We spoke to Arvind Rao – Chairman, CEO and Co-founder, OnMobile about the on-going 3G saga, the post auction market scene, impact of MNP on VAS and more to get a gist of his views and opinions -
On 3G -
The biggest beneficiary of 3G will be mobile internet access.
- Operators in India are trying to load more calls per spectrum and hence spectrum is clogged
- First use of 3G will be for voice.
- Second use of 3G would be for data both for data cards or internet on mobile.
On post 3G auction -
- It will take 2-3 years for a full 3G rollout even after auction for large players and for last mile 3G connectivity in India.
- 3G handsets are expensive and hence adoption of 3G would be low
- Even if handsets have video calling facility it doesn’t work unless both the users have a video calling-enabled handsets. So for actual usage there is still a lot of time before 3G can make an impact.
- Hence, I don’t see substantial revenues through 3G materialize for 5 years substantial. Substantial means even 5-10% of total VAS revenues.
Mr. Rao described the 3G saga in minimum words – “Its all hyped!”. He also questioned the 3G hype by asking – “How many users would have 3G handsets? And how many people would actually use its features?”
On MNP (Mobile Number Portability) and its impact on VAS (Value Added Services) -
- Number of users does not affect OnMobile as we are across all operators
- For a smaller VAS company it may help
- MNP will make us lose profiling and we cant target users based on their consumption
- MNP may have a smaller effect rather than a major shift
- Exclusive / Viral Content will not drive operators to give higher share to content providers even after MNP is implemented. (This contradicts our take on how MNP will revolutionize Mobile VAS Space)
- Even MNP would not have a great impact on the revenue share.
On Revenue share -
I don’t see it changing at all. Operators spend a lot of money on infrastructure and promoting the music. All content VAS providers should learn to respect what operators are spending. We are ok with the way revenue share is structured currently.
(Please Note: Current revenue share is 80:20 in favor of the operators and Ajit Balakrishnan of Rediff had stated that this needs to change to 50:50 for growth of mobile content.)
On are operators doing enough to grow Mobile VAS?
The core reason why VAS is a 7,000 crore industry because the operators have whole heartedly supported it. So my answer is Yes operators are doing a great job.
On Middemen -
I think that there are too many middlemen in VAS for instance -
- Content
- Content aggregators
- Technology
- Distribution, etc etc
What this space requires is innovation and what you don’t need is too many people in the same space offering identical services thereby undercutting margins.
About OnMobile’s Strategy -
Continous innovation is what we are aiming for. We won’t be in areas like games and we will not make content, rather be the distributors of content. Our international targetted markets include Canada, North America, Europe, Africa while we are not targetting China.
