2009 India Mobility Trends

Mint asked me for ten key trends in the Indian mobile space for 2009. Given that I like these year-end lookahead exercises, I sent them the brief list they wanted, and also elaborated on each of them.

2008 was an exciting year in the Indian mobile space. The user base has grown by about 100 million, many new operators have got licences to launch operations, and the 3G auction is just around the corner. So, what does 2009 have in store for us?

Here is a brief summary of my pick of the ten trends that will define the mobile space in India in 2009:

  1. Subscriber growth in India will continue, driven by rural expansion, entry of newer operators, 3G and cheaper handsets.
  2. Incumbent operators will face challenges (and opportunities) on four fronts: new operators, mobile number portability, 3G and MVNOs.
  3. Focus on Value-added Services and Data will increase in saturated, urban markets.
  4. Mobile VAS operators which build direct-to-consumer relationships will start emerging.
  5. Flat-rate Data Plans will accelerate the use of the Mobile Internet, Social Media and Rich Media.
  6. Operators and/or handset players will launch AppStores to drive usage, innovation and revenues.
  7. Mobile Payments and Commerce will come into vogue for microtransactions.
  8. Companies will create multi-faceted mobile presence to deepen customer relationships and drive permission-based interaction and engagement.
  9. The Mobile will emerge as the next advertising and marketing medium – and be seen as capable of not just mass reach but also allow a high degree of targeting.
  10. The 2009 general elections will be an inflection point in the usage of mobiles in many different ways.

1. Subscriber Growth Continues: India is now growing at about 10 million new mobile users every month, and that pace of growth will continue. We will probably be close to 450 million subscribers by end of 2009. Four factors will drive growth of the mobile subscriber base: footprint expansion by existing operators especially in rural India, launch of operations by newer operators, issuing of 3G licences which will open up a new world of data services, and cheaper handsets which will even further lower entry barriers.

2. Incumbent Operators will face Multiple Challenges: The Indian market going ahead can be thought of us two markets: the Red Market which is the competition-filled, saturated urban battlegrounds (top 40-odd cities in India) and accounts for about 100-150 million subscribers, and the Blue Market covering the rest of India, with a potential size of upto a billion subscribers, of whom only 15-20% have actually got a mobile phone. The Red Market wants Data and Value-Added Services (VAS), while the Blue Market needs Access (Voice). A new landscape is emerging in India driven by four simultaneous disruptions — new operators entering the fray, mobile number portability rollout, 3G services, and the green signal for MVNOs (Mobile Virtual Network Operators).

3. Operators will focus on VAS and Data Services in the Red Market: Voice, SMS and quality of network can no longer be used for differentiation – they are now hygiene. The Red Market subscribers got a phone in the first decade of India’s wireless rollout between 1995-2005. They have been using Voice and P2P SMS for between 3 and 13 years. They now want to do much more with their phone – and their time is now coming. 3G will be a big enabler for richer services, and can actually drive higher ARPUs (Average Revenue Per User). We will also see the emergence of Data MVNOs – or mobile computing operators.

4. The Coming Era of VAS Operators: Today, 90% of operators revenues comes from Voice and Rentals. Of the balance 10%, about half comes from Person-to-Person (P2P) SMS. So, VAS accounts for only about 5% of revenue. Operators have primarily focused on voice. I see a new breed of companies emerging who will create direct-to-consumer services and focus exclusively on VAS – think of them as VAS Operators. They will have multiple revenue streams – not just from subscribers, but also from advertisers and businesses. They will be the Genies that make the mobile as magic lamps in the hands of consumers.

5. Flat-rate Data Plans will drive the use of Mobile Internet, Social Media and Rich Media: The US leads the way here. From being a laggard in the use of mobile data, the US is now showing the way with all operators having flat-rate data plans. In India, the right price point, according to me, is Rs 100 per month. A plan like this will encourage the use of the mobile Internet and other services, and create the necessary pull for companies to start building out mobile data services. Operators will benefit from large-scale adoption of data plans. The mobile is ideally positioned to be a window into the incremental N3 (Now-New-Near) Web). Mobile social networks will extend the communication and interaction capabilities of the device. From mail to music, from digisodes to streaming TV channels, the combination of smartphones, flat-rate data plans and 3G will be the gateway to a wide array of rich media.

6. Expect the launch of AppStores: Given the huge success of Apple’s store for mobile applications and Google following suit with its Android Market, I expect Indian operators and handset players to also create AppStores. These stores will open up the content and applications market to just about anyone, and drive both usage and innovation, and also create newer revenue streams for themselves. This will be the first steps in the opening up of operator walled gardens.

7. Mobile Payments and Commerce will come into vogue: This will happen via three mechanisms. First, the mobile cash balance with an operators could be used for payments. Second, a credit card or debit card could be linked with a mobile phone or number, enabling only an instruction to be issued for making payments. Finally, independent companies could encourage the creation of cash balances to be used for off-deck services. Taken together, the mobile has the potential to emerge at the centre of micropayments.

8. Companies will start creating their Mobile Presence: A mobile presence is much more than setting up a Keyword on a shortcode for lead-generation. Early Adopters will start integrating the mobile (especially SMS and the mobile Internet) into each of their business processes. They will use permission-based channels (rather than spam) to build deeper customer relationships and drive greater engagement.

9. Emergence of Mobile as a Mass and Targeted Medium: Today, the Mobile is one of four new media that ad agencies and business look at along with FM, Out-of-home and the Internet. Given the user base that is already there, the mobile is ready for breaking out of the pack. It has the attributes of a mass medium like TV and print, and can combine the targeting that the Internet offers.

10. The 2009 Elections will be an inflection point for Mobile usage: More than half of the voting Indian population will have a mobile – which is a two-way interactive device. As the Mumbai attacks showed, while TV can rouse passion, it is the mobile which gets people organised and working towards common goals. Just as the US elections of 2008 were a defining moment in the use of Internet and mobile, I believe that the 2009 general elections in India will drive innovation in how the mobile is used for building communities, citizen journalism, advertising and more.