Comments on TRAI Paper on MVAS Growth Recommendations

TRAI recently came out with a paper outlining draft recommendations for the growth of Mobile Value-added Services (MVAS) in India [TRAI press release, TRAI paper]. Here is NetCore’s response sent to TRAI:

At the outset we would like to congratulate TRAI for having made extremely well thought out recommendations that will be far-reaching in their positive impact on the growth of VAS in India.

However, we would like to draw your attention to just a few issues that, we believe, still requires more detailed clarifications. These are listed below:

1)       The key issue considered is ‘Issue 9 – whether there should be regulation on revenue share model’. In the debate on pricing models there is mention of the mandatory revenue share model whereby TRAI can specify a maximum revenue share that the operator can charge. Netcore is of the opinion that it would be good if TRAI specifies separate revenue shares for each of the services in the off-deck as well as the on-deck model. It has been suggested that the same should be left to discussions between operator and content provider but, as we all know, one party has much more bargaining power than the other so the negotiations can never be bilateral. This is why TRAI needs to intervene. TRAI cites the roadblock to doing this as the lack of mandatory licensing for VASPs. We believe that smaller VAS and content players will be more than happy to register as ‘OSP – VAS’, provided this would ensure them of a reasonable revenue share.

2)       In addition to access, one of the key services that Telecom providers can give to other players is access to billing services. Although this is mentioned in the document a few times, the obligation of telecom operators to provide this service to off-deck providers at reasonable revenue shares is not spelt out clearly. Netcore would like to appeal to TRAI to make further clarifications on this very important point. The ability to collect money (through operators) from subscribers will energize content and VAS providers to come up with new and innovative services further accelerating the growth of VAS. This will encourage a lot of VAS companies to undertake their own marketing, customer support as well as brand building. For billing services there could either be a revenue share or a fixed price defined by TRAI. This will also spawn healthy competition in the market and hence ensure consumers/subscribers get the best pricing possible for value added services. This will help a larger number of subscribers to avail of such services.

3)       In off-deck model, Telecom providers will be mandated to publish access and bearer charges. Again this could become a problem if the charges published are high because these will add to the end-user price. Also end-users will need to be educated that they will be paying the sum of the two charges – VAS + access – and it may well be that the high access/carrier charge may make the service unviable. This is once again an argument in favour of TRAI setting the revenue shares for all services provided by the telecom operator.

4)       Common short code services Chapter II clause (xvii): VAS and content providers should be asked to keep DOT informed about additional services that they propose to release on existing short codes rather than asking them to seek approval for each such new service. Once DOT is informed it should be assumed that the service can be made operational after 15 days unless an objection is raised. The process of seeking approval will delay the launch of new services and introduce unnecessary bureaucracy.

5)       Common short code services, Chapter II clause (xxiii): While we welcome the introduction of short codes at different price points and also Toll free short codes, we would like to seek an additional clarification. Over the years, short codes have become automatically associated with premium services. This has led to the interpretation in some quarters that free information alert (push) services of the type provided by Netcore (MyToday Dailies) cannot be offered on short codes. Netcore would therefore like to have an explicit clarification that users may indeed opt-in for free information alert (subscription) services through short codes. If a VASP is able to subsidise the cost of service via other revenue sources e.g. advertising, lead generation etc. and in turn is able to offer free service to the subscribers then this will be in the best interest of a consumer. Since these are opt-in services it will help build multi-revenue streams rather than just burdening the subscriber to pay for every service he/she wants to subscribe to.

6)       Chapter II, Clause (iv)(d) and para 3.9.3(ii): The argument that reconciliation and calibration of MIS systems should be part of the negotiation between Telecom providers and VAS providers, in order to bring confidence in the MVAS value chain and improve the reconciliation process, is flawed. Telecom access providers have much more bargaining power than smaller players like VAS and content providers so this will not lead to the effect that TRAI is looking for. Ideally online access to MIS should be made available to VAS providers, but technology wise this could take a long time to be ready. In the meantime MIS and reconciliation will always be subject to dispute.

7)       At the open house, one of the key issues raised was that of dispute redressal. The TRAI draft recommendations document is completely silent on this topic. Netcore is of the opinion that a healthy ecosystem cannot be created unless there are quick and effective mechanisms to settle disputes. Netcore would like to urge TRAI to add some recommendations in this regard.

8)       Another issue that needs clarification is one of NDNC vs. Opt-in. Netcore pioneered opt-in services and the industry today is moving steadily towards ‘opt-in’ as the best method of offering services (Airtel information alerts, Google SMS channels and even TRAI’s DND service some of the services that have already started). In the light of this it becomes important for TRAI to issue a clarification to the effect that ‘Opt-in overrides NDNC registration’. Every subscriber should have the option to register under NDNC and hence protect himself from un-solicited communication. However a subscriber who has registered under NDNC yet has the right to opt-in to any service voluntarily. Due to lack of clarity, currently subscribers under NDNC are not allowed to be offered services even if they have voluntarily opted-in to a service.

