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'Mobile users don't have spare money to donate'

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CIOL Bureau
New Update

Telcordia provides software and services for IP, wireline, mobility and cable networks. The company works with more than 40 communication service providers across the globe and holds over 1800 patents. Telcordia is chief architect of the United States communications system. The company has also partnered with Tata Teleservices, Idea Cellular, Reliance Communications and Aircel in India.

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With 3G services launch around the corner, Anuj Kapur, country head, India, Service Delivery Solutions, Telcordia interacted with Prasoon Srivastava of CIOL to share the company's experience and observation in other market where 3G services has already been rolled out.

Excerpts:

Based on your experience with 3G players, which are the things that you would suggest to Indian TSPs to avoid in their offerings?

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3G deployments around the world have led to increased revenues, improved customer loyalty, and new sources of revenues. On the other hand, there are costs to be minimized and strong competitors with the same goals to watch.

One of the most notable features of the earlier 3G deployments, particularly in North America and Western Europe, have been the offers of 'flat-rate' or 'all you can eat' tariff plans. These have been relatively high priced plans designed to encourage 3G take-up and usage by providing unlimited access for a fixed monthly fee.

However, with the move to sophisticated smart phones, and many more applications and web services designed for these phones, the traffic has increased enormously. These plans are no longer viable. Many operators in these markets are facing difficulties.

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Since every Indian operator is aware of the risks associated with these plans, we think it is unlikely we will see them offered in India. We believes we will see a lot of different plans, tailored for different parts of the user community. One key component of these plans will be to 'get what you pay for'.

Telcordia expects to see bandwidth tiers forming an important part of these plans. Some just need basic email and web searching and only need a low-speed connection. Others may want to watch or share video clips and will be willing to pay for a faster connection. Eventually, others may even want to watch HD video (for example on laptops or tablet devices) and will pay for even higher bandwidth.

As per your observations, which are the applications that have been major contributor to ARPU of your clients in 3G space?

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Video is the 'killer application' for 3G. That is both a blessing and a curse. Video is highly attractive to people and people will spend money on high-quality video services. However, video requires specific user devices and takes considerable network resources.

Most users prefer streaming, with instant access rather than download it and watch it offline. In countries where 3G has been deployed, video is now taking a large part of the available mobile data bandwidth. This shows that video services are very popular.

What are the challenges you find in managing video applications?

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The challenge is to get users to pay a fair price. Fortunately the nature and popularity of video services provide several mechanisms like bandwidth-based price tiering. This automatically associates a higher price with the higher value of streaming video. Lower value offline video can be accessed using a low price web browsing plan but online video requires a high bandwidth plan.

Mobile operators are in an ideal position to create high value targeted advertising surrounding the video content. For example, ads can be selected based on user information, location and content type. Operators can create relationships with major web services to provide inclusive access to their content as part of a targeted plan or as a loyalty reward.

Paid video content provides another possible revenue stream as third-party video services will want to be able to bundle the user access charges in the price of the content. This allows the operator to have another source of revenue from the content provider.

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At present most of the TSPs are unable to recover cost of per airtime in India. Which are the points where you feel correction is required?

The key is to provide value to the user, in a way which they appreciate and for which they are willing to pay. For 3G, we believe that the introduction of bandwidth tiers will do that and will allow strong competition without destroying value.

Cost control and profitability is a key issue for 3G. The industry must avoid destroying value by offering packages that are not bandwidth-based.

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Smaller towns and cities are considered to generate low ARPU for TSPs. In anyway, do you feel this low contributing segment can be made to spend more?

There are two parts to this. Users can only be encouraged to spend more if they are being offered something of value in return. Users do not have spare money to donate to operators. For the operators to get a larger share of the users' wallet, they have to offer new services that people find valuable.

On the other hand, operators have a strong relationship with their users — they know a lot about them, like location. They have control of the device, which is in the users' hands. TSPs have a billing relationship with them. All of these are things which third parties will be willing to pay to share access.

Which are the new BSS business models that Telcordia feels will help TSPs in attracting more customers?

The key is taking the view that the business model is “two-sided”. While receiving revenues from the users, the operator also needs to be in the business of enabling their customers to do business with third parties and get paid a share.

The most obvious examples, today, are carrier billing and advertising. Carrier billing means, primarily, providing a way for users to pay for third-party content from their phone account.

However, although these two will be the most important in the short term, several other “enablers” are likely to be important going forward like cross-industry promotions, cross-industry loyalty, bundled access and security.

Which are the new industry verticals where we will soon see Telcordia's presence?

Telcordia is committed to providing for the needs of telecom operators. We are very committed to India and to our Indian customers, and we will continue to invest in expanding our business here. We look forward to the challenges being brought to us by our customers in 3G, in advertising, in mobile banking, and in MVNOs, as well as many other areas.

Which will be the top three major contributor offerings from Telcordia that will contribute to this growth?

The Indian market has been phenomenally successful and is watched from around the world. Telcordia believes that our contributions will continue to drive innovation in new services and in charging. These two areas are closely linked as service innovation drives revenues and, most importantly, profits. The ongoing evolution of the Telcordia Real-Time Charging, Telcordia Bandwidth Manager and Telcordia Converged Application Server products will, we hope, be a force to assist with the continued growth of our customers in India.

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