Data – The New Voice of Mobile in India

As per a leading IT Research and Consulting firm's study on smartphones, the smartphone penetration in India is close to 65%. Additionally, according to a report by GSMA, a global telecom body, penetration of unique mobile subscribers in India is at 25%. The report also notes that 2.2 SIM cards per user is the average in India, whereas the worldwide average is 1.85 SIM cards per person. The implication of this is that the ARPU (Average Revenue per User) per operator is actually fairly low.

Recently, I was a part of a study on the voice and data market in the country. In this capacity, I interviewed the functional head of a leading telecom operator in India. He agreed that voice is quickly becoming a tired medium of generating revenues for Indian telecommunication companies. Currently, voice services account for a majority of ARPU. However, this scenario is changing from the dependency on voice services and moving to greater emphasis on MVAS (Mobile Value Added Services). MVAS is a non core service (all services beyond standard voice call services) that is provided by telecommunication companies. The components of MVAS include: mobile Internet, color ring back tone, and other allied services (horoscopes, score updates, etc.).

The question to be answered is: what is fueling the growth of mobile data? There are multiple factors behind this surge of growth. First, the mobile handset market is in the middle of a home run, where local players (Micromax, Karbonn, etc.) have given the big guys (Samsung, Apple, Nokia etc) a run for their money. Secondly, smartphones are no longer an aspirational product for the middle class in India. Aggressive pricing and robust distribution has ensured that smartphones and tablets are within the reach of masses. Tier 2 and Tier 3 cities, as well as rural areas are fueling much of this growth. The penetration of smartphones is steadily on the rise among smaller towns and the Internet penetration in rural areas is surging. A significant proportion of rural India has access to the Internet and many are gaining access through their mobile devices. This has resulted in an increase in the adoption of non voice services by the business in the rural areas. The MSME (Ministry of Micro, Small and Medium Enterprises) which is the principal governing body for SMEs in India has also played an important role here. A significant amount of data is being used by the SMEs in the smaller towns. Small organizations are now slowly developing their own websites and marketing over the social media is on the focus list of many small businesses.

The contribution of data to the total revenue of the leading telecommunication companies has been increasing steadily. According to a study by a leading financial newspaper, the average user spend on MVAS was 27% of the ARPU in 2012, versus just 11% in 2010-11. There is more focus given to data, as it has emerged as an important source of revenue, especially in the wake of falling contribution from voice plans. Low cost data packs and the availability of regional language content have caused the maturity of the users to develop in a way that makes data a more popular option. People are now more open towards trying out various things, such as live cricket updates, caller back tunes, and more on the mobile platform.

The most popular components of MVAS in India are: live scores, horoscopes, video streaming and social networking. ‘Face booking’ – a term that has rapidly caught on with the youth in the country contributes a good chunk of mobile data. FoMo (Fear of Missing Out) is a phenomenon among youths that has catapulted social networking via Facebook, Twitter, and other social media sites to soaring new heights. Another important component in a cricket crazy country like India is the ability to have score updates live. Various sites like cricinfo.com have launched mobile friendly versions of their websites. I feel that the young people population of India has also contributed in a big way in making the mobile population more data friendly.

Earlier, consumers resisted adoption of mobile Internet because they found it difficult to download and install apps, or to use browsers. The fear of high costs was also a prohibitive factor. Being told that the cost is 10 paise per 10 KB of data transfer did not mean anything to users – more so for those in smaller towns and rural areas. Additionally, novices were wary of using the internet for fear of accidentally ending up using more than their quota. Today, a novice would find it easier to access the Internet through his handheld device as the plans are simpler, more transparent, and the content is highly localized. As more and more content is being delivered over the Internet that is being accessed through smartphones. Interesting apps on education and entertainment are also playing a very important role in making data a crucial part in the wheel of mobile technology in India. This has also opened up interesting avenues for data usage by businesses. More number of people are now accessing data – especially through mobile devices. The surge in BYOD policies have made it easier for mobile/remote employees to stay connected and conduct BAU (Business as Usual) on the go.

So, what is the scope of data services or that of MVAS? I believe, we have barely scratched the surface. The telecom player I mentioned interviewing earlier opines that, “The falling prices of smartphones, in conjunction with cheaper and user friendly data packs will drive a huge amount of data usage–especially via handheld devices of smartphones and tablets. The average Indian mobile user is moving up the maturity curve. He is now more open to trying out various smartphone functions like accessing Facebook through his smartphone”.

The BYOD (bring-your-own-device) phenomenon has also contributed in a big way. Employees are now accessing mails and other content through the Internet through their mobile devices at their workplace and data usage through mobile devices has increased significantly. The business needs of the more traditional service providers such as banks have also undergone a change. In fact, for banking the effort is to now reduce the number of walk-ins to a branch. More and more applications are being delivered to consumers over mobile devices – e.g. SMS banking, transaction alerts, and more. I believe this is a trend that is here to stay. It will, in due time, run its course, but until then " In God we trust, everything else is data"!