India MVNO Initiative - Device Players Going to Rock

As per the report published in new paper today, government received 80 request to get the license.
Under MVNO license one can buy the minutes and data from mobile service providers and resell it to end consumer under their brand name. 

Few years back Virgin Mobile attempted the same but failed miserably. 

In a current scenario, when wireless subscribers touched around billion and major chunk of users are still using feature phone will help potential MVNO players in big way.

Currently Device manufacturer are the center of attraction and offer bundled data to their buyer as value add. In that process mobile service provider acquire data user at much lower cost.

Entry of MVNO will help volume device manufacturer present both in feature phone and Smartphone to dominate the market.

The brands like Micromax, intex, lava, karbonn, Spice,  celkon will be the biggest gainer as they are very strong in  feature phone segment whereas some of the mentioned brands are also strong in Smartphone segment. 
The positioning of these brands will attract MVNO towards them for new user acquisition. 

The above brand may choose to ask for user acquisition cost which may run in $1 to $2 of additional revenue per user.This will be on top of their ongoing VAS revenue of around $1 to $5 depending upon the brand market share and reach ability.

These brands are very strong in rural sector when it comes to feature phone and now posses the potential of increasing their margin if all goes right with MVNO license allocation. The move is very good to get more penetration and help those to have mobility who is still deprived of that.

India 4G User Acquisition & Retention - Who is Suffering at the End

Reliance Jio entry into Indian Telecom sector started creating scenario wherein incumbent operators are at the spot.

Latest in the saga, Reliance Jio again approached TRAI and accused Airtel,Vodafone and Idea for blocking users who wants to port out of their existing service providers to Reliance Jio network.  The number involved in total is less than 200 and that shows Reliance Jio commitment towards their potential user.

At the same time, incumbent cannot let the user port out of the network till the guideline of the Mobile Number Portability set by TRAI.

Indian incumbent operators faced the music of MNP and how end user exploited it in 2012 to 2014 era  wherein user took the service of one operator with goodies and then ported out to another one post exhausting the goodies.

In 2012 to 2014 era challengers like Telenor  and others used MNP in their favor and acquire millions of user but unfortunately most of the user were low ARPU user.

It is surprising that based on the reports published in leading new paper not mentioned  Aircel, Reliance Communication and other which in my point bring me to a conclusion that Reliance Jio is only facing problems with three leading incumbent operator. It would be great to know about BSNL user requesting for porting out and it's status.

The real test of porting in and out using MNP will show its class post Reliance Jio start commercial service. Till Dec 31 st 2016 most of the Indian mobile users will try to misuse Reliance Jio service as it is free. I am also delighted that this time around Reliance Jio is so focused about consumer but at the end consumers are suffering. If any legitimate user trying to port out then they should not be used as dice to play competitive strategy. It's a common practice by operator to put across many clause as some of the end user through their past act forced incumbent operators to put across multiple clause related to exit.

For few, mass is suffering and both incumbent and Reliance Jio should solve it the way they did it with PoI

4G Era VAS Growth Potential in India - Mobile Service Provider's Vs. Smartphone Player's

The Indian VAS ecosystem witnessed turbulent time for the last 5 years post MVAS regulations. Indian regulatory body came out with MVAS regulation to protect Indian mobility user and imposed number of authentication and authorization process in order to kill unwarranted billing to end consumer.

The double consent mechanism implementation knocked down Mobile Operator VAS business and Mobile Operator witnessed de-growth in the segment. The entry of OTT players especially the messaging players killed flourishing SMS business which include P2P, A2P and P2A. The sudden move by regulatory body knocked out many VAS players from the market whereas some other segment like Music, gaming etc witnessed tough time retaining the consumer and generating revenue out of them. The revenue share model between Mobile Service Provider's and Content Provider's also made the business sustainability more difficult.

While the transition was happening during MVAS regulation implementation; India started witnessing adoption of Smartphone in Early 2012. It offered huge window of opportunity for the VAS player to acquire user through indirect channel. Many companies from content, music, gaming turned towards Smartphone players to acquire new user. Smartphone player's captured the opportunities with both hands and started selling their inventories in return of space asked by the VAS providers. Some of the Smartphone players even integrated FOTA solution from leading FOTA service providers in order to ensure that they can mint money through existing consumer base. The unprecedented growth in the startup segment in early 2013 made Smartphone player the darling of all.

The limited space in the device and limited leading Smartphone players made the situation worse when Smartphone player started asking for hefty price point to integrate any VAS services or applications without any commitment of user adoption, retention, usages etc.

Many startup companies poured in many million $ in order to get the userbase without any solid business case to retrieve the invested money and disappeared after some time.

