Freedom of Choice

Deccan Herald , 1st Feb 2010, Economy and Business

 

Krishna Kumar G

Mobile service providers in India have witnessed some unprecedented developments in the last couple of quarters, thanks to the fierce competition leading to price war. Stock prices have plummeted; suddenly every second of talk time and every character used for SMS have become the focus area for mobile service operators.

This has driven them to plan new strategies to woo customers and achieve profitability. Now, the operators are gearing-up to face the next challenge— MNP or Mobile number portability.

Mobile Number Portability (MNP) is the ability for mobile phone subscribers to retain their phone numbers even when they change their service provider irrespective of the mobile technology of GSM or CDMA. In short, if a Airtel customer want to switch to Vodafone, or the reverse, he or she can retain the same number. With over 50 crore mobile subscribers, India will have the largest MNP implementation in the world, when it happens. Like many of the developing countries, India too has a very high prepaid subscriber base (about 90 per cent). The porting fee, that a subscriber have to pay, which was expected to be as high as Rs 300 couple of years back, has been attractively set at a maximum of Rs 19 by the regulatory authority to make sure porting fee does not inhibit subscribers to switch operators.

Global trends
MNP roll-out in India is being planned for close to three years, it is now expected to start in April 2010. In fact, MNP roll-out globally has been delayed anywhere between four months (in Finland) to over fifty months (in Germany) due to various reasons like non-availability of a feasible technical solution, general apprehension from the mobile operators, cost to be incurred by operators and the realistic time required to set-up the infrastructure.

Empirical Studies have shown MNP implementation to be more productive for markets that have at least 50 per cent Mobile Tele-density (Number of phones per 100 people).
India, with current Mobile Tele-density of over 45 per cent, will hover around the 50 per cent mark during the actual MNP roll out. MNP has been implemented in over 40 countries across the world spread over 12 years starting with Singapore in 1997. MNP has received lukewarm response in most of the countries.

In the UK, MNP did not take-off due to low awareness, long wait period and long term contract with the current service provider. Among the SAARC nations, Pakistan was the first country to introduce MNP in March 2007 and it experienced less than 1 per cent porting (churn-rate). The poor response was attributed to time consuming porting process and poor customer service. Among the BRIC countries, while China and Russia have deferred the MNP implementation, Brazil implemented both Fixed line and Mobile Number portability during late 2008. Mobile tele-density of Brazil is about 90 per cent.
Even though MNP porting is carried out free of cost to the subscribers, less than 2 per cent of the mobile subscribers have opted for porting over the past 16 months.

However, only Finland, Hong Kong and Australia have been successful in achieving high percentage of Porting. Finland experienced over 10 per cent churn rate due to regulatory prohibition on SIM-locked phones (operator locked phones are extremely popular in the rest of Europe). Hong Kong effectively utilised its fixed line number porting experience which helped quick turn-around of porting requests. In Australia, the regulator has ensured porting to be completed within three hours.

India may follow global trend
Will MNP lead to a huge churn? Churn rate largely depends on country’s mobile penetration, awareness of the portability process, cost, customer service and most importantly on seamless and quick porting experience for the subscribers.

Many surveys conducted in India predict up to 50 per cent porting rate with postpaid subscribers and 10 to 20 per cent for pre-paid subscription. In fact, telecom regulator TRAI has estimated an overall 10 per cent porting rate for the first 15 months and a gradual decrease to 7, 6 and 5 per cent for the successive three years.

Considering the global trends, achieving 10 per cent porting requests in India seems unlikely. There would certainly be interest among subscribers to bargain hunt for the best deal during the initial period. But the euphoria may die down as there is no significant difference in terms of network coverage or cost among the incumbent operators, especially the larger ones.

But the new entrants, and there are four of them, could attract subscribers by offering attractive pricing and exciting vale added service (VAS) offerings. However their poor network coverage and unproven quality of service could become a deterrent for subscribers to switch. Although the international mobile market trends show that MNP has not made much difference to the incumbent service providers, it will be interesting to see the impact on the new entrants.

