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Each operator wants to have some unique offerings around 3G through which they can build their brand and market

When: October 14, 2010
By telecomyatra

"Each operator wants to have some unique offerings around 3G through which they can build their brand and market."

Indian telecom operators have invested nearly Rs 7,000 crore in 3G spectrum and are looking to monetise their 3G offerings as soon as possible. The only way operators can utilise the full potential of their investment is by offering new, innovative services and applications to subscribers. Regarding this, Supriya Bhattacharjee of Telecom Yatra spoke to Kiran Anandampillai, vice president, products, OnMobile, to discuss the services that are likely to gain traction in the 3G era and the plans OnMobile has.

With 3G roll out round the corner, what are OnMobile's plans for it and how do you think it will impact the VAS industry?

We have a clear focus as far as 3G services are concerned. There is a huge opportunity for VAS players in the industry and as 3G gets rolled out, the adoption of VAS in India will increase.

Most operators will start rolling out 3G from January 2011. If we look at one or two years down the line after the services are rolled out, there will be only 15-20 per cent penetration of 3G services, but it will still make a lot of difference to revenues of operators and VAS providers.

No plans to foray into mobile games?

We are very clear that we will never be the creators of mobile games. It is similar to the movie industry: you do not know what will be a hit and what will flop. The creators of mobile games develop hundreds of games and then hope for one or two to become a hit. We can at the most be aggregators and distributors of mobile games, but never creators!

What kind of value added services do you think will pick up after 3G network becomes available?

The services that we think will pick up after 3G are video-based services such as video calling and mobile TV. Also, better bandwidth will allow faster download of full track music and mobile TV on IP (internet protocol).

We have seen rich content extension to products in countries where 3G has happened. In India, something similar can happen with cricket services, as they are a hit.

You said that services such as mobile TV will pick up after the launch of 3G, but such services have become popular only in a few countries such as South Korea. Do you think mobile TV will be successful in India?

Personally, I am optimistic that mobile TV will pick up in India. In India, broadband will reach the masses via mobiles, which has a much higher penetration than internet does. DSL-based broadband penetration is low in the country and is mainly used in the enterprise segment. Thus, the service can do pretty good in India.

Would OnMobile shift its focus from 2G VAS after 3G services are launched?

As far as we are concerned, we will be providing both 2G and 2.5G services, as well as 3G services because we feel that even after 3G is rolled out, about 85 per cent of customers will be on 2G and only 15 per cent will move to 3G. 2G will continue to remain a large market.

What kind of impact do you think 3G will have on operators' VAS revenue?

VAS revenue, as measured by operators today, includes P2P SMSs and data charges also. There will be a significant increase in operators' revenues after 3G mainly due to the contribution of VAS. Right now the contribution of VAS to operators' revenue is about ten per cent. In foreign markets, data usage had gone up to 25-30 per cent after 3G roll out and the same will happen in India. Moreover, since 3G services will be used by high end subscribers, this will clearly double the ARPU (average revenue per user). Thus, we will see an increase in overall VAS revenue, as well as an increase in overall ARPUs. Five per cent of mobile phone users in India already use 3G-enabled handsets and as the network gets rolled out, there will be more people buying 3G handsets. They will also latch on to 3G spectrum. In one year, about 15-20 per cent of subscribers will be on 3G network, and using 3G handsets. This will also give a boost to revenues of the industry.

Do you see any increase in your footprint after 3G services are launched?

There will not be too much increase in our footprint in absolute numbers, but still 3G will really be a contributor to revenues. Already ten per cent of Airtel's customer base is using 3G handsets. 3G will lead to high ARPU for operators and a reasonable and good revenue opportunity for us.

Do you foresee a falling demand of ABCD (astrology, Bollywood, cricket and devotional) VAS after 3G roll out?

There will be no cannibalisation of ABCD services. There is a strong case for these services in our view.

How important is voice VAS for OnMobile?

Voice VAS is already a big thing in the market and we are a leading player in that segment. It forms a significant revenue stream for us and it will continue to grow. What we have seen is that the maximum number of subscribers using these services come from rural areas, but since they are low ARPU customers, their contribution to VAS is not as much as that of high ARPU ones. OnMobile's entertainment services such as mobile radio, mobile box office etc, are doing pretty good in the voice VAS segment. Apart from this, sports services such as live audio commentary and devotional services are also doing good.

You had plans to launch ad CRBT. What's happening on that front?

With ad CRBT we have already gone live nationally with a leading operator, but the problem with this medium is that its sales and education cycle takes a lot of time. Advertising community needs to be educated about this medium. But still we have seen great adoption of these services, mainly amongst operator ads. We are soon going to launch this service with another operator.