergingpreneurship and employment. markets for non-voice services adoption.However, this growth is to a certain extent constrainedby market inefficiencies, which can be addressedthrough initiatives by the market participants andthe regulator. VAS providers face different types ofchallenges with on-deck services, off-deck servicesand local language SMS, some of which are best left The Indian Mobile VAS Opportunity 6
    • 2 Policy Enablers Required for Growth of the Mobile VAS Ecosystem
    • 2 Policy Enablers Required for Growth of the Mobile VAS EcosystemGrowth constraints in the MVAS industry differ between on-deck and off-deck models, and includedispute redressal and data reconciliation, absence of direct consumer billing mechanisms, and lackof pricing control. Further, some services such as SMS face challenges in driving penetration fromthe lack of regulatory standards on enablers such as local language text. We believe that a policyframework without the requirement for licensing and with market determined revenue shares can helpdrive the overall growth of the mobile VAS ecosystem2.1. Key issues impeding the growth of MVAS 2.2. On-Deck VAS Providersindustry in India Given the high level of market inefficiency andThe growth constraints in the on-deck (carrier billed, carrier control, there is a significant amount ofcarrier delivered) and off-deck (D2C delivered, uncertainty in business models for TPEscarrier or D2C billed) ecosystems are different andthus need independent resolutions The primary issue in the on-deck MVAS space is the absence of a formal dispute redressal mechanism toThe on-deck ecosystem works with mobile VAS address potential conflicts such as MIS reconciliationproviders providing platforms and solutions to carriers between carriers and mobile VAS providers, whichthrough a mutually discussed commercial agreement results in payment delays and consequent workingwhich is not governed by any policy framework. capital requirements from smaller mobile VASGiven the carrier ownership of mobile users and providers. This becomes especially important astheir scale, there always remains a possibility in such VAS providers rarely have the negotiating power totransactions for market inefficiencies, which in turn deal with carriers, and the commercial arrangementsmay impact innovation and market development. between a carrier and a VAS provider remains outsideFor off-deck service providers, the bilateral mode of the purview of TRAI regulation. In addition to thisdealing with one carrier at a time for basic services working capital constraint, there is also an elementsuch as short code setup results in significant delay of uncertainty in mobile VAS providers’ revenueand coordination needs, in addition to separate due to the carrier-VAS provider collaboration modelsystem integration costs with multiple carriers. For being based on a revenue share agreement.both on-deck and off-deck mobile VAS offerings,we evaluated the potential resolution frameworks to Carriers take over 60% of revenue share for most ofmaximize market efficiency and consumer welfare. the mobile VAS offerings. The reason behind suchIn addition, there are structural issues such as the a high revenue share is the cost of their branding,lack of local language support across devices which marketing and promotional support for on-deckimpact the adoption of SMS and related services. mobile VAS offerings, in addition to the customer Evolution of Mobile VAS in India 8
    • care and other such operational costs involved in higher level of end user pricing of VAS services.delivering the services to the end user. In addition, These mobile VAS providers have adopted anas the primary revenue stream of such mobile VAS organic as well as inorganic expansion route to enterproviders (TPEs) is dependent on carriers, in cases some of the international markets, and for someof a decline in carrier revenue due to increasing of the TPEs, more than 30% of their subscriberscompetition or the changing nature of demand, the through carrier and OEM partnerships are fromrevenues of mobile VAS providers is at risk. More international markets.importantly, there have been instances when thecarriers have had to reduce revenue shares when The second issue is that many carriers have athey have been under pressure to optimize their relatively higher focus on services which offeroperational expenditure, further putting pressure on immediate revenues and are reluctant to go formobile VAS provider revenues. We understand that ‘capability investing’ models which are innovativethis is a business model issue and the risk taken by but have only a long term monetization potential.a mobile VAS provider in a market place, yet this This results in limited innovation, with significantinduces a high level of uncertainty in the timing focus of carriers on increasing penetration of basicand amount of expected revenues for a mobile VAS services & restricted investments. This is alsoprovider working with a carrier. leading mobile VAS providers to focus on mass market services as they do not have sufficient fundsThis unpredictability of overall revenue and limited and incentive to experiment with new offerings forprofitability potential has led to limited innovation specific niche consumer segments.and platform providers investing in internationalmarkets Finally, given the high level of control of carriers and the relatively smaller overall marketDue to the unpredictability of their overall revenues, for platform providers, larger internationalmany TPEs are expanding to international markets VAS providers have stayed away from thewhich offer better revenue shares and also have a Indian market Figure 2.1: Revenue Share Range Estimates by Type of MVAS and their Level of Content / Service Differentiation 60% 50% • Very popular service, albeit stabilizing now • Network integrated service – harder to 40% switch providers • Content is important • Innovative service with high 30% value proposition • Celebrities are procured by VASP 20% • Very generic service • No clear differentiator between providers 10% 0% News Alerts CRBT Celebrity Talk Source: Analysys Mason, Industry Inputs 9 Policy Enablers Required for Growth of the Mobile VAS Ecosystem
    • But there have been positive signs from carriers pricing and revenue shares, and delay in access torecently as they begin to focus more on non-voice premium numbers are the core issues hampering theservices. This remains true even in the current growth of the off-deck / D2C ecosystem in India.market scenario with VAS providers offering services/ content with differentiation are rewarded with From a technological perspective, WAP / GPRS ishigher revenue shares than VAS providers offering the only channel on which services can be offeredgeneric services. Figure 2.1 compares the revenue directly to consumers. TRAI recommendationsshares in the industry today across generic and have protected the open mobile internet model,differentiated services. which does not allow the carrier to block any particular portal.Given this direct impact of revenue shares oninnovation, we believe that revenue shares should However, the lack of alternate billing mechanismsbe left to market forces. There is also no precedent results in a carrier controlled off-deck MVASof revenue share regulation in other global markets. industry where the off-deck VAS provider has noSetting a floor for minimum revenue shares will control over the pricing of his offerings. This hasonly disincentivize VAS providers from striving for resulted in the price of VAS services being controlledinnovation in their offerings. by carriers for on-deck as well as off-deck services, resulting in the price point of these services being2.3. Off-Deck VAS Providers fairly constant over the years, as can be seen in Figure 2.2.The lack of alternate billing / payment channels hasbeen a significant factor in restricting the growth of The lack of alternate billing / payment channelsoff-deck VAS in India has resulted in restricted growth of off-deck VAS in India. The absence of mass penetration of alternateLack of a direct billing channel, carrier control on payment channels such as credit cards / wallets Figure 2.2: Carrier Control over Pricing11 End user Price for Voice and Non-Voice Offerings ARPU vs. Price of Popular Game in Different in India (2007 & 2010)a Countries (INR)b INR INR 30 30 30 2500 (2%) 2171.7 2000 (3%) 20 1507.5 1500 15 15 1000 (17%) 10 10 10 10 10 10 722.3 (10%) 444.6 500 (33%) 3 3 3 161.6 119.7 54.0 44.6 42.8 44.6 0 0 Voice Premium Mono Tone Poly Tone Wallpaper CRBT India USA UK China Malaysia (10 mins call)a SMS Download Subscription ARPU Game Price 2007 2010 Source: Analysys Mason11 . a. For a 10 minute call; 2007 rate assumed at INR 1 per minute, 2009 rate at INR 0.5 paisa per second, Cost of per transaction for SMS, monotone, polytone & wallpaper, monthly subscription for CRBT; b. India (Paid game on Indiatimes), USA, UK, China (Paid game on Apple Apps Store), Malaysia (GamesUnlimited; Maxis games site); Most games in China are cracked & available for free. Number in parenthesis indicates the cost of game as a % of ARPU Number in parenthesis indicates the cost of game as a % of ARPU Policy Enablers Required for Growth of the Mobile VAS Ecosystem 10
    • restricts the ability of off-deck VAS providers to deployment and management. Delays in requestdirectly bill consumers. processing and allotment of short codes are common within the industry. In addition, since short codesMost VAS providers go through carrier billing are controlled by the carriers, situations arise whereto increase their reach, and end up sharing a high some carriers have allotted short codes, while othersshare (~60-70%) of their revenues with the carrier have not. In such a situation, services get delayedfor use of only the billing channel. This is in sharp and sometimes don’t get launched ever.contrast to global markets where an off-deck VASindustry thrives in the absence of billing constraints. Even once allotted and deployed, short code servicesGlobal markets such as China, Japan and Korea face issues such as arbitrary pricing and blocking ofhave a robust D2C ecosystem and the market has services that are deemed ‘competitive’ by the carrier.benefitted from an early opening of carrier walledgardens to offer easy access to D2C services. 2.4. SMS AdoptionIn addition, mobile VAS providers face significant Penetration of SMS users in India is low as comparedhurdles in activating short codes across multiple to other developing markets such as China andcarriers, in addition to the high integration cost Philippines. While very low pricing has been an important factor in such high usage in ChinaFor SMS and voice, short code services face several and Philippines, another important reason is theissues from allotment of short code to deployment availability of standards-based and efficient encodingof services. Individual carrier controlled and schemes. In India, less than 10% of the installed basemaintained short codes make national rollouts a of handsets supports non-Roman characters, whichlengthy and complicated process. means a large portion of the population is unable to use SMS. Also different handset OEMs use theirShort code services face multiple issues, right from own proprietary standards for local language text,the first step of short code allocation to service creating interoperability issues across devices. Figure 2.3: SMS Penetration, 2010 100% 100% 80% 75% 47% 50% 25% 0% Philippines China India Source: Analysys Mason 11 Policy Enablers Required for Growth of the Mobile VAS Ecosystem
    • Absence of standards based solutions for local a license. In addition, this position also suggestslanguage SMS is another challenge to be addressed that revenue shares should not be regulated asfor growth in SMS users and usage. Complexity it directly impacts innovation by guaranteeingof Indic scripts results in relatively high number a minimum level or constraining services to aof characters per word on an average while the maximum, and are therefore best left to marketinherent efficiency of the Chinese language forces. Recent deals and market movements(average word-length less than 2) overcame the demonstrate that innovation is being rewarded.limitations imposed by Unicode (UCS-2) in terms of70-character size limit. In the case of Philippines, the Proposed Solution: Includes formation of alocal languages are written using the Roman script self-regulated industry forum, similar to thewhich means that the default 7-bit GSM alphabet Advertising Standards Council of India, ASCIcan be used (as in the case of English). to govern the mobile VAS sector. Such a body can provide industry representation and a formalVariation in keypad layouts and standards for Indic dispute redressal mechanism for supporting thelanguage support across vendors / devices results in on-deck ecosystem in addressing the challengesloss of content. This difference creates incompatibility of MIS reconciliation and dispute redressal.between handsets. Some OEMs are using the coded This will also be supported by the formation ofpicture messaging technology for Indian language a premium number policy which will governSMS, which gets limited to specific handsets. These the operation of short codes and rates of inter-issues have constrained the growth of SMS usage connection to help in promoting the off-deckin India. As the number of subscribers from rural ecosystem.areas is growing at a faster rate than in urban areas,the demand for SMS in Indian language is likely to 2. Licensing with Market Determined Revenuecontinue to grow. Shares: This position supports a broad licensing framework for the VAS industry, but allows2.5. Recommendation revenue shares to be determined by market forces. The basic premise is that licensing willThere are multiple view points on the potential ensure that the VAS industry gets support onsolutions to these issues, specifically with respect critical issues such as MIS reconciliation andto revenue share regulation. Opinions vary across dispute resolution, although business termsindustry stakeholders on the preferred solutions such as revenue shares would remain part of theto address the current issues with the mobile VAS commercial agreements between entities andindustry. Broadly, there are three positions proposed therefore left to market forces.by different stakeholders: Proposed Solution: Development of a mobile1. Policy Framework With Market Determined VAS licensing framework that will regulate MIS Revenue Shares: The basic premise of this reconciliation, address dispute resolution and position is that no separate VAS license is required, other issues, but will leave revenue shares to as it may increase the cost for VAS providers, and market participants. All VAS providers would be negatively impact innovation as smaller VAS required to acquire a license. providers will have to bear the attendant costs of Policy Enablers Required for Growth of the Mobile VAS Ecosystem 12
