MOBILE APPLICATIONS: Get, Set, and Go

In a record time of just eight months, Reliance Infocomm has moved to the
number one position in the mobile space with an installed base of 5.57 million
lines. Having done well in the numbers game, the company’s next objective is
to increase ARPU (average revenue per user) both from voice and non-voice
services. Not an easy task, considering that an increase in subscriber base
usually leads to a drop in ARPU. And this is further compounded by the
competition between mobile service providers (CDMA and GSM), who keep cutting
tariffs regularly.

Presently, the big question for mobile service providers is how to increase
ARPU from the present figure of about Rs 500, given that the cost of acquiring a
new customer runs to Rs 400 plus. With voice ARPUs coming down and not yet
replaced by data revenues, the overall equation has been upset.

On the GSM front, data contributes a small portion of the overall revenues.
Service providers are desperate to increase their data revenue, but they have
limitations as both wireless application protocol (WAP) and General Packet Radio
Service (GPRS) have failed to take off. Enhanced Data Rates for GSM Revolution
(EDGE) is the only hope for the service providers and they are presently
undergoing trials with different vendors. On the other hand, Reliance Infocomm
has a definite edge over other GSM and CDMA service providers in the country.
Both WAP and GPRS have not been able to give comparable speeds vis-a-vis CDMA
2000-1x, and have been a big failure. Even the cost of GPRS handsets are higher
in comparison to CDMA 2000-1x handsets. This is further compounded by the
limited number of GPRS handsets available. And those too, are facing
compatibility issues.

"We have focused on low SMS users and tried to identify the problems. We have also tried to address things like whether our campaign should be in Hindi or other local languages" Mahesh Prasad, president, applications and solutions group, Reliance Infocomm

Meanwhile, on the CDMA front itself, the Reliance Infocomm data strategy is
far ahead vis-a-vis Tata Teleservices, which is presently only formulating its
data strategy. Reliance planned its strategy way back in 2001 and data services
commenced right from day one of its mobile launch. Reliance also has the
advantage as all its 5.57 million phones are MMS-enabled in comparison to GSM
service providers who support a very small base of MMS-enabled phones, which is
expected to be in the range of 1/8th to 1/10th of the CDMA base.

Reliance’s entire network is based on data and so, it becomes all the more
important for them to come up with a whole host of applications that can fetch
them a sizeable data revenue. The company has also created an ecosystem where
developers can contribute to increasing the application portfolio of Infocomm.

Data-centric Network

Reliance’s vision is to create a digital revolution that will bring about
a new way of life. A life that will help people to communicate, shop, educate,
and entertain themselves with the pressing of a few buttons on their mobile
phone. Keeping with this vision, the company has gone for a large digital
infrastructure covering around 1,100 cities and towns and has laid around 90,000
Rkm of OFC.

The low PC and Internet penetration is a boon for Reliance as CDMA 2000-1X
provides an average speed of 60 kbps, good for Internet surfing and for a
majority of MMS-based applications. On the other hand in GPRS, one gets a
average speed of around 30 kbps. With successful business models available on 1x
EVDO (successor to CDMA 200-1x technology), Reliance can forge ahead even if GSM
service providers opt for EDGE. In terms of speed, 1x EVDO can provide speeds of
1 Mbps in comparison to EDGE which offers speeds of about 200 kbps.

In future, when Reliance offers CDMA 2000-1xEV DO, it will offer substantial
performance and cost advantage over all 2.5G and other 3G technologies for
mobile data services. Using CDMA 2000-1x EVDO, one can experience high speed
which provides rich browsing, multimedia, entertainment applications, video,
audio clips, and connected games as well as messaging and push applications. End
users also benefit as they get rich experience similar to what they are
accustomed to their desktop computers. With higher data rates, new applications
concepts based on position location can drive additional revenues.

On the platform front, the company is presently using Java and has signed for
BREW. And one can expect BREW-based mobile content sometime in the next quarter.

Mobile Apps

Reliance also has a well-planned and comprehensive strategy on mobile
applications. "The company believes that both voice and data are critical
as they provide a diverse set of applications that are rich in experience,"
says Mahesh Prasad, president, applications and solutions group, Reliance
Infocomm.