Availability of affordable and good quality dual sim phones could also prevent subscribers to avail MNP. Dual sIM phones, hitherto limited to cheaper phone manufactures, have started gaining popularity with the leading manufacturers. Dual sim may soon become the industry standard in India where a subscriber may retain old number for receiving calls and use new and cheap connection for making calls.

Benefits to the subscribers
Number portability would be a very effective tool for ensuring competition and keeping the service providers on their toes. MNP implementation will certainly motivate operators to constantly improve their quality of services in order to retain existing customers and attract new subscribers. All the service providers, no matter how big or small, would have an inherent fear of losing customers. Operators could offer loyalty-based benefits to their existing subscribers and offer subsidised phones with attractive tariff plan with fixed period contract in order to retain the high ARPU (average revenue per user) post paid subscribers.

This may even encourage some of the pre-paid customers to switch to postpaid plans. Subscribers planning to switch can certainly look forward to migration benefits from the recipient operators.

MNP would certainly not revolutionise the Indian telecom market; however, it is a step towards pushing the service providers to improve their quality of service and fostering competitiveness. This could serve as a catalyst to spur further growth in the mobile industry. Subscribers are sure to benefit from the introduction of MNP and importantly it positively affects subscribers’ psychology with the option to switch “anytime”.

The writer is Director and Head of Engineering, Teleca Software Solutions

Rural India can immensely benefit from mobile boom

Deccan Herald  26th October 2009, Economy and Business Section

 

G Krishna Kumar

 

Rural India has played an important role in India’s overall economic growth. In fact, rural India accounts for 70 per cent of India’s population and 56 per cent of national income.

Mobile communication, by bridging the digital divide has revolutionised the social and economic life across the rural and semi-urban areas and mobile phones represent the world’s largest distribution platform. The mobile phone market is especially important for developing countries, where it is growing most rapidly.

Land phone revolution
India, which did not participate in the global land phone revolution, has seen unprecedented growth in mobile subscriber base, with over 450 million subscribers (by the end of 2009), second only to china. India’s tele-density (number of phones per 100 people) has grown over three-folds in the last three years, from about 13 per cent in March 2006 to over 40 per cent now. Mobile usage, restricted to urban India a few years back, has started penetrating the rural hinterland of the country at a good pace. The rural tele-density has grown at an impressive rate from 1.9 per cent in 2005 to over 15 per cent now. A few studies provide show a positive co-relation between Tele-Density and GDP growth. However, India’s Human Development Index stands at an appalling 132nd rank out of the 179 countries. With over two-third of India’s population residing in the rural India, a genuine effort is required from private public partnerships to improve rural India’s standard of living. Indian rural population has challenges in terms of low literacy, poor health care, low per capita income, and other infrastructure problems that inhibit development.

Communication is still a challenge in many of the villages and remote places. While Tele-density is a reflection of Voice communication alone, the actual benefit of technology positively impacting rural economy will be seen when data communication is used effectively. Since the mobile phone and associated wireless technologies can be used to tackle one of the problems, namely, literacy, it would certainly have a cascading effect on the economic development.

While at present, the telecom service providers concentrate on subscriber acquisition in the rural market, primarily for voice services, which has become commoditised due to intense competition in the sector, it is not the end. The low and ever-dwindling ARPU (Average Revenue per User, currently at around Rs 200 a month) can be offset by using mobile services not just for communication, but to more basic aspects of life such as education and healthcare. In advanced countries like United Kingdom, although rural population is smaller compared with urban population, rural subscribers have over-taken their urban counterparts on many of the wireless and broadband parameters. In countries like the US and Australia, rural mobile health services have picked-up momentum.

