Ronnie05's Blog

SMSs: In the way of the Dodo

Posted in Industry updates, Mobile Data & Traffic, Revenues and Monetization by Manas Ganguly on September 30, 2013

SMS is going the way of the Dodo- as per Nielsen’s latest Mobile Insights. In last 2 years in India- SMSs have lost 71.5% of the ground declining from 9 per day per user (2011) to 2 per day per user (July 2013). This isn’t a one of trend – SMSs are declining in usage in countries like China as well, where SMS usage has fallen by 15% in a year.

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Mobile chat applications are taking over registering a 285% increase in usage minutes over the last 2 years. OTT is beginning to take its toll on Operator revenues. The spot of bother is also that voice calling seems to have hit the plateau as well.

Thus telcos in India are really being cornered on data as the only revenue driver. A case in point is Airtel which in its June 2013 quarter results reported 90% increase in data usage and a corresponding 3% drop in SMS revenues (from 11% to 8%). Idea reported a 92.2% increase in mobile data traffic in last year.

The shift from SMS to Social Messaging through smartphone apps is only but a substitution effect.While the rates for SMS vary from Re 1 for local messages to Rs 1.50 for national and Rs 5 for international, data services usage can be unlimited after paying a fixed fee. Moreover, most social messaging services are either free or based on discounted plans.

The operator VAS business would thus be facing the squeeze. While data usage is on the rise, revenue is shifting from high value VAS to data only. Operators are under the pressure to look for more revenue oasis than ever.

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SMS- The Operator cash cow is dying. Time for telcos to wake up & smell the data coffee.

Posted in Business Cases, Industry updates, Revenues and Monetization by Manas Ganguly on May 2, 2013

As SMS celebrates its 20th anniversary , Chat apps are overtaking SMS communication globally. The Operator cash cow is dying. Time for telcos to wake up & smell the data coffee.

A new study by Informa loads the dice up for Chat apps. For the first time, more messages are being sent via applications such as iMessage, WhatsApp and Viber than traditional texting. Messages sent using such apps outnumbered those sent through carrier-based SMS in 2012 and the lead is expected to widen this year as chat apps send twice as many messages as texting. Although traditional SMS has a larger user base, iMessage, WhatsApp or other chatting apps are sending more texts per user, giving them the momentum. Informa estimates that on an average, a chat app user sends 32.6 messages per day, versus just five for SMS. This despite there being 3.5 billion SMS users compared to 586 million among the top six messaging apps surveyed by the researchers.

Mirroring this sentiment, Ovum estimates that Indian telecom operators may lose $3.1 billion in SMS revenues by 2016. In 2012, the Indian telecom industry lost close to $781 million in SMS revenues, as mobile telephony subscribers increasingly used social messaging apps for quick communication. According to data from the Telecom Regulatory Authority of India (TRAI), the number of monthly SMS sent per GSM subscriber fell by 5.62 per cent to 36 for the three months ended September 2012 from 38 in the year ago timeframe. For CDMA users, this number was marginally up to 25 during the same period. Industry watchers believe that there is a secular fall in SMS revenues for both CDMA and GSM operators.

There are a couple of reasons that are driving the consumer growth in the chat apps segment
1. As smartphones outnumber dumb feature phones, app-based messaging is set to eclipse texting. The next evolutionary step is likely to be calling from Facebook, now in limited roll-out, and other social networks.
2. In addition to being cheaper, these apps are more interactive as compared to the traditional SMS. (We could see the popularity of messaging apps wane if they decide to charge for the service. WhatsApp, for instance, is reportedly considering a paid 99 cents a year subscription.)

The demise of SMS is perhaps most symptomatic of the evolution of communications underway. First was the voice call, which largely vanished as texting became common. As SMS slowly declines as a significant revenue opportunity, mobile Internet (broadband or narrowband) is steadily growing as a key revenue generator.

Carriers, globally are playing to the changing notes, and are giving away unlimited texting on data plans. The intent is to convert dwindling SMS revenues into a broadband revenue opportunity. Indian telecom operators seem to be cognizant of this shift. They are increasingly co-bundling free messengers and content services to push data usage as an alternative to cascading SMS revenues. Last year, Reliance Communications tied up with WhatsApp and Facebook, enabling its GSM customers to use the two services for Rs 16/month. Aircel, too, has taken the leap by tying up with Nimbuzz. Others have started this integration – Nokia recently launched a new phone, Asha210, which has a dedicated WhatsApp button

The Chat platform providers are riding the wave and are collaborating with telecom companies for monetising the chat platforms through operator billing

Vernacularization of mVAS: The Indian Challenge (Part II)

Posted in Applications and User Interfaces, Value added services and applications by Manas Ganguly on October 5, 2009

In an earlier post, i had spoken about opportunities, challenges and work that has been done on Indic Language SMS i.e SMS/MVAS in 22 Indian languages. The rubber looks to hit the road by mid 2010 and this post in my slide share account is a detailed report of the Indic Language SMS and the telecom eco-system.