    • 3. Licensing with Policy Determined Revenue Govt approvals would be required. Shares: This position supports a focused licensing • Innovation will be hindered as launching a new regime for VAS providers, including regulation VASP will require acquiring a license. Given the of minimum revenue shares. The basic premise nature of work in development of VAS services, is that revenue share remains a critical issue in it is important that small entrepreneurs get the the ecosystem and with the regulation of revenue flexibility and encouragement that is necessary to shares other operational issues such as MIS drive innovation. reconciliation will also get addressed. • Increased overheads resulting from reporting requirements can inhibit the growth of smaller Proposed Solution: Development of a VAS companies and increase costs for the ecosystem. licensing framework that will specify a minimum revenue share, in addition to regulating MIS The absence of any licensing framework in other reconciliation, dispute resolution and other emerging markets which have witnessed a high aspects. All VAS providers would be required to adoption of VAS supports the first option of not acquire a license. having a license. However, these markets had the benefit of legacy structure and infrastructuralWhile licensing is potentially an option to address enablers such as alternate billing mechanismsthese issues, licensing by itself does not guarantee (high penetration of credit and debit cards), higha solution. Based on carrier and service provider smartphone penetration, higher internet penetrationsubmissions, the pros of licensing can be enumerated and established 3G networks. If policy interventionas follows12: can help put these structural enablers in place, then the Indian mobile VAS ecosystem can also prosper • Licensing will ensure that the VAS industry without a licensing and regulatory framework. gets support on critical issues such as MIS reconciliation and dispute redressal. Our recommendations to the regulatory approach • Licensing would allow the sector to become more are as follows: organized and formalised. 1. We believe that revenue shares are best left to • It would also allow VASPs to come under inter- connection regulation and thus access carrier market forces, given their direct impact on services in a timely fashion with guaranteed QOS, innovation and without the threat of being blocked. Revenue shares are a business discussion • It would also rate players in the VAS space for their between two commercial entities and should be compliance with best practices and standards set by TRAI and others. Coupled with information determined by the value placed by the carrier disclosure measures, this would help in improving on the differentiated nature and monetization market functioning and dispute redressal. potential of the service offered by a mobile VASP. Such a commercial model should help reward newHowever, licensing may not be the best solution for and innovative offerings, while commoditizedthese issues as it comes with additional administrative services are compensated differently.and financial requirements, as listed below: 2. The formation of an industry self-governing • Licensing will result in high costs, including license fee payments, and delays in processes as board that can act as a formal forum for 12 . Response to the TRAI VAS consultation paper 2011 13 Policy Enablers Required for Growth of the Mobile VAS Ecosystem
    • participants in the on-deck ecosystem can This board can draft guidelines for MISaddress some of these growth constraints reconciliation between VAS providers and carriers to protect the interests of all players,We propose the formation of an industry forum especially the smaller providers. This forum canfor on-deck mobile VAS providers. Such a forum also act as a forum for grievance redressal andwill focus on industry self-regulation and can be can issue directives for action.structured in a manner similar to the AdvertisingStandards Council of India (ADCI). The ASCI 3. A policy framework that will introduce acouncil is a body with representatives from across premium number policy can potentiallythe advertising ecosystem. While the council provide an alternate payment mechanismdoes not have any legal powers, it provides by allowing D2C providers the flexibility torepresentation of the overall industry and also control the end user pricing of their servicesoffers a consumer grievance redressal committee. and be aware of their share of the end user revenueThe proposed forum for mobile VAS providerscan have a structure as illustrated in Figure 2.4. As of now, an off-deck VAS provider needs toThe forum board will have representatives from integrate with multiple carriers to be able to usethe carrier and MVASP industry associations. the same premium number / short code numberThe members of such a council will include to provide services to all subscribers. In additionparticipants from the carriers, handset OEMs, to the cost of integration, the time involved intechnology platform providers as well as MVAS such a process is extremely long. Also, the carrierproviders. has an influence on deciding the end user priceFigure 2.4: Proposed Industry Association for Mobile VAS Providers in India IAMAI COAI / AUSPI Formation of an MVAS Authority MVAS Industry Governing Board Members From MVAS Services Handset Stakeholders Across Providers the Value Chain Manufacturers Technology Platform Carriers ProvidersSource: Analysys Mason, Industry Inputs Policy Enablers Required for Growth of the Mobile VAS Ecosystem 14
    • as well as the potential revenue share expected multiple carriers. This also allows the MVASP toby the MVASP, since the carrier effectively has decide the end user pricing of the service, whicha monopoly over their user base – if the MVASP can bring the benefits of competitive marketwants to access that carrier’s customers, they have prices to consumers. In addition, market drivenno other way to do it using a premium number. commercial negotiation between an MVASP and host carriers will ensure availability of multipleA Central Short Code (CSC) agency could competitive options based on the nature ofbe established as a licensed agency, similar to service as well as scale / expected adoption.the MNP agencies, and will be governed byTRAI. Licensing of the CSC agency will allow TRAI can then, using IUC regulations, createit to enter into agreements with other licensed a set of norms for premium number intercon-entities (cellular service providers). The CSC nection. The TRAI mandated rate card foragency will issue a short code to an MVASP (at originating carriers will include price points fora predetermined price), and will communicate service such as billing, origination / terminationthe same to all UASL licensees. These carriers charges of voice and SMS services, based on thewill then have to process the activation of these cost of providing such services. For terminatingshort codes in a pre-defined timeframe, across all carriers, the rate card can include termination ofcircles. premium voice and SMS services.We believe that such a framework can help save This framework can potentially dictate thecost and time of integration for MVASPs with pricing of off-deck enablers (access, hostingFigure 2.5: Proposed Framework for Premium Number Policy Central Short Code (CSC) Agency Created & Mandated by TRAI • Short codes allocated and maintained by this Short Code Operational Across Carriers central agency • Pan India access across all carriers Carrier Carrier ……. Carrier • Mandated turnaround 1 2 n time of activation across carriers User Billed Host carrier pays VASP; by carrier Keeps share to cover for service interconnection and other costs VAS Provider • VAS Provider Offers Services to Users Service Flow Revenue Flow Across CarriersSource: Analysys Mason15 Policy Enablers Required for Growth of the Mobile VAS Ecosystem
    • and billing) using a modular approach to the (UCS-2), ISCII and picture messaging are different components involved, allowing the VAS currently in use for sharing local language providers to choose the access services that they content, but these solutions are not interoperable need. The formulation of this “rate card” for the across devices. In 2008, 3GPP, the body for services provided by the carriers can be done by global mobile telephony standards, amended the TRAI in consultation with the carriers through SMS standards to accommodate a request from an acceptable methodology (e.g. on a cost plus Turkey to support the full Turkish alphabet. basis). Identifying a standardized set of characters of local language fonts in partnership with the4. Standardization of character set and industry will provide the key inputs for deciding incorporation of local language support on the Indic 7-bit encoding format, simplified Indic device can be a potential enabler to drive SMS keypad design (to make user adoption easy) penetration and memory efficient font libraries (critical for distribution and field support). We propose mandating a standard like the CeWIT developed standardized solutions for In addition to the standard solution for local local language support on device, which has language encoding schemes, we propose been approved by GSMA. As incremental mobile mandating the incorporation of local language subscribers are coming from semi urban and text on all handsets sold in India. This enforcement rural areas, there is a demand for handsets with on handset vendors will provide better reach and Indian language support. Various encoding awareness as devices are replaced over time. schemes and other mechanisms such as Unicode Figure 2.6: Proposed Transaction Model for Premium Number Policy Central Short Code (CSC) Agency Created & Mandated by TRAI • Short codes allocated and maintained by this central agency • Short code will be Keeps price as per INR a-b-c accessible Pan India the rate card for: Carrier Carrier across all carriers • Origination / 1 2 • Mandated turnaround Termination INR b time of activation charges across carriers (INR b) As per • Billing – includes commercial customer care cost negotiations (INR c) End user price (INR a) VAS Provider Carrier 1 Subscriber • Selects a carrier for hosting Originating Flow Sends SMS to the premium based on the best rate offered for Termination Flow code of VAS provider A hosting and commercial deal Source: Analysys Mason Policy Enablers Required for Growth of the Mobile VAS Ecosystem 16
    • 3 Trends in the Mobile VAS Industry
    • 3 Trends in the Mobile VAS IndustryThe past couple of years have witnessed structural changes in the mobile VAS value chain withthe uptake of mobile data facilitating the entry of handset OEMs and OTT service providers foroffering D2C services to end users. We expect this trend to continue and mobile data to emerge as apre-dominant driver for non-voice services, counterbalancing the stabilizing penetration of traditionalservices such as CRBT and P2P SMS. In addition, emerging services such as mobile commerce andmobile advertising are also offering an opportunity to carriers to generate revenues from brands,government and other ecosystem participants. As the D2C ecosystem grows, we expect carriers tofocus more on traditional network dependent services3.1. Mobile Data utility applications to differentiate and position their offerings. Community applications whichA majority of the incremental growth in Mobile are proprietary to handset OEMs (e.g. BlackBerryVAS revenues is expected to come from mobile data, Messenger), as well as aggregation of multiple onlineincluding mobile handset and dongle / CCD usage. community applications on devices (e.g. Facebook,The contribution of mobile data to total MVAS Twitter and Orkut) by local as well as global handsetrevenues is expected to increase from 34% in 2010 OEMs have provided a strong use case for end users,to 54% by 2015 especially the youth population, to opt for a mobile internet connection. Such data enabled handsets areThe adoption of mobile handset data has been increasingly becoming the norm, and accounted fortraditionally constrained due to well-known reasons about 65% of handset sales in 2010. Data enabledof 2.5G network capacity and handset capabilities feature phones can also drive mid-level users to useresulting in a sub-optimal user experience. With mobile data. Figure 3.1 illustrates a case study wheresome of the new entrants using mobile handset a carrier has been able to drive their mobile datadata as a differentiator to acquire users as well as usage among low end users through effective usageavailability of GPRS/EDGE enabled feature-phones and implementation of widgets.and basic phones at reasonable price points (< INR2,000), the mobile handset user base has been Also, the price points at which these data plans areincreasing. Carriers are reported to have provisioned available today are also decreasing significantly,or enhanced GPRS capacity in more than 150,000 with some carriers offering 6GB data for INR 100.villages in India, which can provide mobile data Although it’s a perceived value pricing model givenaccess to a large share of the Indian population. that a user generally consumes 100 to 300 MB of data per month (depending on the type of device),In addition to network, handset OEMs are also still the overall price per MB for handset data hasusing mobile internet based community and Evolution of Mobile VAS in India 18
    • Figure 3.1: Case Study: Driving Data Usage on Feature Phones Situation Cricket MyHomeScreen Handset Rollout • Cricket Communications is a carrier in the US that follows a cost leadership strategy 1,200 • Customer base is largely in the lower income groups, and from ethnic groups • Discretionary income is scarce and economic climate unfavorable for the 1,000 Messager users to spend on mobile web II (August 27) Complication Cricket Widget Subscribers (‘000) 800 A200 • Cricket wanted to grow the overall value in the segment, through moving (Sect 22) users to high revenue generating plans that included the mobile web Motorola • They also wanted to meet their goal of add-on services and needed a VE465 600 (September 1) way of making it easier for users to purchase downloads on their devices PCD • Focus on the value segment also limited the type of devices that Cricket TXTM8 could offer to it’s users Samsung (July 22) 400 My Shot (June 11) mPortal Solution • Widgets provided the perfect solution as they can be easily integrated Cricket into the home screen while allowing users easy access and high level of 200 A300 (November) customization • They can be ported across multiple handset platforms and can include distribution strategies / storefronts that can help drive downloads - Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 • mPortal announced the availability of MyHomeScreen on five handsets in Oct 2009 Source: mPortal, Analysys Masonreduced significantly. In addition, with introduction will continue to grow for the next few years asof sachet plans and pay per site models, the entry currently the networks are empty and can supportbarrier for a mass market user to experience internet non-linear growth in dongle data traffic. However,on mobile has come down. in the long term we believe dongles will become an accessory and carrier focus will shift to monetizingFinally, with the stabilizing penetration of CRBT handset based data for optimum asset utilizationand the absence of any killer application on and efficiency. Data access through dongles, data2G/2.5G as well as 3G, mobile internet access is cards and CCDs contributes about 66% of mobilegoing to be a key revenue focus for carriers. Video internet revenue in 2010, which declines to 41% bywas expected to be the primary differentiator for 3G 2015 as majority of the new users in this segmentbased offerings, however with the limited amount of subscribe to pre-paid mode of payment at lowerallocated spectrum (5 MHz) and associated capacity spend levels, thus pulling down the ARPU.constraint; video based services will be limited tocertain segments and geographies, atleast in the Given these enablers, we believe that mobile datainitial stages of rollout. uptake is close to an inflection point. As a parallel, it might benefit to look at China. Over the last threeIn addition to handset data, dongles, tablets and years, data contributed 50%13 to the incrementalembedded laptops will also account for a major revenues for the Chinese wireless telecom industry.section of the mobile internet revenue. As of now, Although internet penetration in China isthe large screen market has been driven by EVDO significantly higher than India (28% opposed toservice providers with their advantages in capacity 6%13), which aids the migration of a user from PCand per unit economics as compared to WCDMA to the mobile for internet usage. We believe that/ HSPA providers. We believe that large screen data even for India there is a latent demand for mobile 13 . Credit Suisse report on India Telecoms Sector dated 23 May 2011 19 Trends in the Mobile VAS Industry