Mobile-based systems
There are plenty of examples of mobile phone based services for rural environment. A simple Mobile based ordering system Collaboration@Rural project, enables small grocery shops in rural South Africa to sell the goods, their customers actually need –— through a mobile delivery system. Nano Ganesh, a trial project in Gujarat allows farmers to use their mobile phones to remotely control irrigation pump sets located in far-off locations.
An mHealth project in Africa provides mobile phone owners updates on diseases via SMS. Advance warning of an impending natural disaster through mobile phones alerts have been implemented in many countries. In South Africa, SIMpill is a sensor-equipped pill bottle with a SIM card that informs doctors whether patients are taking their tuberculosis medicine. Nokia Life Tools provide market and educational information through mobile phones. Such rural specific value-added service applications can be implemented across the rural topography with region specific adaptations.

However, it is important that the target audience is trained and is adept at using the mobile applications for successful adoption. Imparting m-awareness will enable the users to understand and appreciate the value of these technology services and help increase the adoption rate. The Universal Service Obligation Fund (USOF) which has unused funds of over Rs 14,000 crores could be deployed for technology and infrastructure enhancement and maybe embark on a mission of increasing awareness of the mobile technology’s benefits among rural India with an active collaboration amongst various stakeholders such as telcos, learning content providers, universities and schools, and local administration.

The Telcos will have access to ‘m-aware’ rural population, which certainly would help in improving ARPU. TRAI has initiated actions in the right direction by creating an exhaustive connectivity-map covering over 6 lakh villages in India to estimate the available connectivity (coaxial cable, optical fiber connectivity, wire line and wireless) in Rural Areas. Satellite communication could be an alternate option for rough terrains that cannot be connected with wired or Mobile communication.

With 3G and broadband wireless access on the horizon, new opportunities abound to provide rich rural mobile applications. With the rapid fall in the cost of mobile hardware components, and the development of less expensive open source mobile software, the availability of economical feature-rich phones with high end graphic support would make easy adoption of mobile based rural applications. Solar powered mobile phones would be a boon for areas with non-existent/unreliable electricity.

With the next wave of exponential growth in wireless communication certainly coming from the rural segment, there is a huge opportunity to be tapped by the Telcos through innovative and ‘value-for-money’ solutions to address the needs of the rural population.
The writer is Director and Head of Engineering, Teleca Software solutions India.

The M in Learning

 

The Hindu Business Line , 5th October 2009, Monday, eWorld

 

The mobile phone can enable learning in a developing country such as India where its usage is growing by leaps and bounds..

 

M-learning supports learners in that access to learning content and instructors is not restricted by location.

G. Krishna Kumar
V. Sridhar

In today’s classrooms, mobile phones are seen as a nuisance, but they can be the key to a new, personal way of learning. Today’s learners – of all age groups – use their mobiles in nearly all their daily activities. Mobile media enable learners to access information and learning support whenever they need.

“The students of the future will demand learning support that is appropriate for their situation or context. Nothing more; nothing less. And they want it at the moment the need arises. Not sooner; not later. Mobiles will be a key technology to provide that learning support,” says Dr Marcus Specht, professor for Advanced Learning Technologies of the Centre for Learning Sciences and Technologies at the Open University, Netherlands. By enabling learning on the go, m-learning supports learners in that access to learning content and instructors is not restricted by location.

Nothing can be more apt for India which has witnessed colossal growth in mobile usage in the last five years. With close to 450 million mobile phones, India has the second largest mobile subscriber base in the world, next only to China. Mobile usage, restricted to urban India a few years ago, has started penetrating the rural hinterland at a good pace. The rural teledensity has grown from 1.9 per cent in 2005 to over 15 per cent now.

While the world recognises this phenomenal transformation in communication, India’s Human Development Index ranks an appalling 132 out of the 179 countries. With more than 40 per cent of our population being youth, literacy is of immense importance for a country that depends on this demographic dividend to spur growth and economic development. While Russia, China and Brazil have close to 100 per cent literacy, India, with about 80 per cent, needs to catch up.

Indian rural population has challenges in terms of low literacy, poor health care, low per capita income, and other infrastructure problems that inhibit development. If only the mobile phone and associated wireless technologies could be used to tackle one of the problems, namely, literacy, it might have a cascading effect on the economic development of the region.

