Bharti launches Venture fund of Rs 2 billiion($44 million)

Bharti Airtel Ltd has launched a venture fund on Thursday with an initial Rs2 billion ($44 million) to promote content and technology development.
India, with nearly 300 million mobile users, is the second largest wireless market in the world after China, and still has the potential for further huge growth as only just over a quarter of its billion-plus population use cellphones now.
Operators are signing up 8-9 million users every month, and consultancy Garter expects 737 million connections by 2012.
The growth potential has encouraged mobile operators to step up investment on technology and content as they look to tap underdeveloped rural areas.

3G, more than just a mobile phone

What are 3G phones?
Third generation mobile technology or 3G technology is one more stage in the transformation of the mobile phone from a simple communication device to a multi-function device. It was launched first in Japan in 2001. This technology which uses higher band width will enable users to send and receive data at speeds from 114 to 2000 kbps (or 2 Megabits per
second bps) depending on whether the user is stationary or in motion which is way over (6 to 35 times more) the speed offered by any landline modem. Hence a 3G system can be used as a modem for laptops to get access to the internet and it can take on the role of WAN (wide area network) or LAN (local area network). The goals of this new protocol are high quality multi-media and advanced global roaming (in-house, cellular, satellite, etc).
How different were the earlier generation phones?
The first generation phones introduced in the 1980s used analog radio technology. Japan launched the first commercial mobile phone system in 1979. By early 1990s, the second generation or 2G phones replaced the first generation. The main difference was that 2G phones were digital, which meant that the voice itself during a call is encoded to digital signals whereas in 1G it is only modulated to higher frequency, typically 150MHz and up. The other major advancement was that 2G phones allowed text messaging (SMS). 2G networks were built mainly for voice data and slow transmission.
But with rising user expectations the networks soon moved on to the 2.5G phones with general packet radio service (GPRS) that enables mobile phones to access certain websites. However GPRS can only go up to 144 bits per second compared to 3Gs 2 Megabits per second speed. Coloured screens with camera featured mobile phones, gaming and
MP3 music were also introduced at the 2.5G stage.
What are the new services that 3G promises?
Two main services are M commerce (mobile commerce) and global positioning. A 3G user can access, organise and carry out financial transactions, trade stocks, manage payments etc. Global positioning enables the user to know their current location, get information about traffic conditions and get directions to reach a certain place. Live streaming of radio and television to 3G handsets is seen as the future with some companies recently announcing these services.
What is the scenario for 3G phones in India?
The government came out with its 3G policy, including spectrum usage and spectrum pricing. Though Indian operators are yet to start 3G services, they seem ready to launch as soon as the government auction the spectrum which is likely to happen by end of year . A number of handset vendors have already introduced 3Gready phones in the country.BSNL and MTNL are planning to launch 3G by starting of year 2009 as they are sure about getting spectrum in their circles of operation.
How popular are 3G phones?
3G networks worldwide had 295 million subscribers by the end of 2007, which is about 9% of the worldwide subscriber base. The 3G telecom services generated over $120 billion dollars in revenues during 2007. In many markets, the majority of new phones activated were 3G phones. Second generation phones have been almost completely phased out in Japan and South Korea. Many mobile phone users are switching to 3G phones saying it is no
more just a phone or an advanced communication system but like a mobile personal computer.
What is the next anticipated development of mobile phones?
Work has already started on the next generation 4G phones, which it is claimed will be 50 times faster than 3G phones and this enhanced capacity is expected to enable three dimensional renderings and other virtual experiences. This phone, which is expected to be out by 2010, is expected to be able to receive data at 100 Mb per second on the move
and up to 1 GB per second while static. An entire DVD could be downloaded within a minute! The technology being worked on is supposed to increase download speeds by using multiple radio frequencies to the send the same data stream.

What is WiMAX?

WiMAX is a wireless digital communications system, also known as IEEE 802.16, that is intended for wireless "metropolitan area networks". WiMAX can provide broadband wireless access (BWA) up to 30 miles (50 km) for fixed stations, and 3 - 10 miles (5 - 15 km) for mobile stations. In contrast, the WiFi/802.11 wireless local area network standard is limited in most cases to only 100 - 300 feet (30 - 100m).