Infocomm has mobile apps clubbed under five heads– information,
entertainment, communications, commerce and enterprise applications. Presently,
the content is available in eight Indian languages. The beauty about the mobile
applications strategy is that it is applicable to all irrespective of handset
type–black and white, color, and PDA phones. "Neither is it dependent on
the educational, social, or economic background of a user thereby giving
flexibility to the subscriber to use the service depending on his needs and
requirements," says Mahesh Prasad. This gives the user a lot of comfort in
accessing service and they are not bounded because the applications are
developed only in English language.

In the case of Infocomm, R World and R Connect are the two interfaces for
mobile data applications. In the R World model, there are close to around 90
applications and the company is working on increasing its number at regular
intervals. Infocomm is even planning to provide e-mail access and instant
messaging on phones.

Entertainment is a big market for Indian users and Reliance has been focusing
more on Bollywood content like movies, songs, and games through video-streaming,
screensavers, wall papers, ring tones and contests. One can view trailers of new
movies and download song videos. This will only be more popular in the future.
One can also view regularly-updated TV capsules of Aaj Tak and CNBC.

Meanwhile, R Connect, which gives data-connectivity, has around 200,000
subscribers says Mahesh Prasad.

As for commercial apps, users can conduct banking transactions including
paying the Reliance bill using a credit card–using the mobile phone. It is a
secure connection, approved by the bank and certified by Coopers and Lybrand.
Presently, the transaction is specific to HDFC bank account holders but Reliance
plans to tie up with other banks soon.

Developers as Drivers

Agreeing that content will be the main driver, Reliance Infocomm has
invested a lot in generating India-specific content. For this, the company has a
two fold strategy–internal as well as external. On the internal front, the
company has its own applications and solutions group. Apart form this for the
gaming front the company has formed Paradox Studios, a 100 percent subsidiary of
Reliance. Presently, Paradox has a team of around 52 people, whereas the
application and solutions group has around 90 plus in content development. On
the external front, the company has launched DADP (Dhirubhai Ambani Developer
Program) on 28 December 2003. This created an ecosystem so that developers can
become a part of Reliance Infocomm. Now that Qualcomm is also planning to set up
a content development facility in India that will also provide content to all
service providers, some excitement lies ahead.

In the GSM model, the content strategy is driven by handset manufacturers,
but in CDMA it is driven by the service providers. DADP is expected to hone the
local talent, reduce the overall cost of application development, and get more
India-specific content. Out of the 90 plus applications presently available, so
far only around 25 applications has been developed externally says Mahesh Prasad.

"The focus is on simple games. We have about 40 games plus on our (Reliance) phones " Anurag Khurana, CEO, Paradox Studios Pvt Ltd

In DADP, Reliance has got around 10,000 applications of which around 600 plus
are from corporates. Here the company provides development kits, tools and a lab
environment that can be used by developers to develop apps.

Reliance Infocomm has selected two sets of developers till date. Under the
Chartered Developer Program 1 (CDP1) conducted in March 2003 around eight
companies were selected to develop around 20 plus applications. In CDP2,
conducted in early November 2003, around six developers were selected and around
nine applications have been assigned.

Infocomm is looking at three models–outright purchase, outright licensing,
and revenue sharing. The revenue sharing part is presently not applicable as R
World is a free service. "But, we are open to it once we start charging for
our service," says Mahesh Prasad.

So far Reliance was more interested in getting large numbers of subscribers
and had the USPs of R World and R Connect. Secondly, the multimedia content was
never deployed in such a large scale all across India and there was no historic
data about the likings and dislikings of Indian subscribers. Gauging the success
of mobile content through downloads, Reliance now plans to charge for its mobile
content from 1 April 2004.

Looking at its past strategies, it seems Reliance Infocomm is planning for a
nominal monthly subscription. With a large number of subscribers, the company
can think of earning a fair percentage of revenues from non-voice services. The
theory running in Infocomm is that if the pricing is proper and the services
have value, then people will use it in the long run. "Once it goes paid,
the focus should be on contests and co-branding," says Anurag as it will
help in increasing the number of downloads.

Mahesh Prasad feels that the system is ready, market is ready and that the
company can successfully launch paid services.

Only time will tell whether this strategy will work or not. However, if past
experience is anything to go by, it probably will.

Pravin Prashant