USM: Who Prefers What…

Increasingly, end-users feel the need to effectively manage multiple message
types from a single interface. This has led to a demand for services that allow
one to send and receive messages in any format, from the access device of one’s
choice. This is driving the growth of unified messaging services (UMS)
worldwide.

Services like UMS complement the convergence of voice and data networks–which
is more or less going to be the basis for developing ‘killer’ applications
in the near future–to seamlessly integrate the capabilities of the PSTN,
mobile and IP networks.

Globally,
carriers, vendors, system integrators and technology resellers are seeing UMS as
a revenue generating opportunity. In India, however, UMS is at a nascent stage.

Market Dynamics

As is the case with every new technology, it is very important to understand
the market dynamics of UMS with respect to the acceptance levels of various
groups, particularly the end user. Equally important are the relationships among
vendors of UMS solutions and those among the technology resellers. And then
there are the carriers who want to offer unified messaging as a value-added
service to their subscribers and the enterprises who need UMS to offer seamless
unified messaging capabilities to their employees in order to enhance the
productivity.

The dynamics that exist between the UMS vendors and the different target
market segments they are catering to–the carriers and enterprise–vary
depending on the requirements of the end user. In case of carriers, the end user
is the subscriber, whereas in case of enterprises, it is the telecommuting staff
and top management of the companies.

UMS vendors in India fall under two categories. The first category comprises
major international players like 3Com, Avaya, Nortel, Cisco, CMG Data Wireless
and Logica. These players have mostly been catering to the enterprise UMS
installation market worldwide and generally indulge in outright sales of UMS
platforms. Many of them are exploring synergies with Indian carriers and
enterprises alike for UMS platform installations.

The second category of vendors consists of the slowly but steadily upcoming
application development companies, which provide cost-effective solutions for
Indian telecom operators. Navin Mail, a company founded by Sabeer Bhatia is
emerging as a pioneer in this category. Telivoice, a product of this company has
been adopted by many Indian telcos for providing primarily voice mail services
to their subscribers.

Features Are Mostly Basic

UMS is in a ‘bits and pieces’ format in India, with service providers
offering only certain feature sets of UMS to end-users.

Seven service providers–Spice Communications, HFCL Infotel, Shyam Telelink,
Oasis Cellular, Bharti Telenet, Hutch, Hyderabad and Caltiger–are already
offering UMS to their existing subscribers. They are mainly forwarding voice
mails and faxes as attachments from fixed/mobile phones to any e-mail address.

Features of UMS include sending voice messages and faxes as e-mail
attachments, new message notifications over the phone, message filtering, and
e-mail readouts over the phone using text-to-speech conversion. UMS will also
enable mail dictations using by speech recognition software and forwarding of
faxes to any fax machine using a graphical or telephonic interface.

Most of the features currently being offered by service providers are basic
in nature. They allow users to send voice messages and faxes as attachments with
e-mails and notify them about new fax messages and e-mails over the mobile
phone.

E-mail readout, enabled by text-to-speech conversion, is a feature that would
be introduced in due course of time by operators. Phillips, Germany is a major
player on this front and most of the UMS vendors have a tie up with Phillips for
adding the text-to-speech functionality to their platforms.

Speech recognition is still at its infancy even in the international markets.
Hence it’s a far-fetched thought of introducing it in India. SpeechWorks and
Dragon Software are pioneers in the speech recognition software market.

Demand Potential

There is a lot of demand for services that will enable users to access
messages of all formats from a single interface. UMS provides a solution to
these needs and at the same time, gives service providers a unique opportunity
for revenue generation and differentiating their services from competitors.

The key to revenue maximization for service providers lies in designing
different packages with respect to the different target market segments with
respect to pricing and feature sets. It is also important for them to adopt the
most cost-effective means of implementing UMS.

The majority of revenues will initially come from high-end corporate users
and telecommuters who feel the constant need to access their e-mails and control
their faxes from their mobile phones.

The enterprise market is another valuable business proposition for UMS
vendors and system integrators. Corporate UMS installations are growing in
number in Singapore and the US, where businesses are embracing it in order to
keep their sales force and telecommuters accessible to official e-mails, faxes
and voice mails at all times on devices of their choice.

In case of enterprise installations, CIOs are quite clear about the kind of
features that would be used by the employees in their companies. Hence, vendors
can customize the UMS platform in accordance with those specifications.
Enterprise-wide UMS usage is still at a nascent stage in India, but will give
UMS vendors a sizeable chunk of their revenues in the near future.

Implementation Options

There are primarily three options of acquiring a UMS platform in the current
scenario. The exact choice will depend on whether the implementation will be
done by a service provider or an enterprise, after evaluating the
cost-to-benefit.