Anytime, anywhere

While telecom service providers now concentrate on subscriber acquisition in the rural market, primarily for voice services, which has become commoditised due to intense competition, it is not the end. The dwindling average revenue per user (ARPU) can be offset by using mobile services not just for communication but for more basic aspects of life such as education and healthcare. In advanced countries such as the UK, although the rural population is smaller vis-À-vis the urban, rural subscribers have overtaken their urban counterparts on many of the wireless and broadband parameters. In countries such as the US and Australia, rural mobile health services have picked up momentum.

Examples abound on the use of mobile phones for learning. Mobile devices, which are truly personal, provide an opportunity to learn anytime, anywhere. Through an innovative university-businesses collaborative model, Stanford University’s International Outreach Program launched the Dunia Moja Project in Swahili in Africa to teach university courses to students using mobile phones. The Teachermates projects at Stanford University attempts to make education fun by using innovative mobile games.

A pan-European research and development programme on m-learning is aimed at improving literacy and numerical skills in the age group of 16-24, who were not doing well in the normal education system. Recently the European Community project called BLOOM (Bite-sized Learning Opportunities on Mobile Devices) carried out ‘M-learning in Taxi’, an interesting experiment whereby taxi drivers would utilise waiting time effectively by learning about subjects of interest and improving their knowledge about the city using smartphones. M-learning has certainly picked up momentum across the world and most of the projects are universal in nature and with regional adaptations that can be tailored to each country.

Active m-literacy programme

For m-learning to reach the masses, an active m-literacy programme is a must. Though children and youth have the innate ability to use gadgets with ease, as was demonstrated by the Hole-in-the-Wall project pioneered by NIIT, use of mobile devices for activities such as learning needs training. Many services, especially those that are targeted at the rural masses, such as Nokia Life Tools, provide market and educational information through mobile phones. Hence, it is important that the target audience is trained and adept at using these for successful adoption.

Imparting m-literacy will enable the users to understand and appreciate the value of these technology services and help increase the adoption rate. With 3G and broadband wireless access on the horizon, new opportunities abound to provide a rich m-learning experience. With the rapid fall in the cost of mobile hardware components, and the development of less expensive open source mobile software, the availability of economical feature-rich phones with high-end graphic support that makes m-learning conducive, the days of innovative m-learning solutions are not far off.

There certainly is a huge opportunity that can be tapped by addressing the learning needs of youth in urban and rural India using mobile services. Breaking into the Indian rural market requires a lot more creativity. One way is to embark on a mission of m-literacy and m-learning with an active collaboration amongst various stakeholders such as telecom companies, learning content providers, universities and schools, and local administration. What better way to make the life of our future hopefuls better than educating them through the ubiquitous mobile technologies?

Mr Krishna Kumar is Director and Head of Engineering, Teleca Software Solutions India, and Dr Sridhar is former professor of Management Development Institute, Gurgaon. The views expressed are personal.

Will 3G make biz sense ?

DECCAN HERALD : 16th March 2009 , Economy and Business Telecom Tech : The next wave in mobility will change the game

Will 3G make biz sense ?

G Krishna Kumar and Dr V Sridhar

Though India is far behind in launching 3G services, it will be a distruptive technology when it becomes an accepted standard.

