Unsolicited Commercial Communications Regulation in India– Trigger for Mobile Based Advertisement

The online advertisement spend by advertisers are reached INR 2260 Cr ending March 2013. The market size is too low. The advertiser’s prefer to opt for telemarketing and promotional SMS to reach out to Mobility user compared to application based mobile advertisement on mobile. The Applications ecosystem in India is not matured enough to offer hidden potential of device centric and application hosted mobile advertisement due to number of reasons such as backend delivery, Contextual capture, mobile e-Commerce mechanism. The lack of technology supported triggered advertisers to choose telemarketing and promotional SMS to offer product awareness drive through the mentioned media. In order to keep the cost low and offer better value proposition, many telemarketing and bulk advertisement providers decided to choose short cuts to capture market share. The move turned out to be risk for consumer privacy, content security. Post multiple regulatory directives, regulators failed to stop pesky telemarketing calls and SMS by telemarketing companies. In order to control unaccounted billions of message routing through illegal mechanism prompted regulators to put the onus on Wireless operators to enhance their network to eradicate or control revenue leakage which is impacting whole ecosystem player. Post few high voltage meetings and directives, it is observed that many companies indulged in Mobile Marketing using Telemarketing and SMS experienced drastic fall in their order flow and business. Any positive impact of unsolicited commercial communication regulation would force advertisers to find another medium to reach out to consumer base. With the growing adoption of Application among Indian medium to high end smartphone users, Mobile marketing business is going to be redirected to Mobile advertisement based marketing. In my earlier post, I mentioned about Mobile based advertisement market size of INR 230 Cr but I can see that $ Bn’s opportunity is waiting for the smart companies to capture.

Indian Mobile Marketing Business experiencing fall in business post stringent regulation

The regulatory effort to protect Indian wireless and wired subscriber privacy as well as to enforce regulation started to show positive impact after 5 years of effort. In recent months, Indian regulators warned few wireless operators to twist their networks identify, block and initiate action against telemarketing flaunting regulatory compliance forced Mobile marketing tools as well as service provider to remodel their service offering. The “Telemarketing and SMS based promotional activities are termed as Wireless Enterprise Mobility” by few service providers raised their concerns regarding fall in business post enforcement of Do not Disturb, Increased termination charges and termed regulatory moves as showstopper act. I am surprised to observe that none talked about consumer pain and overall benefit of regulation on wireless ecosystem. I also carry reservation in terming Telemarketing calls and SMS based promotional calls as wireless marketing because all kind of wireless service must be supported with subscriber consent. The current solution offerings neglect consumer side.

Indian User Opinion about Pesky Calls and SMS – Lack of Awareness and Social Responsibility Adherence

Recent weeks print media is full of articles around pesky calls and SMS monster which is taking centre stage in most not all communications from regulators. Regulators are proposing stringent fines across ecosystem players involved in supporting pesky calls and SMS. Post multiple blog article posted by me on different social sites to professional sites to increase awareness about negative impact of pesky call and SMS engineering, I realised that Indian subscribers are least bothered about happening around them. I thought of another approach to figure out the unsuccessful enforcement of regulation and esteemed Indian subscribers opinion about the same. Post talking with more than 200 very educated, professionally successful, well-known names in their respective sectors; I reached to the following conclusion

• Not aware of processes to take on pesky caller and SMS originator
• No one want to get into legal process
• Even NDNC subscriber told that nothing is going to improve so it’s useless to talk about it
• No one ever launched any complaint but proudly admitted that they are getting multiple calls and SMS on daily basis
• Other few opinion were very crude and prefer not to share the same

If Industry especially Telco’s are losing Billions of $ then Telco must be part and parcel of awareness program. At the same time, there must be participation by corporate world to increase awareness among their employee about the Pro’s and Con’s of pesky calls and SMS on personal and professional information management. Government may consider stringent information technology centric regulation and announce heavy penalty on companies giving business to mass product marketing companies without adhering to government regulation.

Average pesky call and SMS complaint by registered user per month is too low to deter illegal players

Telecom State Minister came out with average monthly complaint rate against illegal telemarketers and SMS spammers. The number quoted by honourable minister was “27760”. For normal citizen of India, any attempt by subscribers to complain against pesky calls or SMS during assessment, the current scenario is completely different. If 161 Mn plus registered NDNC users are only sending above mentioned number then we must accept the fact that any news report on different print media is completely exaggerated, Isn’t it? It depicts that only fraction of percentage of NDNC users are filing complaint. I believe government regulators must have done analysis better than us and must be worried that how pesky calls and SMS spamming is going out of hand. The sooner we wake up, the better it would be for country. Post survey, the conclusion is very Simple ‘NDNC does not work and its hopeless service. Being a user, I am going to pick up call from Unrecognized calling number” The approach is escapist one not head on approach. We need to take on the issues head on instead of taking back seat.

One Nation –One License -Free Roaming Policy offer India Full MNP vision achievement

In approved NTP 12 document, the Indian government clearly stated long term vision for telecom sector - to exploit the already built foundation to create unprecedented communication reach across Indian geographies. It also set very aggressive targets on teledensity, potential network deployments to serve and offer Indian people very cost effective communications services.

I have already highlighted in my earlier blog posts, MNPRegulation – Regulator’s Vision Verses Reality and UnrealisticNational Telecom Policy vision to achieve 70% Teledensity by 2017 & 100% by2020, the current pattern of broadband and logical challenges in achieving the set goal by the government. But the most interesting vision is to

1. Strive to create One Nation - One License across services and service areas.
2. Achieve One Nation - Full Mobile Number Portability and work towards One Nation -Free Roaming.