Innovative Ideas for Tough Times

I did a brief presentation to a group of NetCore partners last week, sharing some ideas on what to do during tough times (T2) like these. Here it is.

Elections 2009: What’s Different from 2004?

Even as Obama takes oath to become the 44th president of the US, India is gearing up for its own election season. Sometime in April-May, hundreds of millions will vote in the general elections for the 15th Lok Sabha. It would have been hard to imagine five years ago that the Congress would have been able to stay in power with a cobbled coalition for the full term, but they did — even as they switched partners from the Left to the Samajwadi Party towards the end. So, as we look ahead to the elections this year, what has changed since 2004? Here are some of my thoughts:

  • 2009 will probably see a more fragmented verdict than 2004, making the task of government formation harder. In 2004, the Congress got 150 seats, the BJP 130, the Left 60, and about 200 went to various other parties. In 2009, I think the Congress-BJP combo will probably again find it difficult tocross the 300 mark. One big factor is the rise of the Bahujan Samajwadi Party in central India. For the Congress to come back to power, they will need to at least get 150 seats and then work on putting together a coalition. I think the bar for the BJP is much higher — it needs to win 200 seats on its own. Like last time, pre-poll alliances will make a difference.
  • There is a distinct possibility this time of a non-Congress, non-BJP government at the centre, with Mayawati hoping to do a Deve Gowda. If the BSP wins 60-80 seats, she will get support from the Left, and then it can all be up for grabs to get to the 270-mark.
  • The economy is on a down trend, as against the uptrend of 2004. The last year has posed many challenges, and the present government has not handled them well.
  • There is a heightened civic consciousness among citizens, which has grown in the past couple years. I think we will see higher voting percentages this time around. It is not clear who will benefit from this. This engagement is especially higher among the Youth.
  • Getting voters out on the big day will matter since one can expect some smaller parties and dissidents to also contest and split the vote, thus reducing victory margins and putting more seats in play.
  • Both the national parties have a Prnce-in-waiting (Rahul Gandhi for the Congress, and Narendra Modi for the BJP). If either of the Congress or BJP comes to power, expect a mid-term power transfer.
  • On the tech front, I think mobile marketing will play an important role, given that 300+ million Indian voters have a mobile in their hands.
  • Finally, there are the “Learnings of Obama” — I am sure all parties have studied what Obama did in the past 2 years in the US. But one has to be careful innot overplaying the Obama card. India’s election process is different. So, one has to also know what will not work in India.

I think the Congress (as Incumbent) will benefit from playing the same game, while the BJP needs to focus on “Disruptive Innovations” as the Challenger. All in all, it will be a fascinating 4 months – with the elections, and the negotiations to form a government.

What do you think will happen in the elections? If you were strategising for any of the political parties, what would you do?

Blog Past: The IndiaWorld Story

Since the IndiaWorld deal has been brought back to the forefront in recent times because of the controversy surrounding Satyam, I thought it would be a good idea to read how it all began. I wrote this series in late 1997 and early 1998.

The IndiaWorld story begins in September 1994. I was in the US, trying to figure out a good business to do in an area other than software exports. It was the time when the Internet and Web were just about beginning to catch people’s fancies. I spent a few weeks at a friend’s place, browsing the Web on a 14.4 Kbps dial-up modem with Netcom’s Netcruiser account. The experience was absolutely amazing. It was quite evident then that the Web as a medium would have a significant impact on how information was disseminated. The Web offered a good business opportunity: attract the NRIs (I was one myself!) with good intent, and then look at offshoots in electronic commerce.

That was the vision of IndiaWorld: a bridge between Indians worldwide.

On my return to India in November 1994, I wrote to various publishers and talked to a number of companies and individuals to participate in the venture by offering their content. It was tough explaining the Internet and the Web to people in India then: there was no commercial Internet access provider (our “shell” account was through NCST/ERNET). Most thought the Internet to be another variation of a satellite channel! I would take a notebook with NCSA Mosaic, and show them the power of hyperlinks. It wasn’t quite clear how it would make an impact on businesses, but yes, it was going to transform how NRIs got their information.

Our focus was on IndiaWorld as a news and information service for NRIs. With help (and content) from Indian Express, India Today, Dataquest, Reader’s Digest, Kensource, Crisil, CMIE, DSP Financial, Professional Management Group and Laxman, IndiaWorld was formallylaunched from a server in the US on March 13, 1995.

