The telcos were the first to unleash the concept of “paisa-fication” by offering sachet-based pricing for voice calls a couple of years ago. Though the underlying reason can be attributed to hyper-competition unleashed by the former Minister for Communications & IT, it brought back remarkable value for a paisa – worth 2 seconds of talk time! A repeat of some sorts is happening in data pricing as telcos are bracing up for tapping the insatiable appetite of the younger generation for consuming data on the go!
Apps over text
The evidence of the above exists in the recent pronouncement by Jan Koum, CEO of WhatsApp, the popular cross platform messaging service, that it is bigger than Twitter. With 8 billion inbound and 12 billion outbound messages per day, WhatsApp has become a must-have app for all the youngsters on their smartphones. “It is very easy to use; it saves me SMS costs on my prepaid plan; it helps me keeps in touch with friends all around the world at any time of the day” Vindhya, my 14-year old daughter says.
Staying ad-free
What is more? WhatsApp does not have advertisements. Says Koum, “We do have a manifesto opposing advertising”. If so, how does WhatsApp make money? Currently it is building up the adopter base and the critical mass seems to have reached as there are rumours of Facebook or Google interested in acquiring it. Now that the adopters are firmly hooked on to the platform, WhatsApp might introduce a $0.99 per month subscription based model soon. However, the space for messaging services is cluttered.
A successful example is India-based Bharti SoftBank's free mobile messaging app hike that has crossed the 5 million active subscribers mark in just about four months after its launch. Hike has seen a phenomenal uptake especially in India for its unique hike to SMS feature that allows users to send free messages to even those friends/contacts who don't have the app on their mobile phone. Some of the Indian Over the Top (OTT) players such as Nimbuzz have indicated that they will get the Unified License to provide Internet Telephony to their messenger subscribers.
Increasing demand
Realising the potential of such packet/Internet based messaging services offered by the OTT players, that bypass SMS revenues and circuit switched calls, the mobile operators have started actively looking at offering data plans, especially for the younger generation who are hooked on to the above as well as to social networks such as Facebook.
From as low as Re 1 per day, data plans especially aimed at pre-paid users for both 2G and 3G network services are being offered by the operators. This is in complete contrast to the flat rate plan being offered by the operators in Europe and the US. Inadequacy of landline-based broadband, the voracious appetite of the consumersto be connected on the move, the growth of smartphones and mobile-only Internet users (approaching the 10 per cent tipping point of the handset market share), competition building up in 3G and the substitutable Broadband Wireless Access (BWA) service, are key reasons for possible commoditisation of data services much the same as voice in India.
Infrastructure needed
However, to match demand for data services with supply of adequate capacity in the wireless networks to offer good quality of experience for the users, following needs attention. The policy maker (DoT) and regulator (TRAI), should: (i) allocate more airwaves (in 2100 MHz apart from 1800 MHz) at suitably determined reserve price towards the discovery of rational market value (ii) enable optimal spectrum use by allowing sharing of spectrum (iii) initiate consultations on Net Neutrality that enables growth of operator-independent services and (iv) implement suitable QoS regulation for data services. On the other hand, the operators should: (i) implement technologies such as “Wi-Fi offload” to relieve capacity bottlenecks (ii) adopt standards such as “open API” to nurture application and content development and (iii) implement methods to improve the quality of service and customer experience.
It is heartening to note that even the rival telecom operators have gotten together to share backhaul bandwidth in the national and international optic fibre links for improving the techno-economic efficiency of the telecom infrastructure.
In tune with market realities, the policy thus far favouring green field projects was revised in 2007 by introducing passive infrastructure sharing and subsequently in 2008 for sharing most of the active infrastructure elements including backhaul transmission capacity, antennas, and all components of Radio Access Network, excluding spectrum. It is time that the policy as alluded by the Minister recently is tuned to allow sharing of spectrum, thus creating secondary spectrum market for optimal use of scarce resource.
For the first time since the 2010 auction of 3G and BWA spectrum, that we are seeing an uptake in data usage. Policy makers and operators better make use of this opportunity to usher in the next stage of mobile revolution in the country.
(The writer is Research Fellow at Sasken Communication Technologies)