Airtel’s data plans are detrimental to growth of VAS

As anybody who’s tried to download content over Airtel knows, the experience is frustrating enough to put you off content downloading for a long, long time. I have been an Airtel GPRS subscriber for nearly 2 years but have never been able to figure out the different types of GPRS schemes available to subscribers.

Now, lets see what an Airtel subscriber has to wade through in order to download content. The basic GPRS package on Airtel is called Airtel Live and gives you access only to Airtel’s portal or walled garden. There is no GPRS monthly rental or data charge to activate Airtel Live, but the user explicitly needs to request for Airtel Live activation. Airtel Live activation only allows access to the Airtel Live portal . However, the portal itself requires a subscription of Rs. 30 per month in order to download any ringtone, image or game. The Rs.30 subscription gives you ‘free’ content worth Rs30 and any further content downloads are charged per download. Typical ringtones are Rs7-10 and games retail at Rs50 –Rs100 per game.

Another package called Mobile Office, which I’m subscribed to, allows me to download mail from my office server and access any WAP/WEB site I want to. Mobile office subscription is Rs 600 per month for unlimited data access. Here’s the extremely bizzare bit – despite being a Mobile office subscriber, I cannot download content from any 3rd party WAP site such as Yahoo! mobile of Indiatimes. I can access the sites but any attempt at downloading gives me a message that says “You are not authorized to download”. Completely perplexed, I called Airtel only to find that I needed to subscribe to another data plan called Airtel Online, which would allow me to download content from 3rd party WAP sites for Rs 99 a month.

So now, I have 4 data access points I juggle around with depending on what I’m trying to do – Airtel Live, Airtel Online, Mobile Office and Airtel MMS. How on earth does Airtel expect a lay man to figure out any of this. I do not have any personal experience with Hutch, but I’m told there is just one standard data plan.

I wonder what Airtel’s VAS team is thinking. If the idea is to drive traffic only to the Airtel Live portal, then they are being extremely short sighted and haven’t learnt from operators world over who are moving away from the walled garden approach. The only other explanation I can think of is that they want to limit data usage until they invest in infrastructure to handle large scale data usage. Either way, one cann only hope that Airtel simplifies its data plans soon and benefits the entire industry by doing so.

Alternate distribution channels for Mobile VAS – necessary for India

Despite all the brouhaha about the phenomenal mobile subscriber growth in India (100 million and counting), ARPU’s’ are falling steadily across all operators and non-SMS data revenues continue to be negligible; With operator strategies primarily driven by customer acquisition, falling voice plan rates and call charges are leading to lower ARPU.

Operators are all talking about increasing ARPU through mobile Value Added Services (VAS). Advertsising campaigns from operators are increasingly talking about content and services as differentiators. While SMS based infotainment services are growing rapidly (Kaun banega karorepathi alone generated more SMS traffic than any other interactive TV show in the world), the big ticket content downloads are yet to take off. Content downloads that do happen are largely mono ringtones that are delivered as part of the SMS payload and do not need GPRS connectivity. Reality is that GPRS penetration is abysmally low, at best around 2% in the major cities (Source: Netsize guide, 2006)

While everybody in the value chain, from operators to 3rd party service providers to content and media companies desperately want to drive mobile content revenue, there are 4 major factors that still impede mobile data revenues from crossing that point of inflection –

1.Complicated and confusing GPRS plans, atleast from the GSM operators, making it difficult for the lay person to configure their phone for GPRS
2.Lack of robust operator infrastructure which makes GPRS downloading an extremely frustrating experience.
3.Price sensitive consumers
4. Easy availability of pirated mobile content

Despite the roadblocks, I still believe that mobile VAS is a huge opportunity in India, not just in the long term, but also in the near term. Firstly, the large youth segment, is extremely mobile savvy, has a high penetration of data capable mobile phones, is hungry for entertainment and personalization and increasingly has disposable income. And here’s the best part, its not just youth in Mumbai, Delhi or Bangalore who have high end phones, I have seen young people in small towns all over the country carrying the fanciest and latest phone models. Secondly, media and entertainment companies are driving direct to consumer VAS. They’re spending the advertising rupees (hoardings, ad spots), they’ve tasted success with SMS services and are eager to see higher margin content downloads take off.

In the long term, media brands will influence operators to improve infrastructure and bandwidth and make sure that prices come down, both for data plans and content purchase. The interesting opportunity though is in the near term. How do you translate the opportunity that 100 million mobile subs present into money on the table today? The answer, as Dylan said , is blowin in the wind and probably lies in using “Alternate distribution channels” for mobile VAS.

This is not rocket science but simply making use of local knowledge and experience, combining it with some simple yet innovative technology solutions and packaging it all nicely for the user. The “Alternate distribution” winds are already blowing. Airtel has started music downloading service at Airtel retail stores across the country. The user experience is not great but its a start and can only get better and bigger as innovative companies partner with Airtel. A major retail chain (which I cannot name for confidentiality reasons) is already in talks with several service providers to set up point of sale mobile content kiosks which use bluetooth or some other technology to distribute content, coupons and promos at its retail stores all over India. These “Alternate distribution” chanells make use of footfalls and “trusted brand” image of major retailers, can drive down costs for the consumer by over 50% (no need for Operators network and billing charge) and also help to educate consumers about mobile VAS.

Moreover, these “branded stores” can establish themselves as bona fide mobile stores in the future, similar to web stores like amazon.com today. The physical store experience can be extended to the phone through WAP stores or device resident applications as the GPRS base in India improves and grows.

The bottom line is that “Alternate Distribution” of VAS in India appears to have tremendous potential and presents a great opportunity for any new innovative technology provider or service provider who can address the user expereince problems that physical retailers are trying to figure out.

Inflated mobile content numbers hide the true picture

Business Standard, in an article on Jun 12 says India’s Value Added Service (mobile content) market is expected to touch Rs 3,000-4,000 crore ($900 million) by 2007.

The 3000-4000 crore number is so ridiculously inflated that it borders on the amusing. In fact one of the biggest issues in the mobile data services landscape in India is lack of accurate reporting. There are plenty of anectdotal numbers floating around with Yahoo and a couple of operator portals claiming over a million downloads a month for mobile content. Anybody who cares to dig in will soon realize that facts and numbers just dont add up. GPRS penetration is less than 2%, the download experience is frustrating and inconsistent, operator data plans are complicated (Airtel’s Airtel Live, Airtel Online and Mobile office are confusing enough!) and operator walled gardens dont help either. The only form of mobile content doing well in India are probably mono ringtones which can be ordered easily and delivered as an SMS.
Operators need to wake up to reality and simplify data plans and tariffs, allowing media companies to drive the off-portal market. Otherwise, the kind of mobile content numbers being forecast are not going happen anytime soon.

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