A couple of weeks ago, prior to last weeks launch of 3G services by Reliance Communications, MediaNama spoke with Anil Pande, Head of Value Added Services for the telecom operator. During its earnings conference call, RCOM had announced the setting up of a 3G Innovation Lab, and over the last year or so, has launched Grameen VAS targeting rural consumers, done deals with Nokia (for music and Life Tools), Universal Music and GetJar (for Apps). In part 1 of this interview, Pande talks about the companys approach to 3G services, on deck versus off deck services, applications and rural services.
MediaNama: RCOM has set up a 3G Innovation Lab?
Anil Pande: Yes, there is a 3G innovation lab. It’s a new avatar of the Dhirubhai Ambani Developer Programme, which we were the first to incubate in India in 2002. We started a program for building a community of developers, wherein we evaluated their apps, ran contests. The community extended from students, freelances, and software development companies, and expanded into companies providing infrastructure, aggregation and VAS marketing support. With 3G, the components added include in terms of device. It’s an evolution of the his program. We have close to 4000 registered developers, and more than 95% of our apps is outsourced.
MediaNama: What can we RCOM to focus on, on 3G services?
Anil Pande: Emphasis will be on whatever is related to visuals and speed: video content, gaming and social networking. The focus will be on increasing data consumption, and there are clearly two approaches: in terms of your own managed services,and in terms of third party services, where you become a glorified big pipe (laughs). In Europe, there was very little increase in content revenue for telecom operators, and the spurt has been on the pipe, and data consumption. We will retain both focus, but a slight difference is that given the profile in India, as well as the community of users, which is different from what it is in Europe, there will be significant usage of IVVR services. Data has worked much better than IVVR globally, but the way IVR has taken off in India, I expect IVVR and video caller tunes to do better here. Combined, IVR and Caller Tunes account for more than 60% of non-SMS VAS.
MediaNama: Do you think 3G will go mostly off deck or on deck?
Anil Pande: There are two communities of users in India: IVVR and Caller Tunes, wherein it will be on deck. Off deck will be Google, Facebook, Twitter etc, which the user clearly sees as non-operator services. The community of users which are on WAP or HTML, on 2G itself, 70% of traffic on WAP comes off deck, and that will be further enhanced; it gets skewed in terms of overall revenue perspective because of the success of IVR and Caller Tunes.
Off-Deck has contributed in terms of traffic as well. Reliance has always been in another league, in terms of data, with our CDMA network. Our revenues from data has always been huge. Off late if you see, the revenue contribution from mobile Internet and GPRS of Airtel, Vodafone, Aircel and companies like that, has significantly increased. If you profile their VAS revenues, you would see that the increase is primarily from data. The revenue growth from Caller Tunes and IVR is minimal or flat. The mobile Internet penetration used to be low because of two reasons – the kind of handsets people had, in terms of GSM, and issues with getting the handset to work as a data device.
MediaNama: You were the first to push the usage of applications with the ‘Bus Button Dabao’ campaign…
Anil Pande: Even today, there is a significant difference in terms of data usage. Today, even on CDMA, you have 70%-80% of guys using data, which is very high, compared to GSM, where the best case scenario could be Airtel, where their market claimed figure is 15%. This is similar to our GSM penetration, which is around 10-15%. That’s been the advantage with CDMA, where it is simple to use data. With 3G coming in, some of the problems of enabling the data will continue, users are becoming smarter, devices are becoming better, and handsets are putting in mobile Internet APN specs on the phone itself, some challenges are being overcome. 3G should be a much bigger spurt in data consumption.
MediaNama: What’s the role of App Stores, and the thought process behind tying up with GetJar?
Anil Pande: RWorld, which was launched in 2004 was a white labeled app store. The reason behind getting GetJar was the relationships they have with other developers. Our relationship with GetJar was exclusive for a period of time, but nothing stops us from launching another app store. It was a marketing decision to brand it as GetJar, because it is also a popular brand.
MediaNama: Would you be looking at any kind of store for discovery of applications for your data cards?
Anil Pande: AOL had tried this in the US: a closed garden. AOL’s initial experiement was successful, but users evolve. What we’ve done is that when a user logs on, our page opens up. It is forced. Of course, users can navigate out of it. But there would be a segment of users in our shopping mall.
MediaNama: How is the Grameen VAS initiative doing? What kind of subscription have you seen on that?
Anil Pande: Mandi Bhav is doing reasonably on voice, compared to SMS, and not very well on WAP. It has not become a game changer for anyone – Airtel or Reliance – in terms of revenues. The reason is that the user has an alternate channel for the same content. Probably services were overpriced from a rural perspective, even at Rs. 15-30 per month. We know what is the kind of top-ups and ARPU exists in the rural area. We are working on modifying offerings. Nothing has really surprised us, and revenues from rural market have been below expectations across (telecom) operators. Among the services, Mandi prices have clearly done the best. In semi-urban areas, health has taken off – tips, guidance, health yellow pages; doctor on call has been less of a success. And now education is picking up – tips on voice and SMS. We’ve proposed to launch guidance on call for education.
MediaNama: What about machine to machine applications?
Anil Pande: A few are on trial, like Nano Ganesh. It’s still in a pilot stage.
MediaNama: What will need to be done to drive usage in rural areas?
Anil Pande: First of all, service pricing will have to be rationalized, and become more local and personal. The community is very small and localized, and higher level information doesn’t make sense for them. Caller tune content in rural areas, what works is devotional and regional content. Granularity of the offerings has to be refined. The urban community is more global, rural is more localised.