Mobile Microcontent

One of the ideas I have been thinking about is paid microcontent subscriptions delivered to the mobile — via SMS or mail. The key word is “paid” — will people pay, or will it have to be free forever? The mobile is different — see the success of Blackberry and push mail, and also mobile operator-promoted VAS services. The question is: is it possible to build a direct-to-consumer model for content subscriptions, a sort-of iTunes for microcontent. Here are some starting thoughts from me.Pushed content has a charm of its own on the mobile. It just comes to us. Because of the immediacy and 24×7 availability, we welcome it – as long as it not spam. Consider email, for example. It is available on PCs, but people are willing to spend a lot of money to get it pushed to them on the mobile. Pushed content eliminates latency and can also fill free/empty moments.

Microcontent too has its own charm. Look at how taken up people are with Twitter. We have also seen the same reaction with our MyToday free SMS services – the snippets of news and various kinds of tips are so useful and timely. A Daily Delight.

Payment by subscribers is what makes the mobile so unique. Mobile users are willing to pay for content and services. The same music that is perceived as free becomes paid in the form of its micro ringtone version. Operators too have benefited from paid SMS subscription services – it is again the combination of push and microcontent delivered on the mobile that elicits the money. What do you think? Will people play? If so, for what type of content?

Quarterly Numbers

As private companies, we are not obliged to publish any quarterly financials. But imagine if we did think of our business with quarterly targets, and published a report and financials (for internal circulation only) — just like the public companies do? I think it will help small, private companies got a better handle on their own business — and in some ways, even prepare them for the day they become public (if they do).

For most of my life as an entrepreneur, I have not really bothered about targets and all that. “Do the best” was the mantra. Over the past year, I have started tracking all key numbers of our business on a monthly basis more closely (since it is my money that we are currently burning)! We also do a quarterly Board review for a couple of external people – so we at least see the business once from someone else’s eyes. This quarter, I also prepared a brief report which reviewed the quarter that had just gotten over, and provided an outlook for the coming quarter.

This exercise was quite a useful one — it helped look back at what had happened, and put into perspective what we need to do. While there are daily battles to be fought, a bit of big picture  thinking is also critical – and based around the numbers that matter in the business.

So, my advice to entrepreneurs is (and I wish someone had given this to me a decade ago):

  • think of the business in quarters: it is the right granularity — a month is too short, and a year is too long
  • put together a 2-3 member Board with whom you can review the business once a quarter
  • prepare a quarterly report just like a publicly listed company does (and share it with the Board and senior management internally)

The challenge inherent in new, early-stage blue ocean businesses is that one has no clue how the numbers will come up against projections or targets. But, the exercise will still be a useful one and creates much-needed discipline of tracking numbers.

At Infocom in Kolkata on Thursday

I will be speaking at Infocom 08-09 on Thursday at ITC Sonar in Kolkata. My session is at 4 pm, and I have 20 minutes to speak on “Breakthrough Innovations in Mobile.” There will be three other speakers in the 90-minute session. The session brief is as follows:

Turning ideas into reality is what innovation is all about — even better when these innovations will shape the mobile industry. This session would discuss the Mobile innovation market and will bring together the mobile industry’s top innovators, investors, operators and key suppliers from across market segments.

This forum would identify the industry’s top priorities for new products and services, elevate the best-in-class innovations that are building them, and explore how the interests of customers or investors drive these breakthrough Innovations.

This session will explore the technical and commercial drivers underlining mobile businesses and the issues and challenges that will be faced by the mobile enterprises in times to come. Finally, the session would show how innovation can drive reduction in costs and focus on simplicity for increasing consumer base.

In my talk, I plan to build on my 2009 India Mobility Trends note. There are three focus areas I want to concentrate on:

  • the coming mobile Internet era, brought about by new devices (smartphones), 3G and flat-rate data plans
  • the opportunity for new business models in the form of VAS operators and mobile computing operators (Data MVNOs)
  • the emergence of the mobile as the next medium for advertising and marketing medium

Would love your inputs — what do you think are the breakthrough innovations in the mobile space?

It has been many years since I visited Kolkata — probably 5-6 years. I am looking forward to it, though I guess I will end up being at the conference venue for most of the day.

A Boat Ride

One of the nice things about Mumbai is the Arabian Sea. But unlike many other cities, we haven’t really made much of the sea. Only now will we get our first bridge (connecting Bandra and Worli). And then there are the boat rides.

On Saturday evening, I took Abhishek and my niece for a boat ride at Gateway of India. It wasn’t the first time I was doing it — I’ve done this about once a year for the past three years. We don’t even have proper places for people to get on and off easily. The boats also could do with some improvement. In all, plenty of room for an improvement in the overall experience. I guess for Rs 40 for a 25-minute outing one shouldn’t be asking too much.

The ride itself was quite relaxing. Away from land, with only the sea all around, the thoughts start changing. No longer does one think of the short-term issues. Instead, one becomes more contemplative. I guess as the boat becomes detached from the land, so does the mind from all things immediate.

Abhishek has hoping we’d get to see a sea snake! Makes me think what we need next is a sub-marine ride.