Vodafone India, like most of the telecom operators, is focusing on the data segment to increase its presence in the Indian market. The company has 35 million internet users and plans to change the revenue-share percentage between developers and telcos to ensure development of India-specific applications.
Light Reading India spoke to Jonathan Bill, Head of Business Development and Innovation at Vodafone India to find out more about the company's strategy to increase its data uptake in the country.
Light Reading India: There has been a growing concern that the 3G uptake has failed to meet the expectations. What is your take on it?
Jonathan Bill: We believe that the 3G uptake in India is consistent with the roll out of 3G services in every other market. The volume of the customers that we are seeing, the increase in uptakeit is what we would expect at this stage. In every other market where it has been launched, there is a lag period of nine months or a year before the services actually pick up. We are in a pretty good shape actually.
The challenge is that the true HSPA devices are still relatively small in number. We expect that to increase significantly this year because the cost of Android devices is coming down.
However, if we look at the internet usage and data on our network in the last 12 months, we have seen a dramatic increase. Although not all of it is on 3G, it is the halo effect of launching 3G that has led to a material change in our business.
Light Reading India: How many internet users do you have on your network?
Jonathan Bill: We had around 35 million internet users on our network last month, and before we launched 3G we were closer to half of that number. So we have doubled the number of internet users since the time we launched 3G. This is because launching 3G does two things to your business. One is that it requires the roll out of new technology but secondly, it requires us to give a lot more attention to the experience of using data. The second point benefits 2G customers as well. The other factor in India is that we have a pretty solid EDGE experience. In India, EDGE experience is a pretty compelling experience versus in the UK where there is a marked difference between 2G and 3G.
We have 35 million internet users on our network and let's say, we are 20-25 percent of the total market, then we already have around 140 million mobile internet users in India, which means we are bigger than fixed connectivity which is what we all have been assuming is the case. This also makes us the third-largest internet population in the world right now, and that we added 5 million subscribers last month points out that we dont have any problem on the demand side.
Light Reading India: What are the challenges faced in increasing the data uptake in India?
Jonathan Bill: The issues related to the deeper penetration of internet in India are more to do with what services are relevant to the consumer. Right now we are at 10 percent penetration and we have to go beyond the consumers who want services in English.
Demand for internet is high. Services like social networking and entertainment are driving it but what is urgently needed is development of more locally relevant services, [whether it is content in local languages] particularly of services that are designed for mobile-first consumption rather than the fixed internet. We are doing a couple of things to support that. The reason it [unavailability of locally relevant content] is an issue is that there is no business model for people wanting to develop local services in the country.
Light Reading India: What is Vodafone's strategy to increase the data uptake in India?
Jonathan Bill: Vodafone is changing the revenue-share model for developers who want to use our billing infrastructure to charge for content and services. Right now the prevalent model is that the operators keep the majority of the revenue, which means that there is a limited amount of revenue left for development and marketing of the direct consumers. In the UK or other countries, the market is now dominated by application stores as point of distribution. In this model, about 70 percent of the revenue is kept by the developer and 30 percent by the application store, some of which is shared by the operator to do the billing. In India this does not exist.
We are doing two things. The first is improved revenue share for third parties which is much more aligned to the European share [this is going to be a material change]. Secondly, we have developed an application store which is specifically designed for feature phones. We believe India is one of the largest markets for a feature-phone application store. We would be shortly announcing the revenue share model.
The developer community in India is enormous but nearly all of it builds services for export elsewhere. What we are hoping to achieve is that they will build services for consumption in India as well. If we are 100-million-plus internet users in India and if we hope to grow to 200 million or 300 million, then it presents us with a significant business opportunity.
Light Reading India: What kind of services are likely to drive mobile broadband in India? Will it be utility services?
Jonathan Bill: Drivers of internet adoption in Europe or America are the services which benefited the consumer economically. It might be ecommerce, it might be that I can save money by not having to physically go to do things online. I think we will see a move away from fairly traditional services like entertainment to more utility-based services. It will be a move from being a fun thing to do to am-I-economically-advantaged-by-my-access to the internet. As India comes online, one of the drivers will be utility services.
Light Reading India: Will Vodafone drop prices to increase the data consumption?
Jonathan Bill: We are absolutely committed to providing competitive services. I don't think pricing is the sole issue. If you look at the proportion of people accessing internet on our network versus the proportion of people who can, we are pretty close to the European penetration standard. We would obviously strive to drive the pricing. One of the challenges is that it is an extremely competitive market so the cost of providing data is relatively significant to us as operators, so the pricing prevalent in the market is already pretty competitive. That said, for true mobile internet users, we will introduce innovative tariffs and services that will enable them to use it more frequently at a friendlier price.
Gagandeep Kaur, Editor, Light Reading India
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