In 4G era VAS it will be very interesting to see how the VAS ecosystem pans out between Mobile Service Providers and Smartphone Players. Smartphone players are coming out with higher RAM and ROM which can sustain heavy load and may offer good consumer experience provided consumer gets better network coverage.

At the same time, Many Mobile service provider started developing their own VAS ecosystem and went to market to acquire users like the other applications. The only differentiation what Mobile Service Provider implemented is the monetization part. Mobile Service provider now acts as VAS aggregators which can be delivered through the applications to consumer based on the consumer wish coupled with monetization mechanism. In my point of view, it will help Mobile Service Providers to offer both value add to end consumer as they can offer multiple option compared to Smartphone players.

The Mobile Service Providers are struggling with high cost of service and it is expected that they will be offering virtualized VAS ecosystem to end consumer and Reliance Jio and Bharti Airtel successfully demonstrated that through their number of applications which they can sell while selling the SIM to end consumer.

On a contrary, Smartphone players also started focusing on developing their own VAS ecosystem instead of relying on others for small amount. Smartphone players also trying to develop recurring revenue model based VAS platform and some of the are even successful doing so.

Unfortunately, the low DAU, MAU, Revenue per user are pushing Applications providers to take another route of user acquisition model as Smartphone players dont know who will be buying the product, what are their liking and in that scenario, selling a device the preloaded applications will definitely yield bad result.

I think that Mobile Service Provider's will again take the centre stage and am confident that they will witness the revival of their VAS business in coming Quarters

Upcoming 4G Era of India -Low End Smartphone with 1GB RAM will dominate Indian Smartphone in Coming Future

Indian Smartphone segment is changing very dynamically both on the specifications and price point side. One Smartphone player is trying to throw the another. All developed  a perception that Indian Smartphone segment will witness double digit growth and that prompted many new player including Chinese as well as heavy weight Reliance Industry LYF device.

In the past two quarter, there is constant change in market share and example of the same is "LYF" Smartphone. Post the launch of Reliance Jio service, LYF brand launched 1GB RAM device as well as 512 MB RAM devices carrying a maximum price tag of around $55 to $65. It created a buzz in the market and most of the new 4G user registering with Reliance Jio buying low end user as the USP set by Reliance Jio attracting low earning group.

In order to match the set threshold, Zen Mobile Launched 512MB RAM device in just over INR 3000 whereas Karbonn Mobile is known for entry level Smartphone. At the same time, Intex is one of the popular brand in$80 to $100 range.

Given the trend, its my prediction that Indian Smartphone market will be dominated by 1GB RAM device which will not be sufficient to give good 4G user experience given multiple tradeoff.

Ultimately, it will also impact the adoption of VAS services and associated revenue around it. In 2014 - 2015, Smartphone player earning at an average of $2 per device from VAS which will not be the game given the quality of video and HD quality as it will consume higher processing power.

Vodafone India Embarked $3 Bn - Bad News for Reliance Jio

Vodafone India was on the verge of filing for IPO to recover its investment as well as to reduce mounting debt. Reliance Jio service launched shattered their plan as Vodafone clearly understand the impact of Jio tariff plan on their potential IPO offer price. There are lots of apprehension in the market place about incumbent like Airtel,Vodafone or Ideacellular to ward off Reliance Jio competition.

Recently Airtel announced that they will invest around $9Bn to upgrade their network and Idea Cellular will definitely get the support from the promoters in the form of equity infusion or loan to go full fledged against Reliance Jio with aggressive price point.

As per the news reports Reliance Jio initiated call drops are on the rise as incumbent has to provide more PoI and that will take few weeks to be in place. Its universal truth that Reliance group of companies most of the time use their petro finance to suppress competitor and sometime throw them out of the market.

In case of Indian Telecom market place, Reliance Jio is going to face stiff competition from incumbent operator the way new entrant faced in 2012-2013 time frame. By embarking $3Bn fund Vodafone sent out clear signal to industry player that they will be very aggressive in acquiring required spectrum to cover all 4G circle. We should not forget that Vodafone Plc the parent of Vodafone India is pioneer in 4G network know how and time to time support Indian operation.

It is also expected that once the concurrent userbase increases on Reliance Jio network then their partner from ccc will face music to cater the traffic and there might be problem in scenario 1 when the content hosted at partners end. On the other side, if content is hosted at Reliance Jio data center then it will be incremental streaming cost for Reliance Jio

The intention of Vodafone India is very straight and clear that Reliance Jio should struggle with one or another problem till the time Reliance Jio launches their service commercially. All are expecting that post commercial launch Churn rate at Reliance Jio will be maximum given their past experience.

At one end Reliance Jio is also raising 15K  Crore whereas the competitors like Airtel and Vodafone is also showing their financial muscle and it will be interesting game moving forward but will dent Reliance Jio more than anyone else.