mtnlShortly, at about 3:30pm today, the applications for MTNLs 3G Mobile Content services mandate will be opened. MTNL is setting up a franchise based system, and has invited applications from potential 3G Content Aggregators to set up their Content Delivery Network Infrastructure.

The sense that we’re getting from content owners and service providers is that the tender is too expensive, and given the terms of the deal, isn’t really worth it. One top executive told us that that “If you’re a revenue focused company, you will not even think about this.”

So what is wrong with MTNLs 3G Mobile Content Services tender?

It apprears to be a case of having your cake and eating it too. Some key terms of MTNLs tender:

1. Three Year, Non-Exclusive deal: The contract is for three years and is non-exclusive, and MTNL may sign up two bidders each in Delhi and Mumbai, with the same revenue share arrangement with both. MTNL has the right to increase the number of service providers for each city. The bidder or the lead partner should have a net worth of minimum Rs. 30 Crores or minimum turnover of Rs. 20 Crores, and should not be an ISP, UASL or CMTS service provider.

2. Revenue Share Arrangement and Minimum Guarantee: mtnl-minimum-guarantee

The bidder has to quote percentage of revenue that it proposes to share with MTNL separately for Delhi and Mumbai. They will also have to share revenue from advertisements on the network, after deducting the cost of the Ad Agency. Any other additional revenue earned from other services connected with 3G Content Services will also be shared in same proportion. Bid for Delhi & Mumbai shall be evaluated separately to decide lowest (revenue share of bidder) in each area.

3. MTNL can compete: MTNL has reserved the right to start its own content services at any time, and permit such content providers to offer similar services on PCs/ Laptops/ PDAs like films, games, e-learning etc. through MTNL’s 3G or other Access Network.

4. MTNL will decide tariff, and services will be co-branded: MTNL has said that though they will consult with the content owners, they will have the final say in setting the tariff for the services. They can also bundle services with specific handsets, and the procedure for collection of charges for services and handset bundled together shall be defined by MTNL.

5. Pre-paid and retail network controlled by MTNL: The bidder will be responsible for printing & bearing the expenses of Prepaid Vouchers, though quantity of vouchers, supply of PINs’, physical distribution to the various outlets/distributors shall be controlled by MTNL. The prepaid vouchers will be sold only by MTNL or its authorized agencies.

6. Marketing and promotional costs: MTNL and the successful bidders shall together define promotion strategy, and release ads for which the cost shall be borne equally. Apart from this, both MTNL and the bidder are allowed to promote the services.

7. No User Profiling: the content data profiling/ mining of the MTNL subscriber base and usages will be carried out & subscriber data will not be shared under any circumstance. This will be strictly confidential.

8. Service Delivery and Help Desk: the content aggregators shall have to set up a Network Operation Center within three months of signing the agreement in MTNL Delhi and Mumbai separately. They’ll have to set up a help desk for customer support, and also generate the billing data for MTNL. They will have to provide the complete operation, maintenance, billing and provisioning support for content. MTNL will provide infrastructure in their premises on a monthly charge, or provide connectivity to the service provider for live streaming on a quarterly charge basis.

Now the services will have to be launched within 4 months of signing the agreement, though MTNL may extend the same.

One content owner, on condition of anonymity, told MediaNama that the “annual minimum guarantee is too high, particularly since there’s an additional advertising revenue share and revenue share on any new revenue streams. At the same time, this is a non-exclusive deal, and MTNL has the right to start their own service. Given that there are no commitments on fixed subscribers or provisions accounting for the same, this doesn’t make sense. This way, they will only end up creating a valuation hungry company without any signficiant revenues, and an unsustainable business model.”

The problem is that MTNL is offering very little – a service providers bargaining power stems from the number of subscribers they can provide access to, and MTNL is low in that pecking order. They would be well advised to lower their expectations and consider threshholds for payouts based on a subscriber base. Otherwise, if there’s limited uptake of MTNLs 3G services, which is likely, the content aggregators will get burnt. 

We wonder if anyone has actually bid for MTNLs 3G Mobile Content Services tender. If know who has, do let us know. If you have a different take on the tender, please do share it with us.

You may download the Expression of Interest document here.

Update: Services which have to be deployed on MTNLs 3G Video network, according to the EOI:

Mandatory Services:
1. Mobile TV-Live streaming Video
2. Video Conferencing
3. Customised Video Calling
4. Video Alerts / Chat / SMS
5. Sponsored contents for sports, Music etc.
6. Bollywood/ Hollywood content
7. On line / interactive gaming.
8. Video Sharing for social networking
9. Video clips for important live programs & events such as cultural activities, match, Religious, spiritual contents, business leader interviews etc.
10. News Headline video clips e.g. Top stories / Business / Political / Misc. / Weather forecast / Sports.
11. Music Video
12. Multi Media Ring Back tones

Desirable Services:
(a) Info Services:
1. Location based Services: Information of restaurant, cinema hall, hospital, university, ministries, embassies, shopping malls, business etc.
2. Personalized services: Job search / astrology / Email customization / matrimonial.
3. Home Surveillance
4. E-learning-Medical
5. M-Commerce applications of shopping, Travel, Entertainment (airline, railways, movie ticketing) Money transfer, Mobile brokerage, Banking, Business applications, Stocks trading etc.

(b) Misc.
1. Show biz – Celebrity Interviews
2. Map and Route finder
3. Traffic Information
4. Alerts
(c) Voice: Streaming Radio