TECH TALK: Mobile Internet: My Earlier Writing

I wrote about the mobile Internet as part on an earlier Tech Talk series in Feb 2006.

The mobile industry started off with a killer app already available: the desire of people to communicate. Compounded with the fact that for various reasons, the phone was seen as a luxury in India, the mobile gave people in India an independence and freedom that that they had hitherto not experienced when it came to interactions with others. The entry of Reliance Infocomm helped spark off a price war which has led to rocketing growth in the industry.

In India, ringtones, ringback tones, wallpapers, games, voice-based services and SMS infoservices have done very well so far. But they still address a very small segment of the market. There is an opportunity to grow the usage of mobile data (or mobile value added services) beyond the 2G to the 2.5G domain (WAP, MMS and Java) and 3G (streaming services). In India, the mobile has the potential to become a credible alternative for accessing the Internet given the slow growth of connected computers. But for that to happen, a number of things will have to change. With regards to content and value added services, there are three challenges facing mobile businesses: closed publishing systems (walled gardens), operator revenue shares for content providers and mobile data pricing.

The walled gardens that mobile operators run limit the options for publishers. They have to go the operators directly or work through intermediaries who have the operator relationships. While the walled gardens are good for operators who can maximize their revenues through the services, it limits the options that users have and, over time, it will also limit the revenue-generation potential.

In India, the content providers get a much smaller fraction of the transaction and subscription fees paid by users compared to that in other markets such as China and Japan. While the operators have a great advantage with their billing relationship and platform, they tend to keep a very high percentage of the revenue thus limiting what content providers keep. In Japan, NTT Docomos i-mode pays out 91% to the content provider. In China, the mobile operators pay out 80-85%. In India, the content providers tend to get 10-30% of the revenue only.

Mobile data pricing in India also needs to be reduced dramatically. For example, one of the leading operators charges a fee of Rs 49 ($1.10) per month with an additional charge of 10 paise/10 KB. This works out to about Rs 10 (22 cents) per megabyte of download. This encourages more one-time download applications rather than online usage. In addition, in the GSM world, activating mobile data (GPRS) is also not easy. (By comparison, most CDMA handsets come pre-configured for data access, even though they are limited to the operator walled garden.)

From the mobile data perspective, what is needed is an open publishing environment which encourages thousands of microentrepreneurs much like what i-mode enabled in Japan. Operators should open up their walled gardens they will make for the money lost with far greater data traffic because in India the mobile has the potential to become an alternative device for Internet access.

The Internet and mobile will thus play a complementary role the small screens of the mobile offset by the full-sized input/output capabilities of the network computer, and the fixed nature of the computer offset by the portability of the mobile phone. India can be the role model for other emerging markets in creating a digital infrastructure which brings information access to hundreds of millions. This is what will change lives. Entrepreneurs will thus have the opportunity to do good and do well.

Over the past year or so, we have been working on a number of ideas relating to the mobile Internet in my company, Netcore. The focus has been on doing the mobile Internet right. I will write about our work and ideas next week.

Next Week: Mobile Internet (continued)

TECH TALK Mobile Internet+T

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Rajesh Jain

An Entrepreneur based in Mumbai, India.