    • Figure 3.2: Increasing Contribution from Mobile Internet towards Mobile VAS Market in India 1% 1% 2% 2% 2% 3% 11% 9% 7% 6% 5% 13% 33% 33% 38% 45% 43% 45% 5% 5% 5% 5% 20% 22% 6% 6% 17% 17% 20% 23% 31% 33% 32% 24% 17% 12% 2010 2011 2012 2013 2014 2015 Mobile Internet (Handset) Dongles / CCD Data Access IVR Messaging CRBT Others Source: Analysys Masoninternet and with carrier focus and availability of mobile data revenues by 2015, primarily due todevices / content, mobile internet will contribute network capacity issues. Having only 5 MHz ofto a significant portion of the overall mobile VAS 3G spectrum limits the usage of mobile video inrevenues, as can be seen in Figure 3.2. the range of 100 to 300 persons per cell site per sector for different technologies, as can be seen inVideo (mobile TV subscription on dongles and Figure 3.3.handsets) will only contribute to about 1% of the Figure 3.3: Spectrum Capacity Constraints for Mobile Video by Technology14 840 Max no. of Subs Supported No. of Subs Suported during Busy Hour 432 420 216 24 12 EDGE HSPA HSDPA Peak throughout 200 Kbps 3.6 Mbps 7 Mbps per Sector Source: Analysys Mason, Industry Inputs 14 . At 256 Kbps and a contention ratio of 10 Trends in the Mobile VAS Industry 20
    • Given these constraints on capacity and no indication estimated to be INR 20-25, with tele-calling, OBDon future allocation of spectrum, we believe that and other marketing communication accounting foralthough there is a demand for video, mobile video a bulk of the costs. The primary issue is the highofferings will gain traction only in the medium term. level of churn associated with the CRBT service, with an average customer lifetime of only 40 days.3.2. CRBT The average realized revenue per user over this lifeCRBT penetration is expected to stabilize given poor time is estimated to be INR 25-28, and after payoutper unit economics, discovery issues and limited for content (~INR 5), the net revenue is only INR 20carrier focus – 23. This results in an EBITDA margin of INR 3 – 8 for subscription and INR 0 – 2 for a song change,CRBT has been a major contributor to non-voice as can be seen in Figure 3.4.revenues for Indian carriers and has reached For the existing base, where the affordabilitypenetration levels of 18 to 20%. However, this constraint is not applicable, we believe that CRBTstill remains low as compared to the penetration has almost reached the maximum penetration.of CRBT in other markets such as China, where Given that the ARPU from incremental users inpenetration had reached 68% for China Mobile India is extremely low (ARPU of ~ INR 80) andin 2007, although the China user base includes a they are not very technology savvy, there are servicehigh proportion of passive users who subscribe to a discovery and affordability constraints in adoptingservice package for discounted voice tariff and get CRBT for new subscribers.the CRBT service bundled within the package.Guangdong Mobile, the first provincial carrier which Given these constraints, we believe that CRBTadopted CRBT in China and achieved a high CRBT penetration is likely to peak at 18% of the base, andpenetration of 80% in Q1 2007, saw the penetration might even decline over the next few years.start to decline, falling to 75% by Q3 2007. This 3.3. Messagingwas also driven in part by consumer’s access to richmultimedia content such as video. Messaging (P2P SMS) may peak in terms of penetration over the next year, but usage within theIn India, industry inputs indicate that the target consumer segments will potentially increasepenetration will not reach such high levels andwill remain constrained mainly due to service P2P SMS constitutes around 38% of the overallaffordability issues. In the last four years, except mobile VAS market in India, with an estimatedfor selective circle level promotions, the price of a 47% penetration of the user base in 2010. TheCRBT subscription and song change has remained penetration is primarily limited by end user literacyrelatively stable. In addition to the fact that it and comfort in using English language as well asremains a network dependent service which can only Roman characters. The price of P2P SMS has comebe offered to a consumer by its own carrier, there are down over time, but the price point of an SMS isboundary conditions on per unit economics which 60% higher than a one minute voice call (local),make it unviable for carriers to reduce the price point unless the end user opts for a SMS pack. Untilof these services across the board beyond a certain local language support becomes easily available onpoint. handsets and interoperable across carriers, it will beThe acquisition cost for a CRBT customer is difficult to increase SMS penetration on the overall 21 Trends in the Mobile VAS Industry
    • base significantly. Less than 10% of the installed stabilize, but the usage within certain penetratedbase of handsets supports non-Roman characters segments will continue to grow. This is especially truein India. Standardization of character set and for teens and youth segment of the Indian user base.incorporation of local language support on device A comparison of teenage texting behavior betweencan drive SMS penetration. teens in urban India and the US (as shown in Figure 3.5) indicates that the usage behavior is not veryWe believe that although SMS penetration will Figure 3.4: CRBT: Per Unit Economics15 • Revenue realized per user on subscription is only INR 3 – 8; and as low as INR 2 for song change Average Duration of CRBT User 40 days INR 3 - 8 • OBD calls cost ~ INR 12-13 User May Drop for each user Off Due to Low Balance INR 20-25 • Other acquisition costs accrue upto INR 8-12 • New Song: User May or May • ~ INR 5 is the avg. payout Not Renew On Their Own per download Source: Analysys Mason, Industry Inputs Figure 3.5: SMS Usage and Behavior Trends in the US and Urban India, 2010 72% Teens Using SMS 76% 54% Teens Using SMS Daily 38% Average SMS Sent / 3,339 Received per Teen per Month 2,500 US India Source: Pew Research, Nielsen, Assocham, Analysys Mason 15 . Estimates made on the basis of industry inputs Trends in the Mobile VAS Industry 22
    • different. Teens in both urban India and the US are The only foreseeable threat to increasing SMSemerging to be avid users of text messaging – to keep usage in this segment is the increasing proliferationin constant touch with their friends. We believe that of mobile phone based Instant Messaging (IM)usage of SMSs will continue to significantly increase services. IM usage in countries such as the US isin this segment – for communication as well as A2P slowing down the growth of text messaging forVAS services. carriers in recent quarters. We expect IM to grow within this youth segment in India as well, givenOn a per user basis, there is still potential for SMS, the popularity of applications such as BBM andand SMS based services to grow in India. Figure WhatsApp. However, we don’t yet expect IM to3.6 compares the average text messages per user per cannibalize text messaging segment within themonth (2009) across countries. youth, and believe that both IM and messaging willCountries such as the USA have witnessed significant grow significantly in parallel in this segment.growth in the usage of text messaging from an 3.4. Emerging Value Chainaverage of 8 SMS per user per month in 2003 to408 SMS per user per month in 200916 – driven In addition to the above service-specific trends, theremainly by add-on packages for SMS where users get are structural shifts within the mobile VAS valueunlimited text messaging for a flat monthly fee. chain which can potentially have a long term impact Figure 3.6: Average Text Messages Sent Per User Per Month for the Top Ten Countries 609 • Cheaper than voice calls • Ecosystem for a range of services on SMS 408 • Flat rate add-on packs for SMS, with unlimited messaging 259 215 196 193 158 155 138 113 Philippines USA Malaysia Korea Venezuela Ireland Denmark Lithuania Portugal Indonesia Source: ictDATA.org, Analysys Mason 16 . ictDATA.org 23 Trends in the Mobile VAS Industry
    • The mobile VAS value chain has been traditionally consumer facing solutions. Content provisioningcharacterized by a high degree of carrier control across (which includes search and discovery) which is thethe value chain. While the main segments remain most important segment of the consumer facingthe same in terms of content developers, aggregators, interface, is also increasingly moving from CRBTtechnology provider, and access providers, we believe specific provisioning to provisioning across premiumthat carrier control will continue going forward portals.and may even increase in certain sections of the Mobile commerce is emerging as a new revenuevalue chain such as network dependent services. In stream for carriers and handset OEMsaddition, there are emerging revenue streams such asmobile commerce and advertising within the value Carriers and handset OEMS are increasinglychain, as can be seen in Figure 3.7. launching products and services in the mobileCarrier control over network dependent services is commerce space. The recent launch of Airtel Moneyincreasing and Nokia Money are indicative of the emergence of mobile commerce as an additional revenue streamPoor per unit economics are also resulting in for service providers. While most of these services arecarriers increasingly controlling the CRBT network currently niche pilots, service providers are buildingarchitecture by handing over network facing their merchant networks and the ecosystem. Witharchitecture from the CRBT provider to the network supportive regulations gradually opening up, weOEMs. VAS players are losing control over the expect increasing focus on this area.CRBT architecture and are limited to owning some Figure 3.7: The Emerging Value Chain17 • Backward integration across the • Easy integration of VAS products on to the • Carriers offering ad-based services for three segments e.g. TPE moving carrier SDP / network secondary revenue streams into content aggregation • With initiatives like START/STOP, focus is • Partnering with payment companies for • UGC gaining adoption on enabling users to experiment with multiple additional revenue from mobile shopping products and remittance Content Repurposing / ISVd WAP Carrier Billing Carriers SMSa MPGb Voice Online Adc Content Content Product/ Developer Aggregators Apps Retail Cash/ CC/ DC Handset OEM Online Carrier UGC Device 3rd Party VASP Integration WAP SMS Voice MPGb / Adc Technology Platform Enablers Managed Services / Network OEM /VAS SI Advertising/Profiling/Relevance Platform Mobile Commerce Platform • Handset OEM is offering • Carriers deploying profiling / • M-commerce solution • Network OEMs are providing VAS under its brand on relevance platform for better provider with one or more technology platform for multiple sales channel: targeting capabilities such as mobile carriers, e.g. Network OEM online, retail and mobile • Ad-networks forming dedicated payment, mobile banking, CRBT platform integration in • D2C players using alternate sales force to sell branded money transfer and mobile carrier network payment channels inventory shopping Source: Analysys Mason17 . a. STK embedded content is included in SMS; b. Mobile Payment Gateway; c. Ad based revenues; d. Independent Software Vendor Trends in the Mobile VAS Industry 24
    • Figure 3.8: Case Study: Potential Impact of Content Management Solutions MTN Challenges Launch in 17 countries in 7 months • Consistent & seamless user Impact on MTN Performance experience • Reduces MTN’s group headcount • Multiple content inventories significantly • Slow & inefficient roll out in new • Consistent brand representation across territories all territories • Non-existing marketing campaigns • Retailing best practice across all • Limited ARPU territories • High CAPEX as result of separate • Valuable access to consumer insight systems cross territories • Return on Investment IMI Mobile Content Management Solution • Central content hub & local storefronts • Quick & efficient rollout • Ensure optimal customer experience • Boosting ARPU & reduce capex • Marketing & promotion Source: IMI Mobile, Analysys MasonMobile advertising is emerging as an alternative In the content and technology platform space, theremonetization model for D2C providers is an increased focus on developing end to end solutions, with increasing share of non-BollywoodThe adoption of mobile advertising has been muted in content. Technology providers are integratingthe last few years, despite a lot of initiatives by market backwards to also aggregate content and provide anparticipants, including carriers. Going forward, end to end service to carriers. Additionally, carrierswe believe that with the launch of 3G services, also increasingly prefer providing unified servicessmartphones and more importantly, profiling and to the end user with strong content and technologytargeting will help drive the ecosystem. This could integration at the backend. This also enables them topotentially emerge as an alternate revenue stream simplify things on the backend with just one servicefrom third parties such as brands and also offer provider as opposed to multiple entities. Figurean avenue to D2C providers to offer ad supported 3.8 illustrates a case study of an integrated contentcontent and services. management solution and its resultant impact on the carrier’s metrics.Increasing backward and forward integration amongthe content and technology providers to offer unified Handset OEMs and D2C players are increasinglyend to end services to the carriers experimenting with D2C models across multiple distribution and billing channels 25 Trends in the Mobile VAS Industry
    • Carriers still remain the dominant consumer accesschannel due to their control over billing. Increasingly,handset OEMs and D2C players are experimentingwith D2C models across multiple distribution andbilling channels. However, bypassing carrier billingto monetize through credit cards has seen onlylimited success so far, with handset OEM app storesincreasingly integrating carrier billing as an option.While revenue shares haven’t changed much in favorof the VAS providers, these shifts in the value chainwill eventually lead to a more equitable power andrevenue distribution across the value chain. Trends in the Mobile VAS Industry 26
    • 4 Key Growth Areas: Services and Applications
