Doesn’t it sound interesting that after 15 years of growth based on “user generated content” the mobile phones walas are now moving towards non-user generated content and after 15 years of non-user generated content, internet walas are moving towards user generated content.
Sounds confusing? Let me try and make it easier: In the first round of growth mobile/wireless phones have thrived only on voice which is nothing but user generated content. To be slightly technical, the telecom operators have provided a platform on which we the users have contributed our voice content based on which the industry has grown to have more than 400 million customers. In case of the internet over PC/Laptop however, the beginning was made with web 1.0 where the content was provided to the user to web 2.0 where the platform is provided to the user and s/he contributes her own content.
So it appears that the that the adage “grass is greener on the other side” is coming to be true so far as digital content in India is concerned: Mobile walas are now increasing moving towards getting their customers hooked on to non-user generated content and internet walas are seducing their users by user generated content.
As of now, so far as the Indian market is concerned with its various skewed and awkward developments, it appears that the mobile walas have a distinct advantage in distribution of content and services on four fronts:
User generated content OR voice has proved to be a killer application
Which in turn has meant that benefits of “networking” is accruing to the users [more mobile phones there are more and more people would like to buy one; if you are the only mobile users you would have too few people to call
Mobile after all is a complete gadget: it allows you to talk, it provides connectivity and also acts as a tool for interaction [for using internet on PC you would at least have to have a PC/Device, a modem and a connectivity, sufficient electricity/battery supply. Mobile phones integrates all of these in a small and portable gadget]
Unlike the internet walas, the mobile walas have taught the users how to pay for content and services
It is small wonder that everyone is now trying to capture a share of the new user demand for what is perhaps a little too loosely known as mobile value added services. These services range from ringback tones on one end to mobile banking facilities on the other and anything in between.
This need for pushing content and services on mobile phones would continue to be driven by two significant factors:
The falling ARPUs, arrival of 3G and stiffer competition from new licensees would drive the telecom companies towards more and more value added content
On the other hand content and service providers which include such different entities as internet companies, film and music production houses and pure play mobile content and service providers, banks, retailers; increasingly use mobile as an important channel for distribution of content and services.
There is, however, an interesting dichotomy here: telecom users are not used to creating content and services [flourishing as they have done so far on voice]. The content and service providers on the other hand have so far not been used to paying the lion’s share of revenue for distribution [they are used to paying small commissions], and the current business models primarily dictated by telecoms irks them quite a bit.
So the current situation is somewhat like this: mobile walas need content and services to retain and obtain customers but do not know how to create it. Content and service walas are seduced by the huge customer base of telecoms, but are apprehensive of revenue models. While the industry has grown quite a bit within this constraint, it is time to break the ice and work out a sustainable model that benefits both for the telecom operators as well as the relatively smaller content and service providers.
From business models to what content would work in the future? This is a tricky one since the 400 million odd mobile users in India represent the entire universe of user type. In my view, a few things will work well [quite apart from p2p sms, premier sms and RBT that currently goes for all the content and service on mobile]: a) anything that is a part of the process of monetary transaction including actual transfers b) critical information that call for action now, c) active search for information and d) entertainment/fulfilment on the go. Interestingly again, telecom companies can not get into these businesses without losing their core competence just as much as content providers can not set up their own wireless networks to distribute their wares!
While it seems that once the telecom operators and content and service providers have developed a sustainable business model the growth of the industry is going to be unfettered; it would not be unwise to guard against a few roadblocks: a) at 400 million we have crossed all heretofore single product/service market sizes; we do not know our customers except that they want to talk, it is always difficult to service such a customer b) at 400 million we are more than 400 times over the English literate population, we still do not have local language phones worth mentioning c) at 400 million we are set to cross the total literate and numerate population of the country, will the next set of user be interested in mobile content and services at all? If so, of what kind? We do not know!
So even while the b2b issues are solved in the near future, the primary issue of “knowing” the customer, an issue that perhaps irks all mature industry will have to be faced and the industry will be limited by its knowledge or lack of it of its customer.
