Mobile data going the voice way

Rashmi pratap | Updated on September 12, 2014 Published on January 31, 2014

Operators find ways to make data profitable with low rates and killer apps

It is better late than never. After initial hiccups, mobile data services are beginning to take off in the Indian market, much to the relief of operators. The growth is following the lines of voice, which did not grow until 2000 due to high rates. And once call costs started to come down, the growth was exponential.

For data too, operators have realised that nothing except low rates work in the Indian market. From a high of 10paise per 10kb, data rates are now down to 2paise per 10kb and lower in some post paid monthly plans. As soon as operators began to cut data rates, usage began to grow. Data was about 3 per cent of operators’ revenues a year ago. But now, it is bringing in nearly 10 per cent of revenues of leading operators, and usage volumes are growing by over 100 per cent every quarter for Bharti Airtel, Idea Cellular and Vodafone India.

Sivarama Krishnan, executive director (Risk Advisory Services), PricewaterhouseCoopers, says, “Operators have realised that they can’t ask for a premium. If assets don’t sweat, the obsolescence can take away initial investments. Their margins will go up only when assets are used.” Operators also believe that reduced rates will drive usage and help them recover investments made so far. “The idea is to drive mobile internet and this move will facilitate faster adoption and better usage. We are working at different sets of users to facilitate greater amount of (data) consumption,” says Vivek Mathur, chief commercial officer at Vodafone India.

The results of this change in strategy, along with proliferation of low priced smartphones, are already showing. “Our focus on internet experience has resulted in increased data adoption. Data is now a huge source of revenue growth,” says Gopal Vittal, joint MD and CEO, India Operations, Bharti Airtel. Ditto for Idea Cellular (See table). While Vodafone reported a 77 per cent growth in browsing revenues in the September quarter, its detailed numbers are unavailable as the company is not listed in India. Analysts, however, believe that if data is to follow the success of voice story, operators need to create an ecosystem beyond rate cuts to spur usage. “Mobile carriers successfully leveraged the pent up demand for voice-based connectivity in the early years of this decade. However, data-based services are all about experience. And offering superior experience and monetising these services at a mass-market level will be a big challenge for the carriers,” says Jayanth Kolla, partner at tech consultancy Convergence Catalyst.

If operators don’t bring in killer applications for users, data growth may stagnate, says Krishnan. So while telecom companies have tasted initial success with data, they still have a long way to go to ensure that the party continues.

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Published on January 31, 2014
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