According to the Internet and Mobile Association of India report on mobile internet usage, India is expected to have close to 165 million mobile internet users by March 2014, as compared to 87.1 million in December 2012. The surge in data usage by smartphone users is going to offer service providers new avenues of revenue generation. A leading player in managed services space, Tata Communications is focusing its efforts on helping out the operators to leverage the surge in data usage by enhancing the bandwidth and quality of their networks.
In an interview with tele.net, Tim Sherwood, vice-president, mobile segment strategy and development, Tata Communications talks about the business opportunities offered by exponential increase in data services and the trends dominating the Indian telecom sector.
Excerpts?
What are the revenue opportunities offered by mobile data?
The increase in data usage will be the key driver of revenue growth for mobile network operators. Data consumption rates are expected to grow at forty-fifty times than the existing levels. According to a report by the Internet and Mobile Association of India on mobile internet usage data represents 40 per cent of the total spending for mobile internet users. This is likely to increase as more personalised data plans become available encouraging consumers to go in for more bandwidth-hungry applications like video and gaming. Furthermore, in the enterprise mobility space, mobile access to business applications is increasingly becoming a critical requirement driving data consumption growth and associated revenue opportunities for mobile broadband. Given the relatively low penetration of mobile internet, revenue growth will also be driven by the migration of current feature-phone users to smart devices, especially as those handsets become more affordable.
Mobile broadband has made it imperative for mobile operators to rethink their business and service delivery models in order to address the challenges of data demand growth and fierce market competition. Data services provide new opportunities to reduce churn, monetise and personalise offers, and earn a larger share of each subscriber?s wallet.
What applications and services would help operators attract a large number of data users?
Mobile operators need to carefully chart out their target offer packages and roadmap to win a high wallet-share from data users. According to one of the issues of The Economist dated March 16, 2013, internet penetration in India is only three to four per cent of the population across fixed internet lines and mobile networks. Mobile internet represents about two-thirds of those connections. As a result, mobile internet modems (dongles) will play a major role in the mobile data offer portfolio. In addition, feature-phones providing basic web services are still popular and will remain so in the near future, so operators will need to differentiate offer packages and segment approaches to support different devices across different networks (2G, 3G, 4G and Wi-Fi).
A customer survey conducted by Signals Research Group in January 2013, reveals that the Indian customers favoured data plans which are based on usage (differentiated consumption quotas); service tiers (differentiated consumption and data speed thresholds); shared plans for families; and, application-specific plans (offer packages built around enhanced and/or discounted access to different popular websites or ?applications? preferred by different users). By having differentiated data packages and marketing approaches, operators can target various segments of the enterprise and consumer markets. The data requirements of a business user with a PC dongle are quite different from a youth focused on exploring social media with a smartphone worth Rs 4, 000.
Consumer habits are evolving rapidly and hence mobile broadband offerings must continuously evolve as well; one offer will not fit all but even well-designed static offers will not be sufficient. A key tool for successful operators will be adeptly managed personalised loyalty programs and promotions that reward the multi-SIM subscriber to use the operator as their primary provider and that entice the subscriber to experience and increasingly adopt more and more new broadband services.
What are the challenges before Indian telecom operators? What are the ways in which mobile operators can further monetise their network investments?
The industry is witnessing a growth in mobile data consumption rising to multifolds; however, it will be a challenge for operators to maintain pace with the data consumption growth in view of amount of spectrum available at present. Therefore, the MNOs should deploy policies and other types of creative approaches like incorporating Wi-Fi offload as part of effectively supplementing the spectrum capacity to capitalise on the potential of mobile broadband in the country.
Given the likely scarcity of available broadband capacity in the face of massive data demand, operators will need to focus on how to adeptly optimise and monetise their broadband network investments in order to ?sweat their assets?. Another challenge will be to maintain wallet-share from consumers who often use multiple SIMs. Operators will need to be innovative in their data plan offer creation to manage within their scarce capacity and simultaneously excite the customers with creative packages.
Mobile network operators are creating bundled, vertical-specific services with other ecosystem players (e.g. content, gaming, and texting), in order to generate new revenue sources. The operators are also looking to provide data services and plans customised according to the end-user requirements, rather than providing them with a flat-rate data plan. With the customised data packages, the operators can now charge the users according to their usage and needs, also optimising the usage of scarce data network resource. This will require agile and flexible business processes and platforms to enable operators to test and evolve multiple offer types in the market at any point in time offering what is most attractive to each of their multiple target segments. Some of the key enabling tools are dynamic policy management to configure and enforce the targeted consumer and enterprise market offers and to enable agile loyalty programs and promotions.
Mobile broadband also enables new revenue sources that can maximise the return of network assets:
Cloud-based application providers and over-the-top (OTT) players may directly or indirectly fund mobile operators to get full advantage of their ?last mile? access, location based information and trusted billing relationship and create new revenue and value share models.
Machine to Machine (M2M) communications for enterprises is rapidly developing as the ?internet of things? takes form. Different industry verticals are seeking new methods to innovate, taking advantage of mobile broadband connectivity. M2M applications encompass location tracking and logistics, remote control and management of equipment, remote sensing, security, agricultural telematics, automotive telematics, telemedicine, etc. M2M demands on mobile broadband range from small buckets of data with loose constraints on timeliness (e.g. auto maintenance monitoring) to large data streams that require the very highest quality (e.g. Telemedicine). Cost effective management of these diverse user cases will require dynamic policy management to ensure the appropriate quality of experience between the devices.
Mobile Virtual Network Operators (MVNOs) will acquire wholesale mobile broadband services to create new offers through new channels to carefully targeted new segments. Enablement of MVNOs will require dynamic policy management to assure that their services and subscribers do not disruptively contend with other services and subscribers that are supported across the same network.
What are the trends that you foresee in the Indian telecom industry?
With consumers demanding access to more content than ever before, anywhere, anytime, the mobile broadband market has potential for huge growth. Consumers and businesses now prefer smart devices for their personal and professional work. Industry reports suggest that by 2015 mobile broadband will become the leading means of Internet connectivity, covering 80 per cent of total broadband subscriptions. Moreover, mobile video business is taking over the voice business, which means that the data usage between devices is growing exponentially.
Today, enterprise employees are giving preference to work away from office on a temporary or full-time basis. Therefore, there is a growing desire and need of bring-your-own-device policies. Increase in smart devices on-the-go will also give rise to increase in data usage, which will ultimately accelerate the demand for big data which will manage data faster and speed up the processes, thus discarding the traditional concept of single enterprise data warehouses.
The economics of mobile data have changed with the days of unlimited data plans coming to an end due to the increase in data consumption. The MNOs will now have to customise their data plans according to the increasingly demanding end users and manage the wave of mobile data growth ahead.
What are going to be the focus areas for Tata Communication in 2013?
Managed services will remain one of our key focus areas this year. Through managed services, we provide our customers service offerings which go beyond the basic infrastructure facilities. This ensures a long-term relationship with the customers.
The world is witnessing a huge surge in the use of mobile devices for consumer as well as business installations which has led to high bandwidth demand. According to Informa Telecoms and Media?s new report, ?Congestion up ahead? Internet traffic and service forecasts, 2010-2015?, video will be the key driver of 50 per cent of the annual internet traffic growth. Further, two-way video is going to drive traffic volume growth and really test the network for quality and bandwidth availability as we move ahead. For network service providers, the ability to manage this need for high bandwidth will be critical in allowing operators to capitalise on the potential of mobile broadband. We at Tata Communications are working towards providing the MNOs with a range of network services and managed services that can help them leverage this data surge.
