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Mobile Broadband is the next big thing as far as the Indian telecom sector is concerned, with data transfer emerging as the key growth driver for the industry. At an estimated annual growth rate of 50%, analysts feel that 90% of subscribers would be accessing the internet over the mobile phone. Now that’s a big opportunity for companies.
Having said that, there are challenges when it comes to quality, expansion in remote areas, low profit margins and a sustainable business model around the apps.
Idea Chief Marketing Officer Sashi Shankar tells us about this and much more in the first of our series of special interviews on mobile broadband:
The first quarter results for the current financial year were out and your company has shown a decent growth, in fact, a huge growth, in terms of data usage, almost a 90 per cent jump. So, any kind of special strategy or the consumers are using 2G and 3G?
We in Idea have been very closely focused in the adoption of data among our subscribers, both 2G and 3G. In fact, our subscriber base in data usage has actually gone up by almost 100 per cent. We had close to 13 million subscribers for data, during the course of the last year which, in fact, is probably the highest in the industry. And we are seeing a rapid adoption of 3G and 2G by subscribers, and we are fairly confident that the inflection point for data is close. Our intention and focus has always been to increase the number of subscribers who will be able to use data on our networks.
Most of the companies are aggressively selling their data packs through various innovative schemes, through different strategies and interesting plans. What is Idea’s promotion strategy in this area?
In terms of pricing in telecom, there is not much difference between operators. Having said that, in Idea we are very focused on initiating try-and-buy offers for our subscribers who have not experienced data, through various methods of giving him free data usage for a period, giving him a reasonably large amount of data for a pre-affordable rate of Rs. 25 and monitoring the way the person adopts data. What is the kind of data usage he is exhibiting? Is there video usage? How can we encourage him to use the internet for all kinds of purposes, whether it is for entertainment, for productivity or for keeping his calendar and his day-to-day activities in place? So, we are trying to promote the use of data through various ways and means, to make the consumer far more productive, as far as his life goes.
Even as we speak the big rage is mobile apps. Social and video apps are catching up, but utility apps are yet to catch up. Do you see yourself becoming a part of this value chain or will you continue to be a dumb pipe?
We will continue to partner with relevant providers and developers to be able to give far more meaning to the internet offering we are making for the consumer. How we are going to do it, what our level of interaction will be and which providers we will partner with, will soon be known. But we are very clear that we have full knowledge about the consumer, about the consumer’s behavior and our capability of billing the consumer. I’m sure that developers and providers will be more than willing to partner with us to give a meaningful offering for the internet and applications.
Convergence has been taking place to maximise the use of data by handset providers. My mobile phone can become a gaming tool or it can be an online trading platform. How do you see your company operating in this area?
We are very happy that handset companies and device manufacturers have enabled this on smart phones. Our objective is very clear. We will welcome anything that encourages an increase in the number of smart phone users, because that is step one to drive data adoption and usage. And for this, we ourselves have our own smart phones which we have been marketing for the last 12–18 months. We have been fairly successful in that and we are seeing a robust and significant usage growth among subscribers, who’ve been buying our smartphones.
About pricing, do you have any special strategy to push 3G usage in the country?
There is no special pricing strategy. Today, it is more important to educate and create awareness about the benefits of using the internet and using it on a mobile phone. While pricing needs to be at a level that consumers find reasonable, our focus is more on educating him about the importance of using the internet on his phone.
What kind of investments is your company looking at for upgradation and expansion of your 3G network?
We already have close to 20,000 cell sites across the country and our expansion plans are based on the kind of data adoption we see in the next 12 months. We have already earmarked the number of sites we would expect it to roll out in, in the next 12 months. Besides that we have already invested quite a bit of capital on acquiring spectrum and we will continue to invest in new towns and in strengthening our network in existing towns, so that we are able to provide a far better experience, in terms of network quality and speed.
We are looking at taking the network to smaller areas, to tier-3 and -4 towns. We feel that there is lot of pent up demand and there are a lot of people waiting to explore the advantages of the internet. Of course, the ecosystem needs to be put in place. In terms of handsets, it’s about making them more affordable. But we are more importantly looking at making people experience the internet for the first time on their mobile and making that experience a compelling and a delightful one.
What are some of the key challenges that the company and the sector are facing?
With regard to data, there are regulatory challenges with the spectrum. The government will come out with something on it in due course and once that is clarified we can look forward to a very strong growth as far as data usage and data users are concerned.
Besides the regulatory challenges, the other challenge is to make consumers feel that using the internet on a mobile phone is worthwhile. The other big challenge we are facing as an industry that is more and more devices need to come in the consumer’s hand and it needs to come at a price that is affordable enough for them to make the switch from the current feature phone they are using to a smart phone. So, as that picks up our data business will see a huge rise. Also, for consumers, the benefits of using data will see a new paradigm shift.
