CELLULAR OPERATOR: Innovate Now!

What
do cellular and dotcom companies have in common?  Nothing
much. While cellular operators spend crores of rupees hoping to
see profits in the long run, dotcom companies spend hardly any
to start business and rarely wait to go public and register
amazing market capitalization. Cellular companies till yesterday
never thought of publishing web content–poor web sites are
examples. Many do not have presence on the Net yet. For dotcom
companies, content is the lifeline. They thrive on eyeballs,
while the cell companies play a game of generating more talk.
Cellular companies have huge networks to maintain and update.
Dotcom companies can simply outsource their network requirements
to an ISP.

In view of such contrasts,
there are many questions that come up when working out a
business case for WAP services from the cellular operator’s
viewpoint. Can cellular operators become successful content
companies as well? Or, is there an opportunity between simple
access provision and content provision. When is the right time
to introduce WAP services?

Is there a market for such
services at all? If so, how would the tariff be worked out to
make the service attractive enough to customers? Who does one
target–the business customer or the mass consumer?

All doubts remaining,
Indian cellular operators are certain WAP will be a big
opportunity.

In a response to Voice
& Data, AirTel revealed, “Based on feedback received to
the launch of SMS and customer reaction to kind of services they
want to access using cellphones, it can be safely assumed that
WAP will be the driver for newer and innovative services.”
AirTel has more than 70,000 SMS messages being sent from its
network everyday. Out of these about 20,000 are used for
text-based information services, e-mail, etc.

Essar Cellphone, its
competitor in Delhi is more candid. “Essar Cellphone, like
many others, is still in the process of evaluating the
possibilities relating to WAP as to what to offer, when to
offer, the financial implications, etc. As on date there is no
specific time frame on which Essar Cellphone is working. But one
thing is certain. Essar would get into WAP.”

AirTel, Essar Cellphone,
Fascel, Escotel, and Hutchison Max are reportedly working
actively with Nokia and software service providers like
E-Capital to introduce WAP services. Tata Cellular is also
developing its strategies for the same, with Ericsson pitching
in the solutions. Already, these service providers offer
text-based services such as e-mail, information services such as
movie updates, and bank account information access–all through
SMS. Is
India Ready?

Operators think mobile data services could in fact drive the
penetration of mobile telephony in the country. In India,
cellular services and Internet have been the fastest growing
industry segments in recent years. And a mixture of the two
could be an ingredient of a successful business stream.

But, do we have the
fundamental customer demand when it comes to value-added mobile
data services? According to Nokia, recent history shows that
after mobile penetration reaches 15 percent, SMS takes off
exponentially. Perhaps that is why countries of the Nordic
regions and Japan have shown significant growth of mobile data
services. NTT DoCoMo, the first successful WAP services in the
world is from Japan where the mobile penetration in 1998 was
37.44 percent. And Radio Linja, another successful WAP operator
is from Finland, where the mobile penetration is above 50
percent.

Despite the confidence of
the operators, the fact is that India lags far behind other
countries in mobile phone usage. Countries like Malaysia and
Thailand, which are much smaller in both size and population,
have more subscribers than us. Does the poor mobile penetration
of most Asian countries mean that value-added services like WAP
may not yet take off in countries like India? Or will history
prove wrong in the case of information services such as WAP? At
least one example points out there can be exceptions. In
Finland, where half of the population has gone cellular, users
send an average of 24 messages a month. Quite in contrast, users
in the Philippines (with a mobile penetration of just above 2
percent) send an average of 240 per month!

In the Indian case, WAP
might act as the catalyst for the quick growth of mobile
telephony. The cellular phone is a new thing, one might say.
And, it will take time for people to get familiar with cellular
services. But, how many thought of buying a computer before the
Internet happened? The biggest challenge for the cellular
operators is to generate enough interest among the local
Internet community to also host content in the WAP form. WAP
will be attractive to consumers only when there is rich and
relevant content, like the WWW. Then only will subscribers be
attracted to WAP services. Cellular Is
Soon Vanilla!

Thanks to the prosaic policies adopted in the past by the DoT, a
telephone is still a luxury to many in India, and mobile phone a
yuppie gizmo. But, the poor penetration of telephones is both a
curse and a boon to India. Subscribers will have real choice
before they buy any communications device.

As real deregulation
happens in various fields of telecom services, there will be
competition not just in Internet services, but in cellular
telephony as well. In the ISP scenario, we are already noticing
how the price of vanilla access services drop when there is
competition. Subscribers will expect all the plain services–voice,
data, and multimedia–to be priced at mass-affordable rates.
Operators cannot simply stop prices from coming down. If Indian
cellular operators are assuming that mobile telephony will
remain a premium service, they are in for a rude shock. Like in
the West, the cellphone will soon become a basic device that can
be carried around. The question whether subscribers should or
should not pay premium for mobility is a matter of debate.
Cellular companies in the advanced countries already have
rock-bottom airtime rates. Earning on just plain mobile
telephony is not the business model of the future.

In this scenario,
broadband cellular data services and mobile information services
come as the likely cash-earners of tomorrow. It is not
surprising then that leading cellular services everywhere are
testing out broadband cellular technologies like GPRS and
information services such as WAP services. These players now see
a new business model in pricing for information services,
content, and commerce services, rather than just access to
mobile telephony.

India is no exception when
it comes to communication services now that we are moving
towards a deregulated market. Already there are winds of change
blowing. Today, it needs a TRAI to bring down the costs of
making a mobile call. It is not far off when competition alone
will suffice to bring down the tariffs even further. Indian
operators will have to discover newer ways of doing business. Cultural Shift

When a cellular service provider enters the business of
information and commerce services, is it any different from say
an ISP? The answer might be no. The convergence phenomenon has
bitten into everything. Internet no doubt will succeed in
unifying the communication, information, and entertainment
worlds. WAP services enable the cellular operators to bridge the
gap between wireless communication and Internet.

But before the cellular
operators take the plunge into WAP services, they need to
understand what running an Internet business requires. What role
would it play in the emerging business? Is it best to just
maintain a WAP gateway and leave all the information and
application gathering and maintenance to other companies like
the dotcoms, sofware companies, or the media companies? Or can
it pick up some revenues from the application and content
business as well? Even though it may outsource all the
applications and content to others, the cellular company will
need to portray itself as a savvy information provider rather
than just an access provider. If it does not, it could lose out
from the opportunity of encashing the dotcom euphoria and the
market cap game. But, if the cellular operator decides to have a
go at information and application services as well, it would be
facing a different ballgame altogether. The ISPs and dotcom
startups are extremely nimble and fast. To compete with them, a
cellular service provider will atleast have to build a separate
independent division for information and application development
and maintenance. A lot of talk has been there about the immense
problem that cellular companies face in the form of subscriber
churn and loyalty. They will have to tackle even more fickle
minded with subscribers with WAP services. So, what stops a
disinterested WAP surfer to completely ignore the operator’s
WAP portal. The days of rentals and deposits would be gone. To
come out winners in the WAP business, the cellular operator will
not only have to restructure, it will have to fundamentally
change its work culture.

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