    • 4 Key Growth Areas: Services and ApplicationsAs the VAS ecosystem develops, we focus on some of the critical industry growth themes to betterunderstand their available opportunity, critical success factors and emerging business models. Someof these themes such as advertising, entertainment, applications, video and enterprise mobility havestrong underlying linkages to the growth in data services, in addition to availability of devices andsufficient spectrum. Mobile commerce and utility services will leverage multiple bearer channelsand have a significant potential to add value to the urban and rural mass market customers throughfinancial inclusion and access to information, opportunities and infrastructure. However, a majorityof these services will require carriers to forge new partnerships and invest a significant amount ofeffort before they reach significant scale and monetization potential4.1. Introduction to themes we believe will have a significant role in shaping the mobile VAS ecosystem in India in the coming yearsBased on the above trends in the overall mobile (Figure 4.1).VAS market, as well as the structural changes in thevalue chain, we have identified nine themes which Within the consumer mobile VAS business we Figure 4.1: List of Key Themes and Trends within Each Category Current Situation Key Trends Category Themes • UID accepted as KYC will increase share of G2C; carriers • Current scalable models use prepaid cards, and not 1 • Commerce pushing financial inclusion also a key driver (banking, domestic mobile; pilots by carriers, banks, D2C remittances) • Entertainment • Services around music and gaming has seen early • New products such as streaming music, full song download and 2 Services adoption among mid ARPU segment mobile games • Multiple pilots, with few scalable models (e.g. RML, • Utility apps and affordable feature-phones to drive adoption of 3 • Utility Services IKSL), Location based services productivity and livelihood enhancement services Consumer VAS • Emergence of new monetization models based on micro • Carrier promoted SNCs (e.g. AirtelFrenz) aggregating 4 • Community Services transactions, content sales (e.g. Rocketalk) with carrier audience on an ad monetization model marketing support, and increased off-deck usage • Limited services on EDGE with very poor user • Launch of 3G services by 2011 by all major carriers, with a 5 • Mobile Video experience strong video services portfolio (e.g. mobile TV, video calling) • Emergence of affordable android based phones, app store push • Device Apps and App • Carrier app stores dominate; D2C app stores facing 6 by handset OEMs, launch of 3G, utility apps (e.g. railway Stores issues of billing as credit card penetration is low booking) • Among all the network services such as CRBT, CMS, • CRBT has reached a mature level of adoption, while few Network 7 • Network Services Roaming, Recharging, Location Enablement, CRBT network services such as voice mail is limited by cultural and VAS contributes significant share to total MVAS market price points • SMS / display ads used for lead generation and digital • 3G and better device form factors expected to enhance 8 • Mobile Ad / Marketing content sale; poor user experience effectiveness of display advertising and help ecosystem growth Enterprise VAS • Enterprise messaging solutions (e.g. Valuefirst) , Sales • Emergence of enterprise mobility providers with vertical specific, 9 • Enterprise Solutions force management carrier / software agnostic middleware solutions (e.g. Mobien) Source: Analysys Mason Evolution of Mobile VAS in India 28
    • focus on the key themes of entertainment, utility m-commerce remains a niche opportunity in theservices, community services, video, commerce medium term (2 to 3 years) until the power equationand applications / app stores. We believe that the between banks and carriers reaches equilibrium,underlying adoption of mobile data will help drive regulatory and policy frameworks are in place andthe adoption of applications (utility and community) monetization / engagement models get established.and services (video, entertainment and commerce).Also, we believe that SMS, and to some extent voice There are three broad areas within mobile commerce:channel based enablement of some of these services mobile banking, mobile remittance and mobileand applications, is also going to be a significant payments and shopping, and there are multipleadoption driver in the future. business models for each of these services, as can be seen from Figure 4.2.Network based services including call managementofferings (such as missed call alerts) are also expected Banking: In the banking segment, the role ofto become important in the future as technology and the mobile ecosystem is to provide geographicalnetwork becomes a key element of the innovation reach through its distribution channel, means offocus of carriers. Enterprise VAS including enterprise authentication, as well as the convenience of doingmobility for addressing the last mile connectivity financial transactions from any location. Bankingissues for field force remains small, but has the penetration in India is estimated to be less thanpotential to grow significantly especially if it’s able to 20% as it becomes unviable for banks to set uphelp companies save working capital and turnaround branches in rural locations, especially given the lowtimes. CRM (Customer Relationship Management) deposit values. RBI had introduced the Bankingwill also be another key area of growth in enterprise Correspondent (BC) based model in 2006, but theVAS as companies uses the individual reach of scalability of the model has been a challenge withmobiles to communicate with their customers. only ~30 mn accounts opened under the BC scheme by 2010. The primary issue is the limited geographicOne point to note would be that from a market reach of BCs and the weak economics of the modelrevenue projection perspectives, it will not be correct for BCs. Leveraging the carrier distribution networkto sum the value of these themes’ revenues, as most of about 2.0 million retail outlets, the geographicalare cross-bearer and they are not mutually exclusive. coverage issue gets resolved to some extent, and the commercial negotiation between banks and4.2. Mobile Commerce carriers is expected to address the business case issues plaguing the non-carrier BC models. Also,There have been multiple initiatives by carriers, integrating UID with the mobile enabled BC modelshandset OEMs and technology platform providers in can result in faster verification of subscribers, andthe mobile commerce market in the recent past. From such a model can be used for timely payments ofa consumer engagement and retention perspective, wages under MGNREGA (Mahatma Gandhim-commerce has significant potential for telecom National Rural Employment Guarantee Act) andmarket participants, as has also been witnessed in other Govt schemes. If this segment is used for G2Cother emerging markets (analysis of a major Africa payments, then the monetization opportunity formobile money service shows subscribers churn 60% carriers is increased multifold. However, as of nowless than general subscribers – 2.18% versus 5.71% there are no commercial mobile banking modelsmonthly churn18). However, in India, we believe that 18 . CGAP Business Insights on Mobile Money, April 2011 29 Key Growth Areas: Services and Applications
    • Figure 4.2: M-Commerce Service Offering and Business Models in India: Existing and Emerging Mobile Mobile Mobile Banking Remittance Payments Linked E.g. iMobile E.g. Obopay E.g. mChek Value (ICICI Bank) (Yes Bank) Stored Non-banking Cash out is E.g. Airtel Value model not allowed Money E.g. Nokia E.g. Nokia BC E.g. Eko and Money and Money and Based SBI UBI UBI Legend: Status of Service Offerings / Business Models: Existing Emerging NA Source: Analysys Masonbeing launched by any major carrier, although there the market for cash-to-cash domestic remittanceare bank led models ‘powered by’ handset OEMs through informal as well as formal (money order)which are offering BC based banking services channels is estimated to be USD 25 bn, with moneyleveraging their own distribution network. orders accounting for only USD 2 bn of domestic remittances (as of 2009).Remittance: Domestic and overseas remittanceremain another important area where the mobile Shopping and Payments: Stored value walletschannel and device can be used to address market provide the only model which is the most carrier-inefficiencies. Under the current regulations, mobile friendly, as it doesn’t require a bank for offeringenablement is possible only for domestic remittance. the service, though the aggregate value of depositsIndia has about 80 mn domestic migrants remitting must be kept with a bank. The carrier establishesabout USD 12 bn annually to their households in partnerships with merchants and gets a small feerural areas. The migration pattern is concentrated on every transaction made by the subscriber. As thewithin few corridors in India and can be permanent current regulations prohibit the conversion of thisor seasonal migration. For this segment, the primary digital money to cash, the carrier is best positionedmeans of sending money is through informal channels to monetize the digital cash as long as it ensures thatwhich are expensive as well as risky. A large part of there are multiple outlets available for subscribers tothe current unbanked population can potentially make transactions. Also, as the carriers have beenshift to using mobile BC based remittance driven using the e-recharge model on prepaid, maintainingby convenience / lower transaction costs. When a stored value wallet becomes an extension of theincluding all the sources of domestic remittance, e-recharge model with the same recharge network Key Growth Areas: Services and Applications 30
    • being leveraged for stored wallet services as well. activation (e.g. outbound dialers) and service differ- entiation. Beyond CRBT, carriers are also focusing4.3. Mobile Entertainment on other music monetization models such as full track downloads and streaming.The mobile entertainment market is primarilydominated by mobile music and mobile gaming, Across entertainment categories, carriers and VASwith some share of other miscellaneous items such providers are collaborating to optimize and finetuneas wallpapers and theme downloads. search and discovery to drive page views and downloads by helping users to find what they wantIn the past few years, CRBT emerged as the more efficiently. In a specific instance with a Latindominant mode of monetizing digital music in American carrier, a portal management solutionIndia, with mobile accounting for as much as with integrated search and discovery tips helped28% of overall music revenues. However, due to double portal page views and content downloadsreasons mentioned in section 3.2, we expect CRBT (Figure 4.3).penetration to start stabilizing soon. Also, as theCRBT market matures and revenue growth slows In addition to search and discovery, trends in thedown, carriers are increasingly integrating CRBT music entertainment space reflect differentiation incomponents into the network, limiting the role of content, with specific genres, such as regional andCRBT VAS providers to being a facilitator between devotional gaining traction as they drive higherthe various parties. Technology platform providers margins.are thus increasingly focusing on innovations onthe basic CRBT model to drive adoption in mass Mobile games as a category within entertainmentmarket (e.g. ad based CRBT), easier forms of user behaves very differently from other VAS in terms Figure 4.3: Case Study: Impact of Integrated Search and Discovery within Portal Amdocs Solution for Leading Latin American Carrier Downloads (mn) 15 Off-portal profiling & navigation – gives control over the 10 Mobile Internet experience & branding Search engine – capitalize on sponsored links & create stickiness by faster content discovery 5 Targeted advertising platform – increases ad inventory & revenues 0 Feb-10 Jan-11 Direct billing enabler – allows billing for off- portal content (extension of billing platform) Retailing & billing platform – allows selling more Pageviews (mn) premium content 15 Personalized Portal – increases portal usage & stickiness by displaying relevant content 10 Off-portal links – capitalize on sponsored links 5 Recommendations engine – increases content sales & 0 customer experience Jun-10 Jan-11 Unique Page Views Page Views Source: Amdocs, Analysys Mason 31 Key Growth Areas: Services and Applications
    • of revenue growth and penetration drivers. Gaming remain off-deck. The success of “Angry Birds”serves a niche segment of the base and does not show demonstrates this.price elasticity, as opposed to other mass marketservices which tend to attract subscribers when prices Coming to the last traditional segment withindrop. From a consumer usage and adoption behavior mobile entertainment, we expect the adoption ofperspective, the games market can be segmented wallpapers and themes to remain marginal. Easyin terms of casual, amateur and core gamers, access to mobile internet for free content, mightrepresenting the increasing level of engagement cannibalize some carrier revenues from theseand usage of games. The drivers for growth in services, but this cannibalization is likely to bemobile gaming will be to focus on increasing the balanced in the near term by the newer and less techcore and casual gaming segment while enhancing savvy users who will continue to use carrier portalsoverall ARPU. for these services. Therefore, while revenues may remain flat, contribution will decrease.Each of these segments of gamers needs to beaddressed separately to enable the overall growth However, going forward, new types of entertainmentof mobile gaming. While the penetration of core VAS are being pioneered in India keeping in mindgamers within data users will remain stable over the ability to reach the mass market and leveragingthe years, the overall base of casual gamers can popular and exclusive content. One such examplebe driven through the introduction of simple that has been seeing subscriber traction recentlycasual games that are social, engaging and have is One97 Communication’s StarTalk service,an easier discovery mechanisms. This is not unlike which allows subscribers to listen to and talk withthe online success of simple casual games such as celebrities live (Figure 4.4).“Farmville”. Also, with the increasing adoption ofsmartphones and feature-phones with touch screens, 4.4. Utility Servicesthe end user experience of mobile games has altered There are multiple initiatives underway by carriers,significantly, although a major part of these revenues Figure 4.4: Case Study: Emerging Innovative Services within Mobile Entertainment Offering Registrations for Star Talk (One97 • It is an innovative service that allows customers to use their Communications) (mn) mobile phones to talk with and listen to their favorite celebrities 6.4 6.4 • One97 has partnered with various operators to allow 5.3 subscribers to dial, connect and interact with their favorite stars live 4.2 4.3 • The service allows a select group of callers at a time to connect with the celebrity for a live conversation in a 3.4 sequential mode 2.8 2.5 2.6 Business Model Subscription Model (Automated Renewal): • Subscribe to Star Talk for INR 10 0.2 • Celebrity portal, like celebrity interviews, archives, Bollywood October November December September January February 2011 2011 2011 March June gossips, review and preview April May 2011 2010 2011 2011 2010 2010 2010 Event Based Charging: • To talk live to a celebrity, INR10 for the event (auto-renewal) Source: One97 Communications, Analysys Mason Key Growth Areas: Services and Applications 32