The above mentioned clause took telecommunication service providers by surprise and it is even more surprising when there was lack of visibility on the licensing issues.

Currently, Two MNPO’s are managing dipping database and service providers in the respective zones and are integrating their networks through centralized database development to get the real time update.

In a current scenario, the mobile user can only make donor to receipt mobile operator switch within their current service geography or circle.

Is there a need of “Full MNP” when one license across services and service area is going to be implemented?

In a scenario of national roaming abolishment; Intra circle roaming would be abolished and all operator level switch would not be limited to specific circle level. Once intra circle level roaming under one license regime comes into force, it would automatically enable ported out user free movement and flexibility of keeping same MSISDN across service geography. It would automatically offer full MNP across recipient’s mobile operators’ service geographies.

The mobile operators would be forced to pay carriage fee in order to correctly connect and deliver voice call and SMS respectively. On the capex and opex front, the Mobile Operator’s, International Long Distance Operator’s would be forced to remodel centralized ported user database, SMS aggregation platform as well as realign their service logic and business logic in order to correctly redirect voice and SMS traffic. I have not seen any updated regulatory document about the changes required to be done on the dipping database update side.

Even more surprising that regulator are in consultation with stakeholders, post deciding on the policy without zeroing in on the licensing, potential solutioning impact on the user and network performance and cost attached with it.

In my point of view, free roaming would remove the need of Full MNP. The existing mechanism of limited MNP would automatically be extended to Full MNP. The regulators may opt for the clear specifications defining all the raised concerned points by the stakeholders to reduce the revenue loss fear and associated cost. The consultation regarding the licenses and associated cost, post policy approval is bit surprising. I must stress that there are multiple hidden business opportunities for ecosystem stakeholders out of the unwarranted challenges around Full MNP and free roaming.

Growth Opportunities in Indian Mobile Operator Segment

The MVAS, UCC, User verification norms based regulation is hurting VAS revenue for the last six to eight quarters. The regulations clearly impacted SMS and IVR based VAS services and products. The mobility messaging and other VAS revenue share came down from 10-11 % (Q4, FY12) to around 8% (Q3,FY13, consolidated one) whereas data revenue reached to 6-7% (Q3, FY13) from 3% (Q4, FY12). Moving forward, Mobility industry would experience further negative growth in high single digit QoQ for next few quarters reflecting the regulation clause of getting the authorization from user before activating MVAS services. Any authorization process based on IVR, SMS or email may experience low adoption by the consumer due to multiple surrounded reasons. It would clearly impact on Messaging, IVR, Music, RBT, ODV and SMS based delivered, activated Applications. The expected market size of total and non-voice mobility market size may touch $ 32 Bn & $ 5.7Bn (including data and other services). On-going revenue trend suggest that Mobile operators may be able to generate close to $ 2.3Bn from data services neutralizing the loss of MVAS revenue share. According to TRAI performance indicator report, 49% of the total mobile user devices are data capable and that translate it to 440Mn pulse potential total addressable market. With the current paid data user base of around 140 Mn generating slightly lower $1 ARPU present great opportunity to convert lost revenue opportunity into new revenues. Based on the numbers and trend, Mobile operators are losing more revenue than generating. With the population base of 65% as youth, opportunities are offered for mobile operators for smooth transition from SMS, IVR & Voice based and dominated MVAS to data centric MVAS services. The MNO’s are actively refining and defining their evolving delivery mechanism to make it interoperable, portable, and secured through cloud centric and OffNet/OnNet supported environment to capture the un-captured.

The super hyped 3G & BWA - $13 Bn in license auction and another $ 10 Bn in network upgrade investment stretched service providers balance sheet to the limit and their 30% EBITA is used to service debt burden. The slow 3G service user acquisition which stands at around 30 Mn worsened the situation. In the BWA segment only few operators are able to launch their services. Most of the observer started writing down India 3G story as none of the mobile operator covers all circles and regulatory/legal dispute on 3G roaming. It might have dented user confidence to opt for the service. In India, only 8-9% of the total mobile users are frequent travellers and would require seamless roaming. I believe strongly that slow adoption will gather pace with the higher adoption of enabled handset, lower cost through cutting edge delivery platform. The dedicated and priority based QoS, security, data protection, online storage space and dynamic charging model would attract more and more user base. The recent data revenue and user growth is going to act as catalyst for ecosystem players to focus on data centric services, product or application development instead of focussing on auto cycled legacy MVAS product line. The paid applications download is going to experience high double digit growth QoQ for next few years from current run rate of 7-8 million download per month. In my opinion, the incumbent mobile operators must create and invest heavily on new product development research and development to keep on fulfilling user adoption and usage trend pattern quickly instead of relying on MVAS players’ product lines. The mobile operators can easily invest by reducing advertisement cost by 2% as mobile operators at an average invest 10% of their revenue on advertisement. The continuous investment on brand building by most of the mobile operators for the last 10 years created an environment where these brands are household name and thus now they can afford to reconsider their strategy on advertisement investment cut

The innovative services offering product lines to manage Consumer and Prosumer VAS across connected device environment would kick-start VAS revenue growth. The realignment of consolidated SDP into multiple virtual service delivery platforms is needed in order to cater voice, data and video centric VAS portfolio. It would enhance the QoS w.r.t service creation, execution, activation and provisioning. It would also offer granularity in B2B and B2C usage mirroring, higher renewals and increase user adoption.