How do you plan to do that? How do you plan to reduce the cost of devices to provide low-cost technology to consumers?
If you look at the last 12–18 months, the reduction in prices of handsets has been significant. As the volume becomes bigger and bigger, I’m sure that device makers will look at providing much more affordable devices in the market. Our job is to ensure that we provide the relevant plans and price points, create awareness and promote the use of data. Social media is one of the biggest reasons for people to use the internet. Video is the next big thing which is expected to drive data traffic in the next three to five years. So, how do I make relevant offerings for my consumers on the video platform, how can I make him watch things that he currently watches on his desktop or television, on his mobile phone? These are some of the challenges we will address.
And what about utility apps, like mobile banking, online trading?
Definitely. The next big things include mobile banking and, in fact, e-commerce may probably move to m-commerce. There will be mobile banking, mobile commerce, mobile advertising. We all also looking at mobile education and health care. We will see how we can incorporate these areas and the unique benefits that it can provide, in our offering.
On the technology front, with an increase in data traffic most operators are looking at shifting some of the traffic to other locations and other time periods, in what is called integrated career grade Wi-Fi network. How do you see this trend evolving for Idea?
We already had a pilot study done for our Wi-Fi product in Cochin, Hyderabad and Pune and the results have been encouraging. We feel that Wi-Fi will be an integral part of our brand strategy and we are looking forward to understanding this market and the technology, so that we can offer a full-fledged broadband product. This will mean that we could look at Wi-Fi off-loading as part of our plan.
How soon can we expect this aspect to be incorporated in your offering?
I cannot tell you when it will be possible, because we have just started the pilot project and we are yet to understand the results.
Another issue that consumers face is the drop in calls because of connectivity problems, especially for consumers living in high-rise towers or in less-accessible areas. Technology companies are providing small-cell solutions. Do you see Idea adopting it?
As part of our network strategy, small cells solution is underway. We will introduce it when we feel it is relevant and required to give a superior customer experience. Currently we are in the process of expanding our 3G network and that itself is going to be pretty sufficient for the market, at this stage.
Will that also take time or…
That is an ongoing exercise. Network expansion goes on, on a daily basis.
With the increase in the device complexity and content being delivered directly over the Internet, called OTT or over-the-top traffic, customer satisfaction has become very important, because any problem could put off the customer. So, how is Idea taking advantage of this, to benefit customers and to retain loyalty?
We have integrated our CRM system with our billing system and with our call centres. So, if a consumer calls up, he is able to get a fairly good solution for his problem, because these have been integrated. We are also starting a customer experience management programme very soon. It will give us insights into where consumers have low power problems and will enable us to correct those situations quickly.
We are also planning to launch an on-device portal, which the consumer can download as an app on his mobile and use it for all his self-service needs. So whatever service he receives at a store, call centre or any other location, he can do the same on his phone.
These are three or four of our initiatives. We are aware that data consumer servicing is far more complex than voice consumer servicing, because of the variety of devices available in the market. They are all different in terms of their operating system, screen sizes and speed. So, serving the data consumer is far more complex.
We have come a long way in being able to serve our consumers better than we used to, but I think during the course of the next 6–12 months, we will be well-equipped to cater to the consumers.
You recently launched some mobile devices, and considering what you just said about customer satisfaction, are you planning to launch more low-cost devices or devices that can address these complexities in a better manner?
Devices has been part of our strategy from the last 18 months and we will continue to launch devices during the course of this year as well. We will be looking at various screen sizes, because this has become very important to the consumer, for the experience it provides. We are looking at the best products to launch in different screen sizes.
What has your research shown about consumers’ preference in handsets?
Unlike handsets for voice, it is not always the cheapest handset that works when it comes to data. The customer is now evaluating between price, screen size and speed. So they are making that choice. Currently, there are handsets available for Rs. 5,000 with screens of three to three and a half inches. There are new handsets being sold for Rs. 10,000, but their screen size is five inches. So, we are still waiting to see the response on what will be preferred. Obviously, the Rs. 10,000 phone will sell less in terms of volume, but the person buying it will consume far more data, simply because of the larger screen.
You are talking about increasing subscribers, so price of handsets and technology does play an important role?
Yes. I think that will happen as and when the consumer realises that the internet is an essential part of his life and he can’t do without it. And I am sure that that day will come.
Finally, what are some of the big trends the mobile broadband sector should be looking forward to?
I think we are looking to a huge growth in video usage, e-commerce, m-commerce and how I can make my understanding of consumers better, so that we can introduce new products like mobile health care, mobile advertising and location-based services. There is huge opportunity in many areas, as far as internet and broadband is concerned, and we are looking at each of these areas closely.