Though incessantly delayed, the 3G auctions hopefully will take place by March as promised by the Minister, and the network rollout will happen by third quarter of 2009. With BSNL and MTNL soft launching their 3G services in many cities, we hope that the government operators are not given undue first-mover advantage compared to the private operators. However, the nagging questions the operators have are: will 3G fly in India? Is it worth bidding high prices (now that reserve prices are expected to be much higher than originally conceived) for the 3G spectrum? Or will Voice - the ubiquitous killer application - continue even over sophisticated handsets and networks? India is still a growing market despite the economic meltdown taking place all over the world. Indian mobile subscriber base has crossed 350 million and continues to grow to achieve the expected subscriber base of about 500 millions by 2010. Indians enjoy talking over phone. The average talk time in India is more than 500 minutes per month while in China it is about 300 minutes and in Finland, the country which first launched mobile services in the world, is about 200 minutes. Though India is a voice centric market, it has been attractive to handset vendors and even to international operators due to its sheer size and potential for future growth. Non-voice on raise ARPU (Average Revenue per user) is one of the key performance indicators of operators worldwide. ARPU in Indian Metros and Category A circles is about Rs 274 per month. Out of this, data services contribute roughly 12 per cent. SMS constitutes to about 50 per cent of non-voice revenue of the operators. An informal survey conducted by us revealed that less than 1 per cent of software/IT professionals (considered as the Tech Savvy) use any of the Non-SMS data services. Even in an advanced market like USA, non-voice contributes only for about 16 per cent of the overall ARPU of operators. It is expected that worldwide 3.3 trillion SMSs will be sent in the year 2009. The only exceptions being Japanese and South Korean markets which have data ARPU contributing to more than 40 per cent. However, it is well known that Japanese and Korean markets lead the rest of the world markets of the world in terms of advanced mobile services by 2 to 3 years. Will 3G bring a disruptive change in the Indian mobile market? Benefits of 3GThe average 2G spectrum available for Indian operators is much less than the international average. Though most of the spectrum starved incumbents might be looking at 3G license and spectrum for enhanced voice offerings, the competition amongst the licensees will force them to look for alternative revenue streams including high-speed Internet services and other value added data services as well. Operators are expected to focus their 3G services on cities as it helps in increasing the ARPU since cities account for maximum post paid connections. The 3G spectrum will definitely benefit the operators to pack-in more subscribers (more than 2.5 times /MHz compared to 2G) with enhanced voice quality by using the 3G infrastructure. Even amongst the 3G subscribers, voice will continue to dominate as a percentage of total ARPU in the near term. Operators could potentially migrate the existing post paid subscribers with average monthly bills exceeding, say Rs 1,000 to 3G by providing a bundled offering to the subscribers such as subsidised 3G phone and mobile broadband. This will free-up spectrum in 2G and also provide for growth in 3G services. One more option is to use the advertisement model pioneered by the likes of Google. By offering multimedia rich advertisements (akin to TV ads) on the go, the operators can earn additional revenue. This can be used to subsidise the usage/ rental charges of their 3G services so that the operators can garner as many initial adopters as possible in a shorter time frame. Though we see new models of handsets with functionalities such as Global Positioning System, rich media capabilities, enhanced email and search engines, being released by handset vendors every day, these can be of use to subscribers only if services using these functionalities are made available. This requires active collaboration between the operators and Mobile Value Added Service (MVAS) providers. The walled garden approach used by the operators is cited as one of the primary reasons for MVAS not picking up. 3G data cards With suitable regulatory intervention as pointed out in the recent draft recommendations on MVAS by TRAI, and proactive collaboration between the operators, MVAS technology providers, MVAS service providers and handset vendors as witnessed in Japan that spun off world leading mobile services such as iMode and FOMA, we can only hope for our MVAS industry to grow faster. Bundled offerings for 3G data cards may also become popular in cities for high-speed Internet connectivity and multimedia downloads. Apple’s iPhone, provided a different user experience especially in multimedia applications. It encourages end users to download applications by using the data services. With smartphone penetration increasing in India, it is expected that a certain proportion of high ARPU post-paid subscribers will use advanced 3G data services. GPS based Navigation software and associated applications, Mobile TV /streaming applications, m-commerce and mobile gaming are also potential applications and services for smartphone users. Gaming applications, which are extremely popular application among youth could be a significant revenue generation stream for the operators if attractively priced. Using the above strategies, the operators' aim should be to build the critical mass required as soon as possible so that they can sustain their 3G offerings. With Mobile Number Portability (MNP) in the horizon, the operators have to prepare for the battlefield by offering an optimal combination of price and quality of services, for acquiring and retaining subscribers. Data and multimedia services using 3G technologies seems to be one of the options the operators have, to attain competitive edge.    G Krishna Kumar is the Director - Engineering, Teleca and Dr V Sridhar is Visiting Research Fellow, Sasken Communication Technologies. E-mail: krishna.kumar@teleca.com