Monday, June 22, 2009
Tuesday, April 14, 2009
Universal Service Obligation
Before I go any further, let me warn the reader that the title is a technical term used for the obligation in India of the telecom license holders to provide services in the rural areas. I would also like to clarify, if it is not yet clear to anyone who has read my blog entries, that I like to write on things I know nothing about [sometimes in business this habit is petulantly termed as lateral thinking and sometimes it is called thinking out of the box].
So here I am writing about the Universal Service Obligation of Indian Telcos and I begin my story with not mobile phones but with electricity. In the 1960s, the government of many states had this crusaders' mentality [like they have now for telecom]. It was thought and genuinely believed in policy circles that electricity could change people's live.. some even believed that electricity in villages could actually cut down on the birth rate [I am sure u can figure out how and why. I will give u a hint, in my high school economics book one of the reasons given for high birth rates in rural India was supposed to be "lack of entertainment" in rural India!].
Be that as it may, the various state governments started pushing for ambitious electrification programmes. In Bihar this is how it happened: in the '60 wooden electric poles were erected, in the 70s these poles were completed eroded by the rains and were replaced by concrete poles, in the '80s poles had wires which were not live, in the '90s poles became live... but the last mile [that is connecinting homes with live electricity] was still not complete. That was the time I left Bihar for greener pastures and have not returned.
The fun on the entire process was that no one lost out. How? the electricity boards got huge money for ambitious plans, poles wallas got their money, the wire wallas made their money and the villagers did not have to adopt to something they were not sure about as yet. So the story ended in a happy note.
Somewhat similar is the story of the Universal Service Obligation Fund for telcos. This is how it works at present [ I may be wrong since as I said I write about things I do not know about]: the government [which is now very keen to earn money from anyone who makes money] takes 6 per cent of all revenues of telcos, puts it in the consolidated fund of India and promises that any telco which will wire up rural India, will be subsidised from this fund.
Do you see the uncanny similarity between the old electricity story and the new telcom story? How do you think this is going to end? As they say, more things change more they remain the same! I can clearly see that the telcos will start building towers, the wirewallas will supply the wires, the switch wallas will supply the switches and [god forbid] the rural folks will be saved from the mobile phones. So evey one will be a winner just as in the case of electricity.
What is the way forward? I think it's easy..... and the best way forward is to make a lose lose situation for everyone. But How? Simple, dont start from the telcos... start from the consumers and reverse the the flow of subsidies. Here is how the flow chart would look:
1. Pay Rs 1,000 to anyone in the rural areas to buy a handphone [one per family only]
2. Handset manufacturers will start making handsets for 800 Rs and set up shops in rural areas
3. Tower companies will start setting up the towers since people are waiting with handsets
4. Wire companies will quickly wire up the towers [or is it wireless?]
5. Telcos will very soon charge up the wireless, they will know how many consumers are waiting at the other end.
It will be a lose lose situation for all: the rural consumer will be burdened with a mobile phone, and all others will have to invest out their own pockets to build a rural business and the government will be hauled up by the election commission. And the process will be complicated... but then if you have decided to give away free money why not make the dsitribution process as complicated as possible?
Jai Hind
So here I am writing about the Universal Service Obligation of Indian Telcos and I begin my story with not mobile phones but with electricity. In the 1960s, the government of many states had this crusaders' mentality [like they have now for telecom]. It was thought and genuinely believed in policy circles that electricity could change people's live.. some even believed that electricity in villages could actually cut down on the birth rate [I am sure u can figure out how and why. I will give u a hint, in my high school economics book one of the reasons given for high birth rates in rural India was supposed to be "lack of entertainment" in rural India!].
Be that as it may, the various state governments started pushing for ambitious electrification programmes. In Bihar this is how it happened: in the '60 wooden electric poles were erected, in the 70s these poles were completed eroded by the rains and were replaced by concrete poles, in the '80s poles had wires which were not live, in the '90s poles became live... but the last mile [that is connecinting homes with live electricity] was still not complete. That was the time I left Bihar for greener pastures and have not returned.