    • handset OEMs as well as the D2C service providers channel, with automated matching of buyer andin the utility services market. A majority of these supplier requirements. The adoption of such servicesservices are focused on addressing multiple market remains limited due to availability of alternateinefficiencies existing in the urban as well as the rural informal channels (word-of-mouth, friends &markets, including enabling access to information family etc.) for both buyers as well as sellers to fulfil(e.g. weather updates), opportunities (e.g. job their requirements.listings), and infrastructure (e.g. financial inclusion)for end users. Finally, we believe that the most significant value addition by mobile enablement will be in the areaThe access to information proposition has been of access to infrastructure. A key example of suchexisting for some time now using SMS and voice mobile enablement is in the area of financial inclusionchannels and the adoption of data will help drive where the carrier assets of a widespread distributionsharing of multi-media information through mobile network and use of mobile for authentication and/ connected computing devices. Access and devices authorization helps significantly reduce transactionaren’t the major hurdle for basic information-centric cost and enhance convenience for end users.service, however the aggregation of quality, relevant Similarly, use of mobile for simple services such asand accurate content is the key to make sure that some railway reservations helps rural users save a day ofof these mobile enabled services are able to actually travel time as well as cost of travel. For offering somereplace the physical mechanism of aggregation of this of these services, there are regulatory requirementsinformation. In some of the rural areas, consumers which necessitate partnerships with otherreportedly went to the local mandi to cross-check the ecosystem stakeholders (e.g. with banks for offeringcrop produce rates and other agricultural parameters financial inclusion).with the data pushed by service providers on theirmobiles. In urban areas as well, the key value driver This holds true for services such as mobile health,also remains the aggregation of relevant data and agricultural advice and mobile education, as well.content. The current limitation on the adoption of For example, mobile healthcare offers telemedicinethese services is the ability of service providers to facilities in areas where the primary healthcarecontinue to cost effectively collect and update data, infrastructure is not optimal. However, thiswhile distributing it in a monetizable fashion. requires a robust partnership between the various stakeholders – carriers, hospitals, technologyAccess to the opportunities value proposition platform enablers – with a very high level ofappears to be much more applicable for urban areas coordination required to create, grow and optimisefor use cases like trying to address the information this ecosystem. Only then can such services goasymmetry in niche areas such as job listings for mainstream. Similarly for mobile education as well,blue collar workers. For such a service, creating multiple partnerships are required between schools,a dynamic database of entry level blue collar carriers, content providers, digital content creators,workers with periodic updates and providing a etc. to enable a complete offering for the end user.validated standardized list of options to employers This is also true for services that provide agriculturalhas significant value. The role of mobile in such advice to farmers – they require partnershipsa model is to allow suppliers (job seekers) to post between agricultural universities, carriers andtheir qualifications using the SMS, voice or data technology providers – to enable dissemination of 33 Key Growth Areas: Services and Applications
    • accurate information in a timely manner to the end Blogging, while there exist two business models forusers. mobile community services: • Mobile as extension of online community services:From an operational perspective, industry inputs These communities are feature rich platforms suchsuggest that the use case and value proposition of as “Facebook” that allow a wide range of activities.these services is significantly different depending The mobile version of the community serviceon the urban vs. rural deployment of the service, as is usually an application which is a simplifiedillustrated in Figure 4.5. version in terms of features and activities, given the limitations of a smaller screen and deviceThe focus of urban deployments include objectives functionalities. The key target segment for suchsuch as lifestyle and entertainment, in addition to mobile applications include online users typically from metros and tier 1 cities, who already arelivelihood enhancement, as compared to rural areas online registered users with these communities,where the primary focus is livelihood enhancement. and mobile offers them continuous connectivity. The monetization models include ads and micro-Carriers are also entering into partnerships with transactions, though most online SNCs (Socialinstitutions with deep engagement levels with the Networking Communities) are currently notrural community (such as IFFCO fertilizers) to monetizing mobile usage.leverage these channels for pushing voice as well as • Mobile only services: These are communitiesmobile VAS services. with mobile as the primary access channel and with platforms optimized for mobile usage.4.5. Community Services Features offered through these communities are customized to work on slower 2.5G data channels,Mobile community services can broadly be classified as well as other bearer channels such as SMS.as Social Networking, Instant Messaging and Micro Also, these communities are designed to target Figure 4.5: Utility Services for Rural and Urban User Segment • Majority of the utility services adopted by rural segments enhance livelihood Lifestyle / Entertainment • Agriculture alerts and health support for cattle increases the productivity of farmers LBS Push Email Entertainment Services Health • In urban areas, Primary Value Proposition Support majority of utility services are point Shopping & solutions such as Payment interview support, Governance learn English, while Education few services such as Agriculture job listings provides alerts livelihood support News alerts Job Listings Livelihood Health support for cattle Financial Inclusion Rural Urban / Semi-urban Primary User Segment Source: Analysys Mason Key Growth Areas: Services and Applications 34
    • specific needs of end users such as allowing users to has been some growth in mobile instant messaging interact using contacts from their address books. in India. This growth is driven by emergence of The target segment is mobile first users from tier 2 companies offering mobile only IM, or group / 3 cities who typically are not registered in online messaging across bearer channels, and which do not SNCs. require users to register online. Although a numberMultiple mobile only models are also gaining of initiatives have been taken by players across thetraction as the online extension model is limited to ecosystem, monetization still remains limited tousers with PC based internet access. The mobile only revenues from increase in data adoption and deviceSNCs in India are currently aggregating audiences sales.in non-metros with limited focus on monetization Although there exist multiple monetization modelsand are offering services relevant to the mass market for mobile based microblogs (e.g. subscription, payto keep their audience engaged. per message), yet increasing revenue levels remainsTo capitalize on growth in this area, some carriers a challenge. Mobile blogs on voice have witnessedand OEMs have started to offer their own services for significant adoption in India, especially servicessocial networking under their own brand. Various such as BubbleBlog, which allows users to sharesolutions provide the necessary tools to do different updates in their own voice with their social circleelements of this. For example, Qualcomm’s Yagatta or follow celebrities and listen to their updates. Thisplatform focuses on IP-based text, voice and image is another example of how innovation in emergingmessaging (Figure 4.6). markets allows traditional models to be moulded to address a wider market. Through partnershipsFollowing the trend in International markets, there across multiple carriers and using celebrities to drive Figure 4.6: Case Study: Mobile IP Communications Platform19 • Operator can drive data subscriptions with desirable IP-based offerings (with full Operators IMS/RCS-e interoperability) • Operator can keep its brand • OEM can differentiate with leading-edge OEMs communication tools & extend their brand into lifestyle services • A full-featured, carrier-grade mobile IP-communications platform that offers simultaneous delivery of high-quality, low-latency voice, messaging, audio, and video • Developer can enrich its apps and • Yagatta deployment can be hosted by the Operator/OEM services with a wide range of new or by Qualcomm Developers capabilities; Voice and Text messaging, • First release: YagattaTalk, for all-in-one text, voice, and Group calling, Location features and more image messaging Source: Qualcomm, Analysys Mason . Yagatta services are available for deployment with Operators and OEMs today, ISV/Developer SDK to release soon 19 35 Key Growth Areas: Services and Applications
    • subscribers, the result has been adoption of peer to transport is also high in India which can build apeer blogging, as well (Figure 4.7). use case for mobile video during commute times as well. As seen globally, unlike other mobile VAS4.6. Mobile Video the adoption of mobile video content is not directly determined by structural parameters. Yet hygieneVideo based services figure prominently in the 3G factors such as spectrum availability constraints asservice offerings of global carriers. This includes mentioned in Section 3.1 need to be addressed forgeneric service offerings such as Mobile TV and consumer experience to improve.video downloads, to niche services such as videomail. However, structural parameters such as Even though mobile video adoption is still nascent,availability of spectrum also influence the overall there are service providers who are emerging acrossend user experience of some of these video services the value chain. The two primary distributionand the associated adoption levels. models being explored currently are WAP based access and app based access. While app based videoWithin mobile TV, there are multiple use cases which streaming provides better user experience as itexist in global markets, including watching mobile allows a user to customize, categorize and set theirvideo at home, during commute, while waiting preference of mobile TV channels, it faces challengesand in personal time. Some of these use cases will in terms of compatibility with low end featurebe valid for the India market as well. Mobile video phones. Additionally, this also requires users toviewing at home can be a potentially strong use case actively download the application, if it’s not alreadyfor India, given the average TV per HHs number in embedded into the handset, adding an additionalIndia is ~1. Long commute times and usage of public level to the overall service discovery process. Figure 4.7: Case Study: Growth of BubbleBlog in India 12,000,000 3,000,000 Sometimes described as a voice-based Idea Twitter, the BubbleBlog social messaging Tata 10,000,000 Indicom 2,500,000 service enables celebrities and everyday people to share status updates in their own Vodafone Tata 8,000,000 voice with fans and followers through any DOCOMO 2,000,000 mobile phone 6,000,000 Reliance 1,500,000 4,000,000 1,000,000 2,000,000 Airtel 500,000 - 0 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul 2010 2011 Q2 Q3 Q4 Q1 Q2 Key Celeb Amitabh Bachchan Lara Dutta Priyanka Chopra Harbhajan Singh Bipasha Basu Bloggers Sonu Nigam Pooja Gandhi John Abraham Ravi Kishan Yuvraj Singh Started: Emraan Hashmi Neetu Chandra Madhavan Ileana D’Cruz Shilpa Shetty Unique Users Community Bloggers Now with all the major carriers launching with interoperability, there is an accelerating growth of “community” bloggers (ie, friends following friends – not just celebs) as the “network effect” is now enabled. Source: Bubblemotion, Analysys Mason Key Growth Areas: Services and Applications 36
    • Figure 4.8: Relative Positioning of Unique 3G Servicesa Launched by Global Carriers20 High Video Conference, 16% Multi Video Calling, 71% Player Mobile Surveillance, Gaming, Adult 23% Mobile TV, 81% 3% Content, Bandwidth Requirement 6% Video Streaming, 68% Mobile Video – Animation, 23% Video Chat, 6% Full Track Video Download, 65% Downloads, 90% Video Video Sharing - Mail, 13% P2P, 45% Mobile Radio, 16% Music Single Player Streaming, Photo Sharing – Maps and Mobile Games, 6% Album, 19% Navigation, 39% 94% Photo Sharing - Mobile P2P, 52% Newspaper, Mobile Email, Mobile 6% 100% Comics, 6% Mobile Blog, 23% Mobile IM, 39% Low SNC, 13% Nicheb Genericc Category of Services Legend: Service name, % of carriers offering service Source: Analysys MasonHowever, we believe that inspite of these issues app end user consumption perspective the adoption ofbased video is likely to gain in the longer term as the the particular use case will decide whether mobileoverall user experience and level of personalization TV is a substitute for live TV watching or willoffered is a significant value addition to the service. primarily be a means of watching clips of exclusive content which is not available elsewhere.Unlike most other VAS categories, carrier alignmentis not a crucial success factor for mobile video Overall, we believe that an app based carrier alignedservices. Exclusivity of content – whether live or service with access to exclusive content could reach arecorded – can help drive adoption for D2C models, scale as 3G / 4G services are rolled out across India.e.g. exclusive rights to IPL (Indian Premier League)content can potentially be a huge driver for adoption 4.7. Mobile Applications and App Storesin India. Exclusive content can help buffer thisthrough its ability to command a premium for the The app store market in India witnessed a downloadservices. Also, currently the service providers are of over 1 billion apps last year, with the growthtrying to differentiate their offerings in terms of live in app downloads primarily driven by games andvs. recorded content, as well as the range of channels community applications. The demand for appsbeing offered. A few companies are providing as comes mainly from tier 2 cities due to limitedmany as 150 live channels while others are building available alternatives for entertainment in theselibraries of pre-recorded content. However, from an cities. The demand is expected to further increase .a. 3G services of a total of 31 carriers were analyzed: US – AT&T, Verizon, Sprint Nextel; UK – 3, O2, Orange, Vodafone; South Africa – Vodacom, MTN; Malaysia – Maxis, Celcom; 20 Australia – Telstra; Singapore – Singtel; South Korea – SK Telecom; Sri Lanka – Dialog Telekom; Indonesia – Telkomsel; Saudi Arabia – Mobily; Egypt – Vodafone; Qatar – Qtel; UAE – Etisalat; Philippines – Smart Communication; Kuwait – Zain; China – China Unicom; New Zealand – Vodafone; Netherlands – Vodafone; Spain – Orange; Germany – T Mobile; Japan – NTT Docomo; Hong Kong – 3; Switzerland – Orange; Russia – MTS; b. Niche refers to services offered by only few carriers; c. Generic refers to services offered by majority of carriers 37 Key Growth Areas: Services and Applications