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Vernacularization of mVAS: The Indian Challenge

Posted in Value added services and applications by Manas Ganguly on October 2, 2009

Telecom in India is an exciting opportunity. While voice roughly connects 40% of the Indian population, services through mobiles is the next frontier being sighted. However, every frontier has its set of challenges and opportunities. A short note of mVAS vernacularization in India. 

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The Indian government sees mobiles as the next big opportunity to engage, empower and interact with its 1.14 billion population. That said while India has been leading subscriber ads and footprint expansion, the mVAS service usage has not been all too great. Indians on an average send 35 SMSs in a month compared to 100 in China and 750 in Phillipines. SMS today is seen as a mass media information delivery channel, being themost effective and timely way to reach out to people for business, economic and social perspective. 

 The differential in multiples is explained by lack of vernacular medium in MVAS and SMSs. Language SMS is available at most in Hindi only. India on the contrary has 22 national languages. On the other hand english literacy in India is only 10%. The next available opportunity is the roll out of 3G services and it is thus imperative that the telecom eco-system in India would need to gear up for content delivery in vernacular for rural penetration.

By COAI estimates, the MVAS industry is going to generate cummulative revenues worth Rs.121,000 crore in the next 5 years. Other industry figures put the estimate at $74 billion by 2013, with off deck downloads contributiong to $1Billion. Toward this then, Telecom Regulatory Authority of India (TRAI), Department of Telecomuunication (DoT), Cellular Operator Association of India (COAI), Broadband Wireless Consortium of India (BWCI),  National Association of Software and Services Companies (NASSCOM), Cenre of Excellence in Wireless Technology (CeWIT) have been working at creating standards amongst the eco-system: Operators, Device manufacturers and Application Providers for effective and efficient roll out of Language based mVAS services in India.

The challenge is making available a standard amongst eco-system (service providers as well as handset manufacturers). The task is thus

  1. To evolve a core system of Indic MVAS/SMS to be implemented uniformly across vendors and service providers
  2. Making SMS services cost effective. Presently India is high on the SMS versus Call costings. Penetration will be a factor of pricing.
  3. Font rendering to make the fonts standard across all handsets
  4. Key pad design challenge
  5. How do legacy handsets which donot have this Indic feature be included in them

Work done so far:The initail stages of work has been very encouraging. Unlike the Turkish and Philippines scripts which have a commonality with Roman alpha numerics or Chinese alphabets which are phonetic (and thereby easier to use), India provides a larger challenge in terms of number of scripts (Devanagri, Bengali, South Indian languages etc) and corresponding transliteration (a solution that needs to exist).

  1. 10 tables for 22 Indian Languages have been made. These may not be perfect, but give a 80% solution to the need of Vernacular SMS. A 100% Lingual text solution is still being worked upon
  2. There are some solutions that exist to graduate Legacy handsets to Indic MVAS/SMS though the solutions are not complete by itself.
  3. The code change in the Indic MVAS takes care of the fact that it uses 152 alphabets instead of 70 that was the prevalent solution earlier.
  4. There are basic two routes for Indic SMS/MVAS: Single Shift Mechanism and Locking Shift Mechanism. Out of this the Locking shift mechanism is more efficient in language styles.

 The scope of work next: The progress so far has been good and encouraging. However, there are challenges in terms of font, key design, legacy handsets support and SMS price normalization.

  1. Font rendering: Bringing all service providers, handset manufacturers and application developers is going to be a key standard platform for rolling out the language mVAS initiative.
  2. Key Pad design: Fitting in more than 100 characters of Indian languages in 12 keys plus the screen with dynamic and intutive strokes without expanding the application footprint  
  3. Inclusion of Legacy handsets: there are 500 million people in India with devices, many of which donot support the language based application. One would need to look at upgrading these people and getting them cconnected to the vernacular application. The delivery process and medium are a blackbox. 
  4. SMS pricing normalization: While India is one of the lowest tariff countries as far as voice is concerned, the SMS to voice Tariffs are not proportionate. More so with the vernacular medium which is 3X the ost of regular services. Regularization of these tariffs will be a must for mass acceptance of this media.
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