Telecom operators must improve strategy for content and applications

Telecom operators in emerging markets including India, China and Brazil, must improve their strategy and execution if they are to ensure sustained success in the mobile content and applications arena, according to Ovum. The global advisory and consulting firm believes operators are yet to commit sufficient attention and resources to what is a small but growing market with significant potential.

The finding has come at the time when telecom operators in India, the second largest market in the world, are exploring various options to meet the losses due to the ongoing tariff war. Value Added Services (VAS) is a key focus of telcos in India. Of late the operators have started talking about applications and content. But it is yet to get the attention of subscribers. As per recent industry estimates mobile application market is currently estimated to be $1 bn. Most of the subscribers will use around five mobile applications at a time and most future opportunities will come from 'killer applications'.

Ovum's research says that most operators have so far been too busy with land grab and expansion to be able to make the transition from providing basic voice and SMS services. SMS and mobile Internet aside, content accounts for around 10% of most operator revenues in India, and most of this is basic services such as ringtones, logos, wallpapers, simple games and news/information services.

“There are multiple reasons for this state of play,” said Angel Dobardziev, practice leader at Ovum.

“Many operators are yet to commit significant organisational focus and resources to this area. Users, many of whom have very recently crossed the communications divide, are still focusing their limited budgets on basic voice and SMS services," Dobardziev added.

Ovum believes the development of a strong, balanced and effective value chain will be one of the key factors that will shape the future of mobile content services in emerging markets.

Mobile operators currently occupy a central role in the value chain, but few are giving mobile content services the attention required to develop an attractive service portfolio in order to succeed.

The other important factors that will play a major role in market development would be availability of affordable mid-range devices that enable a richer content experience. Literacy challenges will be a key barrier, particularly in rural areas, and solutions to overcome this, such as IVR and video. Local content and applications tailored for, and in the language of, diverse local communities are still sparse, although this will improve rapidly in the medium term.

The research indicates that many operators' strategies need more refined customer segmentation, stronger marketing (in its broadest sense), more effective management of the content value chain and a carefully considered application store strategy. Operator shortcomings are understandable: mobile content and applications require a very different mindset to selling voice and SMS.

akhileshs@cybermedia.co.in