    • Figure 4.9: Mapping of App Stores and Critical Success Factors21 • Revenue share is • High rev share • Provides high Developer less • Provides continuous revenue share to Community • No developer forum, support to developers except Airtel developers Critical Success Factors User • Better profiling of its • Profiling based on Experience / subscriber handset model • Better user interface Relevance • Poor user interface • Better user interface • Unable to implement • Unable to implement • Seamless billing single click checkout single click checkout Monetization / • Ability to implement and subscription and subscription Billing subscription model plana plana Carrier OEM / OS Third Party App Stores Favourability of CSF: High Medium Low Source: Analysys Masonwith the launch of 3G, an increase in level of OEMs have also established developers’ forums tohandset bundling, and increasing sale of feature engage and support in developing localized andphones. The growth in active mobile data users and relevant apps. Industry inputs suggest that carrierssignificant investment by operators / OEMs / service do not have the bandwidth / organizational focus toproviders for promoting their app stores is expected be able to continuously engage with developers andto increase the average number of downloads per handhold them through such a process, especiallyapp, thus improving the overall per app economics when dealing with large numbers of developers.for developers. Also, the carrier revenue shares for developers are relatively lower (12%) as compared to others.Based on the app store ownership model, app storescan be classified as carrier app stores, OEM / OS app The carrier as well as OEM / OS app stores have thestores and third party app stores. For an app store, potential to in their own way each enhance betterthe key success factors include developer community user experience and relevance of content. Whileengagement, user experience / relevance and billing / carriers track the usage pattern of their subscribers,monetization models. which positions them well to push relevant applications to their subscribers, OEM / OS vendorsWe believe that handset OEMs are the best positioned know the handset capability and can target the userto engage the developer community given their with apps that work best on the particular OS /programs for continuous engagement with developers form factor. Also, OEMs are in a better position toand better revenue shares (60 to 70%) as compared provide enhanced user experience based on strongto the telcos (12 to 15%) and third party providers. device service integration. It is uncertain whether . a. Without relying on Credit / Debit Cards 21 Key Growth Areas: Services and Applications 38
    • carrier or OEM app stores will emerge as the leader provide access to rich multimedia content that theyin user experience and relevance of content. can share / exchange with others. In addition, MMS has a use case in mobile advertising where rich adsIn continuation of the current situation, we expect can be pushed to end users opting for the service.carriers to continue to have a strong control overbilling and monetization especially for mass market Call management and call completion services suchusers. Carrier app stores will continue to provide as missed call alerts have found some success in theseamless and single click billing while it is a multiple India market, with ~5% penetration for missed callstep process to purchase apps at other stores. Carriers alerts on a country wide basis. The primary valueare also better positioned to implement subscription proposition for such services is to drive additional callmodels and dynamic charging to target a broader traffic on the network and enhance asset utilization,user base more effectively, while handset OEMs rather than generate incremental revenues fromwould find it challenging to execute models like the service itself. Other call management servicesdaily subscriptions as they don’t have access to the such as Voicemail have only witnessed moderatesubscribers prepaid balance or postpaid account. adoption (~1 mn users) in India due to a lack of awareness, cultural issues and high pricing. Pricing4.8. Network Based Services in particular is rather high as compared to other markets where missed call alerts are offered free. InNetwork VAS are defined as value added services addition to pricing, operators don’t promote thesethat are network functionality dependent and services in their ATL VAS promotions, resulting inconsequently can only be offered by carriers. The lower awareness among consumers.range of VAS that can be classified as network VASranges from dominant services (such as CRBT and Emerging services within network VAS includesSMS) to niche (such as CMS22 and MMS), and video solutions such as video calling and IVVRemerging services (Video calling and IVVR 23). portals. While there is a lot of expectation built-upServices such as CRBT and SMS (P2P) have been from these solutions, it remains to be seen if theyprevalent in the Indian market for quite some will be successful in the Indian context. Demandtime, and have witnessed mass market penetration. side surveys reflect that a compelling use case doesHowever, both these services are now stabilizing exist for video based solutions in India, especially(in terms of penetration) due to various reasons, as among the youth segment 24. Services such as videodetailed in Chapter 3. calling have not been very popular worldwide, and it remains to be seen if they will be adoptedOther niche services such as MMS have witnessed extensively in India. Certain demand drivers, likemoderate adoption within consumer segments, and high level of domestic migrant labour, could createremain constrained by multiple issues. P2P MMS an environment for success of video calling. Buthas remained limited in India, as in global markets, in addition to device issues (lack of front camera)primarily due to issues with pricing, compatibility and pricing, industry feedback suggests that currentand network interoperability. However, with the networks are not yet optimized for video delivery –emergence of low cost feature rich handsets, MMS is whether its video calling or IVVR portals. For videoemerging as a product offering for the user segment services, device encoding needs to be in sync withwhich does not access mobile internet data to 22 . Call Management Services 23 . Interactive Voice and Video Response 24 .PwC VAS Report Survey, 2010 39 Key Growth Areas: Services and Applications
    • network encoding and current networks are still not model has been the focus of public scrutiny givenin a position to enable seamless video delivery. These its potential violation of user privacy. The recentissues should be addressed soon, but it is expected regulations for governing SMS based advertisingto take another 6 months to a year before seamless only allows advertisers to send promotionalvideo on the mobile can become a reality. Even when messages to registered users relevant to categoriesthat is achieved, network capacity will still remain a chosen by them. Post these new regulations thechallenge (as discussed in Chapter 3). growth in SMS advertising will primarily come from the opt-in model and enterprise usage for4.9. Mobile Advertising CRM, and there could be potential value addition from profiling information that allows targetedPrima facie, mobile appears to be a very effective advertising. Such models are already beginning tomeans of reaching a large population through witness traction, with service providers focusing onmultiple audio and video channels, including the targeted advertising to users based on their historicalpossibility of message customization based on profile information to generate higher metrics, as incustomer profiling and usage information. However, the example illustrated in Figure 4.10.despite the reach and inherent benefits of the mobilecommunication channel, the adoption of mobile Voice advertising has the benefit of being similaradvertising in India has been limited, with the to radio advertising media and appear intuitive todominant use case being lead generation. This has brands. However, if the voice based messages are notbeen primarily due to the channel characteristics of positioned properly (for example, when a consumermobile across the SMS, WAP and voice channels. is waiting for accessing some service), it can disrupt the user experience significantly. Consumer feedbackLow cost and easy accessibility have been key drivers on use cases of pre-call inserts have not been veryfor SMS adoption by SMEs and SOHOs for lead positive. Also, industry inputs suggest that thegeneration in India, especially for the BFSI, Travel, inventory of voice based ad calls is very high andRetail and FMCG verticals. However, current price there is only limited ad inventory which results inlevels are not sustainable, especially with the TRAI low fill rates and a muted business case. However, theregulations restricting the usage of promotional CPMs on voice are higher than for other channelsmessages between 9 pm to 9 am. This will result in (in the range of INR 200-400) as brands are moreinsufficient capacity utilization of the SMSC capacity willing to experiment with the voice medium, givenleased from the carrier. In addition, potential its similarity to radio. Additionally, advertisersintroduction of termination charges for bulk SMS prefer the voice medium as all the ads get deliveredmay result in the overall bulk SMS business case and users listen to the ad with undivided attention,becoming unviable for participating aggregators. However, even though there have been multiple pilots, the growth in voice based advertising is yetSMS ads typically come in two forms: ad-fill or push. to be realized.Ad-fill SMSs are typically messages sent for anotherpurpose where the footer (e.g. 80 or more characters) WAP inventory has seen significant growth overare used for advertising. Push SMS represents the the past one year, led by feature phone adoptionprevalent use case of SMS pushed for marketing and reduced data pricing. India has emergedactivities and promotional services. The push SMS as the largest mobile ad impression market in Key Growth Areas: Services and Applications 40
    • Figure 4.10: Case Study: Targeted SMS Advertising and it’s Impact on Metrics Situation SMS GupShup Solution • FutureBazaar.com launched “Battle‟, a shopping • The SMS GupShup audience was targeted on the basis initiative that lasted 96 hours and had consumers vying of their historically captured profiling data and usage to buy consumer electronics products with genuine and attitude patterns manufacturer’s warranty • No SMS blast was used – only 1.8 – 2 mn users (pre- • The initiative offered a lowest price guarantee with free screened on the basis of their profiles) were targeted of cost delivery to the customer • Campaign designed exclusively for sales generation, • The focus was on consumer electronics as a leading and not for marketing / lead generation sector of the growing e-commerce market in India Revenue Generated from • Purchases were made through Future Bazaar’s online Converted Sales (INR mn) portal or on the phone 6.8 Insights • Equivalent CTRs for confirmed sales: 4 – 5% Objective • Cost of sales ~ 14% was significantly lower than for other • To achieve maximum sales in 96 hours, for the duration channels of the “Battle” shopping initiative • Tier 2 Traffic: 24 / 28 states Sales represented in the purchase tally Source: SMS GupShup, Analysys Mason Figure 4.11: Benefits to Entities across the Mobile Advertising Ecosystem with Changes in Market Dynamics 3G Service / Device Profiling /Targeting Measurement Metrics Features Enhanced user Consumers NA Relevant ads experience Richer ad Higher CPM; formats; Ad Networks Better reporting Increase in CTR Increase in branded inventory Knowledge of Interactive ads; Ads for Advertisers RoI; Increased spend Higher conversion brand recognition on mobile medium (display / banner ads) Legend: Status of Market Dynamics: Emerging Required NA Source: Analysys Mason41 Key Growth Areas: Services and Applications
    • Asia-Pacific25 with the total WAP ad inventory methods to estimate the reach, leading to lack ofgrowing from 1.1 bn in 2009 to an estimated standard metrics for advertisers, as opposed to4.0 bn in 2010. Average number of page views in online advertising.India was in the range of 350 pages per user permonth in 2010, and is expected to grow further Additionally, with 3G and better device features,in 2011 to ~550-700 pages per user per month. mobile can be used for branding ads, rather thanHowever, inspite of increasing WAP usage, CTRs just lead generation, as richer ad formats can beand CPMs have remained stable in the range of supported. Ad networks can also leverage device0.4% to 1% for CTRs and INR 60-70 for CPMs features and higher bandwidth to build complexity(increasing to INR 80 - 120 for some publishers), in the campaigns to support interactivity for a higherprimarily due to the increasing share of low value level of consumer engagement.users among data subscribers and prevalent practicesof untargeted advertising. Better targeting and 4.10. Enterprise Servicesprofiling can help drive CPMs / CTRs. Additionally, Enterprise VAS services include the two mainother non RoI based metrics as well as innovative lead categories of SMS aggregation and Enterprisegeneration metrics (e.g. click to call) are also likely Mobility services, which also includes CRM.to drive better campaigns for brand awareness / leadgeneration purposes. Driven by increasing mobile The SMS aggregation market in India is estimated tointernet penetration and better metrics, WAP based be a USD 56 mn market, with over 5 bn SMS messagesadvertising is expected to witness significant growth. being sent every month. It’s largely dominated by transactional business SMS (e.g. alert from a bankGoing forward, we expect profiling, measurement on cash withdrawal) and push advertising. Bulk SMSmetrics & better service/device quality to drive volume has been rising constantly, while its pricesgrowth of mobile advertising. have been steadily declining over the years. Based onBetter targeting and higher CPMs are realizable if how the SMS aggregators source the capacity fromcarriers can potentially share subscriber information carriers, there exist two business models: variablewith ad networks. Ad networks need to work with pricing and fixed pricing. In a variable pricing model,carriers to better profile the consumers for displaying carriers sell SMS on a per SMS basis to aggregatorsrelevant ads across carrier / non-carrier products. In and the pricing varies on the basis of volume. Inaddition, carriers have the opportunity to leverage a fixed pricing model, carriers sell bandwidth onconsumer profiling data to emerge as ‘smart pipes’ by the basis of transactions per second (TPS). Peakoffering highly relevant and contextual information time utilization of a TPS link is approximatelyand content to end users. This will also allow carriers 8 to 10 hours / day @ 70% efficiency. While theto play a more significant role in the growth of the top six aggregators account for a large share of theoff deck VAS ecosystem. market, the remaining market is fragmented across multiple resellers.Given the wide variety of networks, handsets,and mobile sites, a comprehensive view of mobile Enterprise mobility is still in a nascent stage ofaudience measurement technique has not yet been adoption in India, being primarily dominateddeveloped. Currently ad networks employ different by mobile email and collaboration applications.20 . Admob Mobile Metrics, May 2010 Key Growth Areas: Services and Applications 42
