Monday, May 2, 2011

The New "Old" Path Forward: Bundling and Resource Sharing

Telecom infrastructure provider Viom Networks with India's Minister of Communication and Information Technology recently inaugurated a rural service center in the north of the country that aims to facilitate socioeconomic growth through connectivity and convergence. The center is the first of 20,000 such centers that Viom hopes to roll out across the country in partnership with the Indian government in the next two years. The goal for each rural service center is to capture untapped connectivity and electricity resources offered by existing telecom infrastructure. Modularized facilities surrounding the towers deliver medical services such as cold storage for vaccines, banking infrastructure to drive the Government's financial inclusion agenda, and Internet kiosks to facilitate education and eGovernance initiatives. 

Resource sharing and bundling strategies are well known to the ICT sector. Shared resource computing has grown into a viable product category that allows customers to leverage processing power that would otherwise go untapped. Mobile operators around the world are increasingly extracting the services layer and bundling offerings on a single platform to leverage economies of scale, combat high churn rates and raise average revenue per user (ARPU). The opportunity to leverage telecom infrastructure has been a topic of discussion since 2009, when the Development Fund of the GSM Association (GSMA) produced a report documenting that mobile base stations typically have 5 kW of excess power that could be used to provide services to rural communities around the world. The GSMA noted that favorable regulatory environments would be required to implement such programs. The developments in India suggest that the Indian government is interested in implementing this latest innovative application of a bundling and resource sharing strategy to deliver key services to its constituents.

For multinational firms and members of the development community seeking to scale products or sustainably deliver services, partnering with local and national governments to bundle services and share resources may provide an attractive entry strategy. A thorough examination of the regulatory requirements and business models needed to support such a strategy is an essential part of determining how to take advantage of this nascent opportunity. Whether related to mobile or not, looking outside the box for innovative ways to leverage existing platforms is a savvy emerging market strategy.

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