What is needed is the equivalent of an i-mode for India. While i-mode’s 91% payouts made Japan the pioneer in mobile data, my belief is that a model wherein content and service providers could get 70% of the end-user payment can help drive data services in India. While AppStores do offer that, the “app market” in India is still quite limited. The challenge for AppStores is collecting money.
Here, then are the parameters of the problem that need to be solved:
- Collect money in small tranches (say, Rs 150, or $3) independent of the mobile operator for a collection cost of no more than 10%. This problem is not as simple as it sounds – most Indians do not have credit cards, don’t use their debit cards, and some many not even have a bank account. The lowest common denominator they all have is cash. What is needed is akin to a “cash conveyor belt.”
- Pay out 70% of the end-user price to the publishers (content and software)
- Run a profitable business with a gross margin of 18% (20% less 2% service tax)
The opportunity in India is to target 100 million users who are willing to pay Rs 50-100 ($1-2) per month for mobile data services. No one other than the mobile operator has solved the problem of collecting and billing for small amounts of money. India needs an alternative micropayments and publishing platform to help drive the mobile data ecosystem. Therein lies the biggest set of opportunities for intermediaries, content providers and software developers.