    • The primary driver for adoption of other mobility month model. The need of field employees to stayapplications such as ERP is the cost saving that connected and the overall shift of the workplace tocan potentially accrue from lower sales turnaround being more efficient and decentralized signals a hightime. Enterprise customers (as compared to SMBs) potential for these services in the future.account for a bulk of these applications, and areopen to spending as much as 25-30% of their total Another key segment within enterprise applicationsspend on productivity applications for having them is consumer facing solutions such as CRM. Thesemobile enabled. Verticals such as financial services, applications can be used to drive user stickiness,pharmaceuticals and FMCG are leading the overall convenience and overall engagement levels with thedeployments in this space, and the business models user, as is seen in an integrated CRM tool deployedrange from a fixed capex model to a pay per user per with a cable operator in the US (Figure 4.12). Figure 4.12: Case Study: CRM with Enhanced Discovery and Upsell / Cross Sell Opportunities Situation • A large cable operator in North America offers video, high speed data and phone services • The company recently started quad play through offering wireless data cards. They now also plan to offer mobile voice and data solutions to help retain users and also drive their life time value Challenge • Company faced significant challenges in its overall brand evolution. Primary concern around product was on how to promote the discovery of their services and offerings both to new users as well as the larger cable subscriber base • Additionally, they wanted to be able to make intelligent recommendations and offer personalization to enhance the overall user experience Approach • mPortal with its SPRINGBOARD product suite implemented a discovery solution for smart phones and tablets • The solution is well positioned to help drive retention of users, better service discovery and improve uptake • Additionally, more control over the discovery coupled with insights into consumer usage help plan future services Source: mPortal, Analysys Mason 43 Key Growth Areas: Services and Applications
    • Key Growth Areas: Services and Applications 44
    • 5 Forecasts
    • 5 ForecastsIn line with the recurring theme of emergence of data as a significant value driver for carriers in thecoming few years, we estimate the contribution of data revenues to increase to 54% of the overallmobile VAS revenues of INR 671 bn in 2015. The contribution of CRBT declines from 13% in 2010 to5% in 2015, and that for SMS declines from 45% in 2010 to 33% in 2015, due to multiple demand andsupply side constraints. The penetration of voice based services increases significantly from 15% in2010 to 25% in 2015, as voice becomes an important channel for delivery of utility, information andentertainment to the non-data user base. Finally, we estimate mobile commerce and advertising to beworth INR 20 bn and INR 21.2 bn by 2015Non voice revenues are expected to account for as Mobile non-voice and VAS revenues in India havemuch as 51% of the incremental industry revenues, been lagging the global markets for quite some timeand will account for 31% of the wireless revenues in but are expected to catch up with other emerging2015 markets such as Malaysia and China by 2015. However, unlike expectations of this growth being Figure 5.1: Mobile VAS Market in India (INR bn) and its Share to Wireless Telecom Revenue 31% 31% 27% 671 603 19 37 22% 14 35 18% 480 219 16% 9 34 202 368 6 34 291 34 182 28 4 32 148 213 159 23 123 2 28 132 81 19 96 16 62 201 215 13 58 150 48 88 25 49 2010 2011 2012 2013 2014 2015 Mobile Internet (Handset) Dongles / CCD Data Access IVR Messaging CRBT Others Source: Analysys Mason Evolution of Mobile VAS in India 46
    • driven by innovative services and applications on reduction in price per MB for HSPA data, increasing3G/4G, we believe that data access revenues will penetration of feature-phones and smartphones, asbe the biggest revenue driver. In addition to data well as availability of content and applications. Asaccess on handsets, connected computing devices shown in Figure 5.2, we expect a user base of 22 mnand dongles will also contribute significantly to on 3G handset data contributing a data ARPU ofincrease in data access revenues. Moreover, we INR 133 in 2011 going down to INR 49 in 2015,expect the traditional ‘killer application’ CRBT to with access accounting for a major share of theactually decline in terms of revenue contribution due revenues. The decline in ARPU is driven by a shift into issues around per unit economics for carriers and the mix of subscribers on long validity (30 days) vs.end user affordability. Similarly we believe that SMS shorter validity (1 day, 3 day plans) plans, as well aspenetration will stabilize at the current levels due to an overall decline in the price per MB for HSPA dataconsumer behaviour and literacy issues, although driven by competition and availability of bundledwithin users of SMS, the usage will continue to offerings. Of an active base of 1.1 bn subscribers inincrease driven by adoption of SMS based social, 2015, we believe that 154 mn subscribers will be onutility and productivity applications. In addition 2.5G data as the carrier coverage increases to aboutto the above traditional revenue sources, there are 300,000 villages and the use case for data at theemerging revenue sources of mobile commerce entry level increases, while the adoption and usageand advertising. of applications will increase, their primary value proposition will be driving user engagement as theWith HSPA carriers focusing on handset data at revenue contribution will not be significant.the expenses of dongles, and an increase in EDGEcoverage, we expect mobile handset data users to 3G (HSPA and EVDO) dongles and CCD basereach 468 mn by 2015, contributing to 32% of will grow to 66 mn by 2015, while 21 mn will beoverall mobile VAS revenues connected on 4GWe believe that the trend of adoption of mobile With some of the HSPA carriers also opting forhandset data will continue to be reinforced by a offering EVDO dongle based services due to Figure 5.2: Handset Data Users (mn) 468 372 314 275 223 183 132 125 54 22 76 7 142 149 154 129 103 69 2010 2011 2012 2013 2014 2015 2G Data Users (mn) 3G Data Users (mn) Source: Analysys Mason 47 Forecasts
    • the relative capacity and cost per MB advantage case will be connected computing devices and dataof EVDO, we believe that EVDO dongles will dongles. We expect the 4G / LTE dongle and CCDdominate the mobile broadband access market from base to reach 21 mn by 2015.PCs and CCDs. However, with an increase in theprepaid base for casual data usage, we believe that CRBT contribution to overall revenues will declinedata connectivity on devices will start becoming from 13% in 2010 to 5% in 2015 due to carriermore common, thus resulting in a decline in 3G business case and user affordability issuesdongle and CCD ARPU. With the introduction ofLTE in late 2012 / early 2013, and issues around CRBT has been the traditional killer application butindoor coverage at 2.3 GHz as well as the expected is on its way to losing its sheen as the penetrationdeployment of LTE in hotspots (rather than full begins to stabilize, with only about 5% of incrementalmobile coverage), we believe that the initial use subscribers opting for a CRBT subscription at most Figure 5.3: Dongles and CCDs base (mn) 66 21 48 13 28 5 18 46 35 12 7 24 18 12 6 1 2010 2011 2012 2013 2014 2015 2G 3G 4G Source: Analysys Mason Figure 5.4 CRBT Revenues and its Contribution to MVAS 37 34 35 34 32 28 13% 11% 9% 7% 6% 5% 2010 2011 2012 2013 2014 2015 CRBT Revenues (INR bn) Share of CRBT in MVAS Source: Analysys Mason Forecasts 48
    • carriers. After accounting for the acquisition cost and there is a potential upside from the direct-to-content payout, the per unit economics doesn’t allow consumer ecosystem, as well.for a significant price drop especially with a highchurn rate of incremental customers. Due to these SMS penetration is expected to stabilize at 50% ofreasons the subscription and song change charges for the base by 2015, although the usage is expected toCRBT have remained broadly constant, except for increase from 89 outgoing SMS per sub in 2010 tocircle level promotions, and will limit penetration 113 outgoing SMS per sub in 2015and revenue contributions in the longer term. The share of SMS in overall mobile VAS revenuesThe penetration of voice based services will be is expected to decline from 45% in 2011 to 33%driven by utility and productivity applications, in 2015, as penetration stabilizes due to the lack ofand potentially a favourable premium short code local language support on handsets. However, weallocation framework, its revenue contribution will believe that the usage of SMS within the penetratedincrease three folds to INR 34 bn user base will continue with increasing social and community applications and services, andVoice services / IVR usage has thus far been the easy availability of low priced SMS packs. Indominated by entertainment services, with addition, with introduction of multiple utility andinformation and transaction use cases beginning to productivity services on the SMS channel, the valuegain traction in the past couple of years. We believe and usage of A2P SMS will go up substantially. P2Athat going forward voice/IVR will provide a means SMS for contests and other such premium services isof information, opportunity and entertainment relatively price inelastic and are expected to continueaccess to a significant proportion of the 1.1 bn active to be priced higher even in the future.user base in 2015. The introduction of services suchas mobile health and education on a voice based Mobile advertising revenues will increase from INRplatform will drive some of the demand for IVR. 2 bn in 2010 to INR 21.2 bn in 2015, primarily withAlso, if there is a favourable policy framework for improving user experience with mobile internetallocation and governance of premium short codes, Figure 5.5: Voice / IVR Revenues and its Penetration 25% 23% 20% 34 17% 28 16% 15% 23 19 16 13 2010 2011 2012 2013 2014 2015 Voice / IVR Revenues (INR bn) IVR Penetration Source: Analysys Mason 49 Forecasts
    • Mobile advertising has remained limited to a lead will rise. We also believe that the push SMS marketgeneration channel due to multiple issues resulting has significant user privacy issues as well as policyin a sub-optimal customer experience and the scrutiny and will grow only marginally, especially ifassociated reluctance of brands to seriously invest in there is any regulatory intervention on terminationthis channel. With increasing penetration of mobile charges. However, opt-in SMS advertising modelsinternet and improvements in data access and device will gain traction from better user profiling,features, we expect WAP ad inventory to grow introduction of SMS based utility services as wellsubstantially. In addition, with industry initiatives as enterprise CRM. Voice based advertising is notaround ad effectiveness metrics and carrier profiling expected to grow significantly due to consumerof end users, we believe that fill rates and CPMs intrusion and low fill rates. Figure 5.6: Messaging Revenues (INR bn) 219 202 182 159 132 96 2010 2011 2012 2013 2014 2015 Source: Analysys Mason Figure 5.7: Mobile Advertising Revenues (INR bn) 21 17 12 7 4 2 2010 2011 2012 2013 2014 2015 Source: Analysys Mason Forecasts 50
    • Mobile commerce revenues will increase from INR model are still evolving, we believe that transfer of0.2 bn in 2010 to INR 20 bn in 2015, primarily funds from government to end users through suchdominated by payments a BC based model remains a compelling use case, especially with the introduction and integration ofMobile commerce, including banking, payments UID numbers. We estimate the transaction volumesand remittances has been fairly successful in some from such a BC banking channel to be INR 232of the emerging markets such as Africa, resulting in bn in 2015. Finally, mobile offers an opportunitysignificant revenue streams as well as churn control. to shift a share of the informal domestic remittanceIn India, regulations around mobile commerce market to mobile enabled channel driven by theand the legacy control of banks on the financial value proposition of reduced costs and increasedecosystem has delayed the introduction of similar convenience.such services. However, there have been significantregulatory changes introduced by the RBI in the Enterprise mobility solutions will contribute INRrecent past which have paved the way for carriers 15.0 bn revenues in 2015, while bulk SMS businessto participate in and drive the growth of some of will grow marginally from INR 3 bn in 2010 to INRthese opportunities, in collaboration with banks and 5 bn in 2015other stakeholders. Carriers have already introducedstored wallet based services which can be used for Enterprise mobility solutions are now increasinglymerchant, utility and other bill payments. Carriers being deployed by businesses to leverage the powerhave also started to launch BC based models for of wireless to have their field force connected tolower transaction cost and greater reach for offering enterprise infrastructure and databases at all pointsfinancial inclusion services. While some of the in time. Such solutions offer the benefit of fasterbusiness model elements of a consumer led BC turnaround time to place and fulfil orders and in Figure 5.8: Mobile Commerce Revenues (INR bn) 19.9 13.4 7.9 3.7 1.1 0.2 2010 2011 2012 2013 2014 2015 Mobile Commerce (INR bn) Source: Analysys Mason 51 Forecasts
    • turn reduce working capital and accounts receivables.The value of these solutions are greater for consumerfacing industry verticals with a geographicallydistributed work force, yet the average order valueremains high. We estimate the enterprise mobilitysolutions market to reach INR 15.0 bn by 2015,driven by spend on projects to make enterprise ITsystems more functional for mobile interactivity.The other component of the enterprise market,bulk SMS is expected to grow marginally especiallyas the market becomes further commoditized andregulatory constraints inhibit push SMS growthin the near future. However, we believe that sucha decline will be balanced by an increase in SMSmessages sent by enterprises to their customers forinformational and promotional purposes throughintegration with CRM systems. We expect the bulkSMS market to grow from INR 3 bn in 2010 to INR5 bn by 2015. Figure 5.9: Enterprise VAS Revenues(INR bn) 20 18 15 13 11 15 9 13 11 9 7 8 4 4 5 5 3 3 2010 2011 2012 2013 2014 2015 Bulk SMS Market (INR bn) Enterprise Mobility (INR bn) Source: Analysys Mason Forecasts 52
    • Annexure: Sponsors’ Profiles
    • Platinum Sponsor Gold Sponsors
    • Company Profile: mPortalSummary Founded in 2000, mPortal is a leading enabler of next generation mobile user experiences. The mPortal solution simplifies and optimizes access to data services for users to make personal and relevant choices about mobile applications and content.Company Overview Management Team: D. P. Venkatesh, Founder & CEO; P.G. Ponnapa, CEO Emerging Markets Investors: Friedli Corp Finance, Zurich Key Platform Partnerships: Amazon, Apple, Google, HP/Palm, HTML 5, Mediatek, Microsoft, Qualcomm and RIMM Key Clients: AOL, Bloomberg, Disney, ESPN, Time Warner Cable, Comcast, Cox, Cricket, Reliance Infocomm and Verizon WirelessKey Offerings & Business Models Offers SPRINGBOARD Customer Experience Platform which provides two key components of the connected device experience ecosystem: • SPRINGBOARD Discovery Platform which is a connected device software platform that permits the development of a next generation user experience across multiple mobile devices, tablets and smart TVs with a focus on Idle/Home screen presence. • SPRINGBOARD Delivery Platform which is a content and application creation, aggregation, analytics, monetization and delivery platform for managing and delivering connected device content and applications. Business Model is a cloud based globally managed services model with revenues generated by licensing software directly to service providers and device players as well as revenue share arrangements based on value or revenues generated by its platform.Future Plans Focus on Emerging markets – with a solution aimed at Handsets in the feature phone and smart phone space enhancing Content discovery across device and OS platforms ranging from MTK, BREW, Android, Microsoft, RIMM and others. Help Carriers in the Developed and Emerging Markets optimize their mobile experience by superior user experience and enhanced Home Screen Content Discovery across all types of mobile phones, tablets and Smart TVs. 55 Annexure: Sponsors’ Profiles