Outright Purchase from Vendor: In this approach, the cost of the solution is
conventionally on a per-subscriber basis. The per-subscriber cost of a UMS
platform currently lies in the range of Rs 800 to Rs 1,000. With the increase in
number of subscribers, the cost of the platform is scaled up accordingly. Most
of the UMS implementations in India fall in this category. Some of the service
provider-vendor tie-ups in this category are Bharti Telenet—CommWorks in
Delhi; Shyam Telelink—Alliance Infotech in Rajasthan; and HFCL Infotel—Alliance
Infotech in Punjab.

The outright purchase approach brings into picture the system integrators
that have tie-ups with vendors for the installation and troubleshooting. Most of
the major vendors operate in the form of small points of presence. Hence it
becomes important for them to garner the technical expertise of system
integrators for customization of the UMS solution in accordance with the
requirements of the service provider or the enterprise.

The approach is the most prevalent one in the enterprise space too. However,
unlike service providers, enterprises are not faced with the constraint of
regular upgradations in terms of number of end-users and therefore the cost to
the company is mostly fixed.

Revenue Sharing with UMS Platform Developers: This approach is giving the
outright purchase model a tough fight in today’s market scenario where service
providers are focusing on cutting costs in a big way. Platform developers do not
charge service providers anything for the UMS software, but share the revenue
with them, based on the usage of the service. This saves service providers from
the risk of incurring losses and also gives them the flexibility in pricing the
service. Orange in Mumbai, Spice Communications and Bharti Telenet, Delhi are
already using Navin Mail’s voice messaging service, Telivoice on a revenue
sharing basis. Oasis Cellular in Jaipur is using Rainbow’s UMS infrastructure
provided by Alliance Infotech on a revenue sharing basis. At present, there are
no carrier-vendor tie-ups in the category, but it is slowly emerging as a
cost-effective option to the outright purchase model. The only drawback of this
model is that not many Indian software developers are open to it.

In-house Development: This entails service providers to use their in-house
software development skills to come up with a UMS platform to suit their
requirements or to provide the software to other service providers. This
approach is more on the rise among the Internet service providers, who have
strong in-house software development skills. GTL has developed a UMS platform,
which may be used to provide UMS to its corporate customers as part of its
enterprise suite of solutions. Spice Communications, the cellular operator in
Punjab has developed a UMS platform and has been providing the service to its
subscribers since February 2002. Developing the platform in-house cost Spice Rs
80 lakh for an initially projected subscriber base of 10,000, which works out to
a per-subscriber cost of Rs 800. Spice did not meet with the anticipated success
and the subscriber base for UMS stood at around 1,000 as on May 2002.

One major player that is contemplating developing a UMS platform is Reliance
Infocomm. It is working on developing a variety of other software applications
for offering value-added services for its WiLL service. Once the regulatory
clearance is given to these value-added services, UMS would be a
revenue-generating proposition for the company.

Investment versus Gains

As we have seen from the different modes of implementations, service
providers and enterprises may adopt different methodologies for acquiring
platforms.

The outright purchase model has worked for enterprises in the global markets
and has been seen as a viable option in the Indian scenario as well. Tata
Telecom-Avaya, 3Com, Logica and Nortel are some of the main vendors in this
category. Also, the system integration tie-ups of these vendors are in place,
which is a very important parameter in gauging the UMS vendors’ credibility.
Captaris Corp, a major UMS vendor in the US and Singapore, says that an
enterprise with an employee strength of 200 (180 office-based and 20 remote/travelling)
can recover the cost of the product in 68 business days. The SME/SOHO segment of
the Indian enterprise market would be the ideal target for the UMS vendors.

Indian service providers are yet to show a clear trend as far as the
implementation model of the UMS platform is concerned.

The main objective for service providers to offer services like UMS is to
generate additional revenue and hence they will avoid the risk of unnecessary
capital expenditure and instead work out a path that ensures return on
investment.

Given this scenario, UMS vendors would do well to offer their products to
service providers, initially on a revenue sharing basis, so that the latter are
able to offer services at a low price initially and generate awareness about the
service among end-users.

In the longer run, the service providers will anyway migrate to revenue
sharing, as it offers more flexibility in terms of designing different pricing
strategies for UMS services, without facing the risk of incurring losses
associated with outright purchase.

The immediate challenge for UMS vendors, as far as the service provider space
is concerned, is to revisit their existing model of outright purchase.
Meanwhile, they can expect action in the enterprise space.

It will, however, be some time before a wide-scale demand for UMS as a
value-added service is generated in India. A lot of user awareness is needed to
make that happen. The key, of course, lies in offering some feature sets of UMS
and making the user comfortable with the concept.

C Manikantan

SITM