Tuesday, December 1, 2009

Rural India Provides a New Lab for mServices Scale

Entertainment may not be the first thing that springs to mind when people think about the basic human needs that mobile phones can help to fulfill. But for many it is a fundamental contributor to quality of life. This fact is illustrated in a recent Wall Street Journal article on the growth of entertainment in rural India provided via mobile phones. mEntertainment, as it is called, is one of many mServices growing rapidly in India, as customers pay to call and listen to the latest Bollywood tunes or receive text messages with the day's cricket scores. Other services, such as mAdvertising and mBanking, are also taking off. A full 31% of car-buying decisions in the country are now influenced by mobile phone advertisements, and increasing demand for mobile financial services has led Nokia to begin offering its new 'Nokia Money' service in India.

y developing countries are striving for scale in mServices. But India appears to be leading the pack with accelerated growth of offerings and adoption. This is, in part, due to the extremely low mobile voice and text prices that Indian mobile subscribers pay. Customers in India are paying less than a penny a minute for voice calling, a result of fierce competition among a large number of mobile operators. This dynamic is stimulating greater mobile phone adoption and use, but it is hard on mobile operators who are struggling to make a profit; average revenue per user (ARPU) has been declining while the market grows rapidly into lower-income customer groups. Operators are now responding by providing additional services - mServices - to stimulate incremental customer spending, over and above what is already spent on normal voice and texting capabilities.

Operators - and handset manufacturers - around the world are hoping mServices will address growth and margin requirements that traditional voice and texting services cannot. mServices provided through existing voice and texting capabilities can increase revenues through higher volume. And over time, the offering of more sophisticated services, like targeted customer profiling and web-based capabilities, will allow for premium pricing and increased profits. This also creates opportunity for other companies that either create or enable new mServices. Tools, components and turn-key solutions for mServices can all find customer demand and partnership opportunities, especially in emerging markets where service alternatives are few and operator pressures are mounting.

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