With WiMAX, WiFi-like data rates are easily supported, but the issue of interference is lessened. WiMAX operates on both licensed and non-licensed frequencies, providing a regulated environment and viable economic model for wireless carriers.

WiMAX can be used for wireless networking in much the same way as the more common WiFi protocol. WiMAX is a second-generation protocol that allows for more efficient bandwidth use, interference avoidance, and is intended to allow higher data rates over longer distances.

The IEEE 802.16 standard defines the technical features of the communications protocol. The WiMAX Forum offers a means of testing manufacturer's equipment for compatibility, as well as an industry group dedicated to fostering the development and commercialization of the technology.

Soon, WiMAX will be a very well recognized term to describe wireless Internet access throughout the world.

India-Huge market for Mobile VAS

Stanford University and BDA, through a combination of interviews of executives in leading VAS firms, secondary research and analysis of prevailing trends has released it’s research report on “Future of Mobile VAS in India“.
Here are key excerpts:

Subscriber base:

• Population: 1.112 billion
• Fixed Subs : 39.41 million (Oct 2007)
• Mobile Subs : 217.14 million (Oct 2007)
• Internet Subs : 9.22 million (Jun 2007)
• Broadband Subs :2.67 million (Sept 2007)

Of the mobile subscribers:

• Prepaid connection comprise 85% of total subscriber base (expected to increase to 90%); and over 95% of new additions.
• By the end of 2010, the mobile teledensity will be almost 44% with 497 mn subscribers (driven by semi-urban and rural areas)

VAS in India:Past, Present and Future

• VAS constitutes 7% of of total telecom revenue for Indian operators.
• SMS consituted 55% of VAS revenue in 2006 [P2P/A2P/P2A, A = Application, P=Person), the growth was majorly driven by reality shows like Indian Idol/Kelloggs/KBC etc.
• Digital music (including CRBT and ringtones) constitutes 35% of VAS revenue.
• CAGR of 44% (2007 – 2010), VAS revenues will reach USD 2,744 mn (926mn $ by 2007): This is dependent on several factors like regulatory (e.g. number portability) and non-regulatory factors.
  • Growth acceleration will begin in 2009, as various challenges are overcome, size of mature user base increases, and telco focus on high end user VAS heightens
• Bollywood and Cricket is the killer content - though no significant investment has gone beyond developing local apps or even content/services.
• Revenue share between telcos & content providers / aggregators is 70:30, substantially more skewed in favor of telco than in other countries - further aggravated by lack of payment mechanisms.
• SMS/IVR/Music downloads/Internet Apps/Search will see an upsurge; limited growth of UGC and mCommerce
• Almost half of Indians use ULCH (Ultra Low Cost Handsets)

Entities in VAS Value chain

• Content/Application Owner - cos. like saregama/mauj/Rajshri who develop coyrighted content
• Aggregator - aggregates content like games/wallpapers/ringtones and distributes it to suit customer needs [players : mauj, hungama mobile, indiatimes mobile etc]
• software developer - develops applications (like payment/games/middleware etc.) for mobile VAS [players - mchek/July systems/webaroo/affle etc]
• Technology Enabler - provides the platform that plugs into telco networks and acts like a bridge between aggregator and telcos [players include OnMobile, cellnext. mauj etc]

Operators still dominate the revenue sharing arrangement in VAS [Of the amount paid by end users, 60-70% is kept by operator, aggregator gets 20-25% and content app/owner gets 10-15% of the revenue]

Challenges:

• Lack of content localization
• Shortage of spectrum
• Slow adoption of GPRS mobiles (only 6.1 mn GPRS users compared to 200 mn overall subs)

Future VAS trends:

• Location Based Services
  
• Mobile Music update will increase with better bandwidth
• Migration to 3G will result in increased ARPU
• Local content is on the rise - regional/rural IVR seen as a major opportunity
  
• Mobile commerce doesn not look too promising (India is still a cash and cheque country)
• IVR will see large scale adoption, especially in rural areas.
• Mobile E-Mail will primarily be driven by enterprises
• Stocks on mobile will see an uptake

The current state of VAS can be candidly summed in one sentence “Novelty of VAS on mobile is short-lived and innovation is the key to success which means technology companies like will have to increase their investments into R&D”