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Home > Business > Special


Why it will be the year of the cellphone

Moinak Mitra, Outlook Money | January 10, 2007

If You've Got Mail in 1998, catch up with Friends in 2007. Through the year, telecom operators will be widening coverage, innovating with newer services and, post a series of Trai-als and errors (Trai is Telecom Regulatory Authority of India), may also provide for a creative interface between your mobile phone and the television, thanks to 3G (third generation) technology.

Both Trai and the operators have their reasons why 2007 will be the year of the cellphone in India. Outlook Money brings to you seven compelling reasons why you should stay on tap more often in the New Year.

Tariffs: Talktime charges in India are among the lowest in the world. As a result, operator margins are under pressure. But who cares? Thin margins may further slim down this year. Says Manoj Kohli, president, Bharti Airtel, "If the government brings down taxes, we will pass on the benefits to our consumers. This, in a regime which is already 20 per cent lower than China."

Bharti Airtel is investing $2 billion in 2006-07 to ensure the 'death of distance', which, hopefully, will further bring down call charges by 15-20 per cent. Moreover, with sharing of infrastructure among operators and the reduced burden of revenue sharing for universal access service licence (UASL), basic and cellular mobile service providers will lower operating costs and the benefits may again be passed on to the consumer.

Bottomline: If you pay Re 1 a minute for a local call today, you may have to pay 80 paise for the same tomorrow. Talk is cheap, tech is chief.

Enter 3G: So what is 3G? It's a collective name given to the next level of services that will be available on a mobile phone. The services will provide the ability to simultaneously transfer voice data (a telephone call) and non-voice data (such as downloading information, exchanging email, and instant messaging) with unparalleled sound quality. If you get that, you're one up on the current 2-2.5G services doing the rounds.

Ministry of Communications and Information Technology has embarked on an ambitious project to release spectrum from Ministry of Defence to augment 3G services. So far, 45 MHz of spectrum has been planned, of which only 25 MHz is allocated for 3G services in 2,100-MHz band. While there is talk of additional spectrum for 3G, expect only a marginal rollout mid-2007 because with this technology expensive 3G-enabled phones are needed. Remember, as a nation, we are still in the Nokia 1100 mode.

So, the telecom regulator will first see mass, and then determine class, however hard technology knocks at its doors.

Coverage & Availability: Operators are working actively with vendors to take coverage beyond the existing 5,161 urban Census towns. In effect, you will be seeing a lot more telecom towers as you drive along national and state highways, and may even catch a signal in the remotest suburb of say, Jhumrithalia. Bharti Airtel, Reliance, Hutch, Idea and other players are also aggressively wiring up basements and elevators of urban centres so that consumers can get uninterrupted coverage.

At the same time, operators are increasingly following a 'matchbox distribution strategy' to gain marketshare. That is, wherever matchboxes are sold, you will get recharge options. Telecom complements retail to spread its wings in 2007. You may consider Bharti Airtel's recent tie-up with Wal-Mart to be aimed essentially at strengthening this synergy. The moot point is that you can recharge your phone either online (sitting at home) or with minimal fuss at your neighbourhood store.


VOIP-out: While the government is planning to curb 'illegal' Internet telephony, its clampdown will affect services like Net2Phone, Vonage, Dialpad, Impetus, Novanet, Euros and Skype. Your Yahoo may be spared since it has got permission to set up a VOIP company in India.

According to government estimates, unauthorised providers account for about 30 million minutes of Internet telephony a month. This disturbs a level-playing field for bonafide licensees, while they also avoid the 12.24 per cent service tax and six per cent revenue share to the government.


Innovation: You will be seeing innovations becoming more generic and fresh initiatives being launched, both by mobile phone companies and telecom operators, to refuel content. Downloading the ringtone of your choice, for instance, may now be offered by a raft of players and there will be more music in regional languages to choose from.

The mobile industry, already faced with a steep decrease in voice ARPU (average revenue per user), is expanding its reach by offering voice services in rural areas and high-margin data services in urban areas to increase revenues. Mobile TV, IPTV (video on demand) and other broadband applications are already under trial at Reliance, Airtel and MTNL. They are all waiting with bated breath for the regulator's nod. Once that is granted, you can seriously watch Friends on your mobile.

Interactivity:  Year 2007 promises a higher level of interface between your cellphone and the television. Bharti Airtel already had a successful run with Indian Idol as Reliance did with Nach Baliye. Special mobile content packages will be available through SMS, voice and WAP platforms for the upcoming Kaun Banega Crorepati-III featuring Shahrukh Khan as anchor, and Nach Baliye-II.

Long-distance dash:  Other than local calls, you can look forward to further fall in national long distance (NLD) and international long distance (ILD) call charges. Says Mahesh Uppal, director of telecom consultancy firm ComFirst India, "I see NLD and ILD prices converging to local call rates by 2008." In an industry where technology is continually dictating the realignment of market forces, consider a further 40 per cent drop in long distance charges.

M-Commerce:  We have already got a feel of mobile commerce in a limited way with, say, the M-Commerce service launched by Airtel in conjunction with ICICI Bank, wherein you can buy a range of products and services off the phone.

"Airtel has tie-ups with 100 merchants for M-Commerce as of now and we are ramping up rapidly. In 2007, we want your phone to be both your debit and credit card," says Kohli. However, ComFirst's Uppal warns that while M-Commerce will go a long way in granting convenience, consumer protection is still a thorny issue in India.

"It's a mindset issue and people are still averse to giving out their credit card details over the phone. Security standards should be very high for M-Commerce to take off. Also, you should get exactly what you asked for over the phone," points out Uppal.

He elaborates that if you order a new refrigerator over the phone, and receive one that is different from what you had asked for, then "it shouldn't be imposed on you."

Anyhow, you will witness increased levels of M-Commerce activity, mainly via travel bookings, discount airfares, holiday packages, job hunting and matrimonial services -- all through 2007.

Remember to pfaff and use the fluff all year long. Music, movies, M-Commerce, TV shows, live cricket. . . your touchpad could well be the launchpad to tomorrow's world.


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