The fun on the entire process was that no one lost out. How? the electricity boards got huge money for ambitious plans, poles wallas got their money, the wire wallas made their money and the villagers did not have to adopt to something they were not sure about as yet. So the story ended in a happy note.
Somewhat similar is the story of the Universal Service Obligation Fund for telcos. This is how it works at present [ I may be wrong since as I said I write about things I do not know about]: the government [which is now very keen to earn money from anyone who makes money] takes 6 per cent of all revenues of telcos, puts it in the consolidated fund of India and promises that any telco which will wire up rural India, will be subsidised from this fund.
Do you see the uncanny similarity between the old electricity story and the new telcom story? How do you think this is going to end? As they say, more things change more they remain the same! I can clearly see that the telcos will start building towers, the wirewallas will supply the wires, the switch wallas will supply the switches and [god forbid] the rural folks will be saved from the mobile phones. So evey one will be a winner just as in the case of electricity.
What is the way forward? I think it's easy..... and the best way forward is to make a lose lose situation for everyone. But How? Simple, dont start from the telcos... start from the consumers and reverse the the flow of subsidies. Here is how the flow chart would look:
1. Pay Rs 1,000 to anyone in the rural areas to buy a handphone [one per family only]
2. Handset manufacturers will start making handsets for 800 Rs and set up shops in rural areas
3. Tower companies will start setting up the towers since people are waiting with handsets
4. Wire companies will quickly wire up the towers [or is it wireless?]
5. Telcos will very soon charge up the wireless, they will know how many consumers are waiting at the other end.
It will be a lose lose situation for all: the rural consumer will be burdened with a mobile phone, and all others will have to invest out their own pockets to build a rural business and the government will be hauled up by the election commission. And the process will be complicated... but then if you have decided to give away free money why not make the dsitribution process as complicated as possible?
Jai Hind
Thursday, March 26, 2009
Diamonds for Economically Challenged, Anyone?
Ratan N Tata and his team have finally launched the Tata Nano Car. The ultimate in the world in "poor person's car". I am told that a lot of work and moolah have gone into the making of this poor person's vehicle - original reserach and development, design, engine etc etc. You name it and the car has it. The only thing retained from the heretofore known design of the cars is that the steering is still on one side [right side in this case]. I have always wondered why car steerings are on one side and not in the middle. Cars evolved from horse carriages where the coachman sat in the middle hence it would have been natural for cars to have steering wheels in the middle. That way u could also have two passenger seats in front. Perhaps someone making cars for persons who cannot even afford Nanos will make a car with the steering wheel in the middle.... someday.
But, as usual I digress. The whole point is, here is a great man from a developing country who thought of the have nots and put his resources behind making a car that is affordable by the poor. Just imagine if every industrialist and businessmen thought like him. The world would be a wonderful place to live in. So here are my suggestions to some of the biggies to make use of the recession and make pro poor products:
1. Shell, Chevron and others should start making a poor person's version of gasoline [to be used with Nano]
2. De Beers should start making poor person's diamond [we also have women to make happy, you know]
3. Boeing and Airbus should seriously start making planes for poor persons [some of us have got bored with cars anyways]
4. Central Banks should start printing poor person's money
World would be such a wonderful place to live in - there will be no class tension, no social tension, no neighbour's envy owner's pride syndrome.
Reminds me of a story I heard as a boy:
Rich Man to his new illiterate Driver: You know my only son is a IIT and IIM grad and works in Dubai
Driver: What's the big deal? My son also works in Dubai.
Thanks to Mr Tata the car industry has got Dubaied.. May his tribe increase.