    • mPortal’s Idle Screen Solution Dynamic Widget Platform Annexure: Sponsors’ Profiles 56
    • Company Profile: AmdocsSummary Founded in 1982, Amdocs is the market leader in customer experience systems innovation. The company combines business and operational support systems, service delivery platforms, proven services and deep industry expertise to enable service providers and their customers to do more in the connected world. Amdocs’ offerings help service providers explore new business models, differentiate through personalized customer experiences, and streamline operations. A global company with revenue of approximately $3.0 billion in fiscal 2010, Amdocs has over 19,000 employees & serves customers in more than 60 countries worldwide.Company Overview Management Team: Eli Gelman, CEO; Anshoo Gaur, India Head; Shrirang Bapat, Vice President, R&D India Investors: Listed on NYSE (DOX) Key Partnerships: Alcatel Lucent, Cognizant, CTC, HT, IBM, tech Mahindra and others Key Clients: Amdocs’ customer base includes services companies in more than 60 countries worldwide. Some key customers are AT &T, Bell Canada, SingTel Optus, Videocon, Vodafone Germany, Vodafone UK, Vodafone Greece and othersKey Offerings Offers OSS/BSS solutions. Offers Managed Services such as Customer Management, Revenue Management, Service Delivery and Portfolio Management.Future Plans Plans to amplify the training programs to equip the employees with best of tools and knowledge to perform at highest levels; focus on new projects and launches; refine and expand the base modules and develop customer experience systems; pursue new acquisitions and other initiatives to offer new products and services. Amdocs is #1 in Worldwide Amdocs named the #1 “Amdocs benefits from a OSS and Billing with a 31.2% Telecom Operations strong managed services Market Share Management Systems Vendor business…” (January 2009) (May 2009) (February 2009) 57 Annexure: Sponsors’ Profiles
    • Company Profile: Bubble MotionSummary Leader in Mobile Social Media with the launch of BubbleBlog – a voice blogging service that has grown rapidly throughout Asia (started in India).Company Overview Management Team: Silicon Valley veterans transplanted to Asia - from former startups Facebook, Yahoo!, Oracle, BEA Systems, Skype and Google Investors: Sequoia Capital US, Sequoia Capital India, SingTel, Comcast, Palomar Ventures, Infocomm Investors and NGP Global and India Footprint: Launching with all major operators in India as well as in Indonesia, Japan and the Philippines Key Partnerships: Partnered with 30+ media companies to secure exclusive rights to 500+ celebrities and with 20+ Tier 1 operators to launch BubbleBlog Key Clients: Airtel, Reliance, Vodafone, Tata, Idea Cellular, Telkomsel, Indosat, XL, Globe, Smart, AIS, KDDI, Softbank, Turkcell and other operators Subscriber Base: Over 10 million (June 2011) Growth Rate: 382% y-o-yKey Focus Social Media: Focused solely on social media, specifically mobile social microblogging BubbleBlog: Initial service launch, which is a voice blogging service (i.e, Twitter with a voice)Future Plans Text/Photo/Video: Initial service was ‘voice’ blogging, but already added text as well as deep Facebook/Twitter integration – next up: photo and video; Expand Geographies: To rest of Asian countries not yet launched in: Thailand, Malaysia, Vietnam, South Korea, Taiwan, Cambodia and others Smartphone Apps: Launch an iPhone and Android app for BubbleBlog Annexure: Sponsors’ Profiles 58
    • Company Profile: IMImobileSummary IMImobile is the leading, trusted specialist provider of mobile data delivery technology platforms and managed services globally for top telecom operators, B2C brands and media companies enabling an open mobile market managed services. Our leading DaVinci Evolved Service Platform™ powers a wide range of services (created, delivered & managed by IMImobile) including: social aggregation, contact management, mobile advertising & marketing, messaging, storefronts, ring back tones & digital music services. Currently, IMImobile has presence across Asia, Europe, LatAm, & Middle East. A 650 employee base provides services to 71 operators & blue-chip clients in 59 countries.Company Overview Management Team (India): Vishwanath Alluri, Founder, Chairman & CEO; Shyam Bhat, CTO & Founder Global Footprint: Besides India, UK, USA, Dubai, Dhaka and Sri Lanka Key Partnerships: National Geographic, SaReGaMa, CRY, Warner Music Group & Universal Key Clients: Operators: MTN, Vodafone, Virgin Mobile, Airtel, MTNL, BSNL, MTNL, Reliance, Aircel, TTST, Maxis, Grameenphone and others Media, Advertisers & Enterprises: Reuters, Google, Meteor, Sahara, Hindustan Times, Hindu, Yahoo, Cricinfo, Star, Jaya TV and others Global Membership in Trade Industry Associations: GSMA, WAC (Wholesale Application Community), MEF (Mobile Entertainment Forum) & MMA (Mobile Marketing Association)Key Offerings and Business Models Offers unique combination of cost optimisation and revenue generation. Further, IMImobile is working towards opening operators’ dormant network assets so that network works as a ‘smart pipe’ instead of a ‘bit pipe’. Provides a unique combination of content management, operational model, business model and wholly-owned technology which enables a quality and breadth of solution, cost effective SaaS delivery model and high service level availability unmatched in the industry. Offers a unique personalized SMS service - mVaayoo™. It is the most cost effective End-to-End Enterprise Mobile Messaging Service with an incomparable, high service level availability.Future Plans Plans of creating and driving an open global mobile marketplace for new applications and services, and to help operators realize the network-as-a-service model and make their networks smarter. It also plans to become a specialist provider of technology platforms and managed services globally to 100 leading telecom operators, B2C brands and media companies in the next 2 years and to over 500 customers in 5 years. 59 Annexure: Sponsors’ Profiles
    • Company Profile: One97 CommunicationSummary One97 is a pioneer in mobile internet services for consumers in India. It has the widest and largest deployment of telecom application cloud platform. Thriving on innovation, One97 delivers mobile content, advertising and commerce services to millions of mobile consumers.Company Overview Headquartered in New Delhi, One97 is more than 1,000 people strong team with regional offices in Mumbai, Chennai, Dhaka, Lagos and Dubai Management Team: Vijay Shekhar Sharma, Chariman & Managing Director Investors: Marquee investors like Intel Capital, SAIF Partners and Silicon Valley Bank Investments: One97 has set up a USD 100 million fund to invest and incubate in mobile ecosystem. It has already made investments in the following companies: • Oorja, New Delhi: An analytics driven comprehensive customer communications platform • LeapSky Wireless, Singapore: A mobile internet roaming service • Ciqual, Scotland: A mobile Internet analytics platform • TenCube, Singapore: Makers of award winning mobile internet security service WaveSecure (sold to McAfee, USA) • PayTM, New Delhi: A mobile commerce platform for consumers and enterpriseKey Offerings and Business Models Offers Inapaq branded content services for mobile consumers. Offers Oorja Mobile Advertising – pay per click and pay per insert mobile advertising on 2.5G and mobile internet properties. Provides a mobile commerce platform, PayTM for mobile recharge offers and deals for consumers.Future Plans Leading emerging market player in select segments of mobile internet value chain. Annexure: Sponsors’ Profiles 60
    • Company Profile: QualcommAbout Qualcomm Inc.Overview Qualcomm Incorporated, a FORTUNE 500® company is the world leader in next-generation mobile technologies. Today, Qualcomm technologies are powering the convergence of mobile communications and consumer electronics, making wireless devices and services more personal, affordable and accessible to people everywhere. Established in July 1985, Qualcomm is headquartered in San Diego, California and has an employee base of about 17,500 highly skilled professional spread across 139 locations worldwide. Qualcomm believes in giving back to community and encourages employees to achieve work-life balance. Qualcomm is listed on the NASDAQ under the symbol QCOM. Dr. Paul E. Jacobs is the chairman and chief executive officer of Qualcomm.Quick Facts • Revenues $10.99 billion (fiscal year 2010) • Approximately 17,500 full-time and temporary employees • GAAP R&D expenses $2.55 billion for fiscal year 2010 (23% of revenues) • Ranked #33 in FORTUNE’s list of “100 Best Companies to Work For” in 2011About Qualcomm India Qualcomm established its India operations in 1996 with Qualcomm India Private Limited. Headquartered in Mumbai, it also has a business development location in Delhi. Kanwalinder Singh, president, Qualcomm India and South Asia heads Qualcomm’s operations in the region. In addition to its offices in Mumbai and Delhi, Qualcomm has R&D presence in Hyderabad and Bangalore, including a handset pre-certification lab in Hyderabad. Qualcomm has expanded its presence with representation of Qualcomm Ventures.Quick Facts: • Dr. Avneesh Agrawal, President, Qualcomm India & South Asia and Senior Vice President, Qualcomm, Inc. • Office locations: Mumbai, New Delhi, Hyderabad, Bangalore • Recognized among India’s top 25 ‘Great Places to Work’ for five consecutive years (2007-2011) and ranked No. 1 in telecom sector in 2008, 2009 and 2010. 61 Annexure: Sponsors’ Profiles
    • Company Profile: SMS GupshupSummary Founded in 2007, SMS Gupshup is India’s largest and fastest growing group messaging platform processing over 2.5 billion messages per month, with over 45 million users and 3.5 million communities.Company Overview Management Team: Beerud Sheth, Co-Founder & CEO; Rakesh Mathur, Co-Founder and Chairman; Vishwanath Ramachandaran, Founding Executive & CTO; Milind Agarwal, Founding Executive & VP Sales; Chirag Jain, Founding Executive Investors: Charles River Ventures, Helion Ventures, Globespan Ventures, Private Equity funds and others Key Partnerships: Tata, Aircel, Airtel, Loop, BSNL (India); Sun, Smart, Globe (Philipinnes); Telkomsel, Bakrie (Indonesia); Batelco (Bahrain); Dialog (Srilanka)Key Offerings Offers mobile marketing solutions to acquire new customers, engage and retain existing customers. Provides CRM applications (Sales Tracker, Inventory Tracker, Loyalty program, rewards & offers, content cards and other apps). Offers mobile communities for social networking and chatrooms. Launched “Reply-All” (many-to-many) SMS capability.Future Plans Plans to expand its network across new geographies. Plans to increase focus on expanding its product portfolio to provide a richer experiences to smartphone users. Plans to strengthen the sales and marketing teams in India and international markets. 350,000 SMS Gupshup Active User Base (Jan 09-Feb11) 50% 45% 300,000 40% 250,000 35% 200,000 30% 25% 150,000 20% 100,000 15% 10% 50,000 5% 0 0% May-09 May-10 Feb-09 Mar-09 Apr-09 Jul-09 Oct-09 Feb-10 Mar-10 Apr-10 Jul-10 Oct-10 Feb-11 Nov-10 Dec-10 Jan-09 Jun-09 Aug-09 Sep-09 Nov-09 Dec-09 Jan-10 Jun-10 Aug-10 Sep-10 Jan-11 last 30-day Active Publishers Active Subscriber % Annexure: Sponsors’ Profiles 62
    • The Internet and Mobile Association of India [IAMAI] is a Analysys Mason is a trusted adviser on telecoms,young and vibrant association with ambitions of representing the technology and media. With 260 staff across 12 offices, weentire gamut of digital businesses in India. It was established in are respected worldwide for our exceptional quality of work,2004 by the leading online publishers, but in the last seven years independence and flexibility in responding to client needs.has come to effectively address the challenges facing the digital For more than 25 years, we have been helping clients inand online industry including mobile content and services, more than 100 countries to maximise their opportunities.online publishing, mobile advertising, online advertising, We work with our clients, including operators, regulators andecommerce and mobile & digital payments among others. end users, to:Among the macro issues that has kept the association busyhave been content and services on internet and mobile, internet • design winning strategies that deliver measurable resultsthrough mobile, broadband penetration, tech entrepreneurship • make informed decisions based on market intelligence andand tech entrepreneurship funding. analytical rigourSeven years after its establishment, the association is still the only • develop innovative propositions to gain competitive advantageprofessional industry body representing the online and mobile • make intelligent investments in public and private companies ofVAS industry in India. varying sizesThe association is registered under the Societies Act and is a Analysys Mason’s India office has been operational since 2004,recognised charity in Maharashtra. With a membership of 110 and has a team of 19 professionals with strong experience inodd Indian and MNC companies, offices in Delhi and Mumbai corporate planning, strategy consulting, transaction advisoryand a permanent and professional staff of 10, the association and research.is well placed to work towards charting a growth path for the Our experience in the mobile value added services industry indigital industry in India. India includes the following projects: • Corporate Planning (Global Software and Services Vendor, 2009): Identified distribution channels and go-to-market strategy in India for their on-device portal integrated application platform. Recommendations included a detailed plan indicating the short, medium and long-term objectives, including the types of applications / services • Go-to-Market Strategy (Global MVAS provider, 2009): Developed a growth strategy (organic and inorganic) for the client’s India business, by identifying possible growth opportunities based on the total addressable market, competitive intensity across bearer channels (e.g. WAP) and distribution channels (e.g. D2C) and possible business model shifts between current and future services • Transaction Advisory (Private Equity Fund, 2011): Conducted a business due diligence of a leading local search and listings service provider in India. Developed a market model to understand the future scalability potential, evaluated the competitive and regulatory scenario and estimated the incremental revenue opportunity from increase in price, penetration and upgrade • Transaction Advisory (Private Equity Fund, 2011): Identified key growth areas within mobile VAS in India based on their demand and supply analysis and total addressable market. Within the growth areas, evaluated leading VAS companies and shortlisted them based on multiple parametersFor more information please contact: For more information, please contact:Internet & Mobile Association of India Analysys MasonF-36, Basement BD – 4th Floor, Big Jo’s TowerEast of Kailash Netaji Subhash Place, PitampuraNew Delhi, 110 065 New Delhi, 110034, IndiaTel: +91 11 4657 0328 Tel: +91 11 4700 3100www.iamai.in Fax : +91 11 4700 3102 www.analysysmason.com
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