But, as usual I digress. The whole point is, here is a great man from a developing country who thought of the have nots and put his resources behind making a car that is affordable by the poor. Just imagine if every industrialist and businessmen thought like him. The world would be a wonderful place to live in. So here are my suggestions to some of the biggies to make use of the recession and make pro poor products:
1. Shell, Chevron and others should start making a poor person's version of gasoline [to be used with Nano]
2. De Beers should start making poor person's diamond [we also have women to make happy, you know]
3. Boeing and Airbus should seriously start making planes for poor persons [some of us have got bored with cars anyways]
4. Central Banks should start printing poor person's money
World would be such a wonderful place to live in - there will be no class tension, no social tension, no neighbour's envy owner's pride syndrome.
Reminds me of a story I heard as a boy:
Rich Man to his new illiterate Driver: You know my only son is a IIT and IIM grad and works in Dubai
Driver: What's the big deal? My son also works in Dubai.
Thanks to Mr Tata the car industry has got Dubaied.. May his tribe increase.
Wednesday, March 04, 2009
Spread of Ideas
I heard this story many years back from my friend. His father, also my teacher much later than the incident described here, as a young member of the Communist Party in his younger days had participated in meeting to discuss the defeat of the Party in all seats in Punjab except one. I was told by my friend that in the meeting the young scholar had raised his hand and asked "would it not be better if, rather than dissecting the cause of defeat, we deliberate on how we won one seat and recreate those conditions elsewhere so that we could win more seats". He was hooted as a charlatan and soon after he ceased to be a member of the Party. I narrate this story as an entry to the somewhat scary story of the recent takeover of the Swat valley by the followers of Taliban and the stark fact that Amritsar is only 500 kilometres from Swat.
Apart from the obvious historical fallacy in the scaremongering [Amritsar has always been 500 kilometres from Swat and Swat has always been a land of warlords since as far as historical records go], it does give an opportunity to see how ideas spread or more importantly how the spread of ideas are restricted. Here are some examples to start a debate: Bihar is zero kilometres from West Bengal where CPM has been ruling for 28 years. The presence of a marxist party at its borders has made no impact to Bihar's own variety of politics. Ditto with Tamil Nadu and Kerala. North Korea and South Korea; China and Pakistan are other examples where the flow of ideas and therefore politics have refused to permeate each other's territories. It seems obvious to me that ideology does not spread by mere geographical proximity. Then how do ideas spread? I really don't know. Perhaps socio-economic situations help or perhaps political sponsorship does....
Be that as it may, I am not alarmed at what is happening at Swat for two reasons, a) what is happening at Swat has been happening there at least since the last 200 years or more [I think Birbal too got killed in one of Akbar's campaign in that region] without affecting any one outside that area; b) empirically, ideas do not spread by just being in the neighbourhood. So let us not rush to contain the spread of ideas by half cooked methods, that could prove to be the most effective way to bring home the idea. As the Bengali proverb goes "Dont dig a canal to bring the crocodile home".
Apart from the obvious historical fallacy in the scaremongering [Amritsar has always been 500 kilometres from Swat and Swat has always been a land of warlords since as far as historical records go], it does give an opportunity to see how ideas spread or more importantly how the spread of ideas are restricted. Here are some examples to start a debate: Bihar is zero kilometres from West Bengal where CPM has been ruling for 28 years. The presence of a marxist party at its borders has made no impact to Bihar's own variety of politics. Ditto with Tamil Nadu and Kerala. North Korea and South Korea; China and Pakistan are other examples where the flow of ideas and therefore politics have refused to permeate each other's territories. It seems obvious to me that ideology does not spread by mere geographical proximity. Then how do ideas spread? I really don't know. Perhaps socio-economic situations help or perhaps political sponsorship does....
Be that as it may, I am not alarmed at what is happening at Swat for two reasons, a) what is happening at Swat has been happening there at least since the last 200 years or more [I think Birbal too got killed in one of Akbar's campaign in that region] without affecting any one outside that area; b) empirically, ideas do not spread by just being in the neighbourhood. So let us not rush to contain the spread of ideas by half cooked methods, that could prove to be the most effective way to bring home the idea. As the Bengali proverb goes "Dont dig a canal to bring the crocodile home".
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