So, What is the Question?

In 2002, when I was working with VOICE&DATA, Dataquests sister magazine, we
had organized a series of discussions on industry issues that were top-of-mind
at that time. One of them was titled Mobile Data: Charting An Indian Success
Story. The discussion, which was the first formal platform on the topic, saw
bitter debate among the operators and application vendors on the revenue share,
with the latter identifying the huge revenue that NTT DoCoMo in Japan shared
with its content and application providers as the reason for its success. The
operators stuck to the argument that the ground realities were very different in
both markets. Both had their logic.

About seven months back, I had the opportunity to be present in such a
discussion. I must confess, in between, I had not really kept up with the
developments. But to my surprise, I found that the debate was still the same,
though arguments had changed a bit. Sure, it was less bitter. This was because
of two reasons. Well, the revenue share for the application/content vendors had
gone up marginally. Secondly, these players had realized that there was no point
fighting with the operators so bitterly, that too in a public platform.

But that is very little change in six years, the same six years that saw
Indias mobile subscriber base increasing manifold, and mobile being effectively
used by banks and insurance companies, among others, to build better customer
value.

In this context, we must ask the questions again: are operators the most
important players in this value chain? If yes, why? If no, why? In fact, is
there such a thing called a mobile data/application value chain?

Well, the story does not provide clear answers to these questions, simply
because there arent any. But what it does try to do is to ask some of those
questions, which we should have asked a little earlier. We must begin by asking
the right questions.

Editors Take Shyamanuja Das shymanujad@cybermedia.co.in

For that, let me take the readers into the era when the same questions were
being asked about the Internet. In the beginning, it is access providers who
were central to the Internet, because they claimed they owned the customers,
something which today mobile operators do. So, what does that owning the
customer mean? They bill the customer, collect the payments and have an idea who
those customers are. Right?

And to a vast majority of tiny application/content makers, that is a huge
value add. And they have to buy that argument. But what if the application or
content owner is State Bank of India or ICICI Bank? Or for that matter Life
Insurance Corporation of India? They know a lot more about their customerswhat
they spend on, how much are they worth. And lest you forget, they also know the
mobile number. And that is all that they need when it comes to using mobile as a
medium.

Are they part of the mobile value chain? We do not know and they do not care.

And that is where this hypothesis of centrality of operators gets a huge
jolt. And that is because there is nothing likeand it will be common sense,
though it may sound radical todaythe mobile applications value chain. It is the
financial services value chain; the media value chain; the enterprise IT value
chain; the retail value chain and so on, with mobile emerging as a very
important component of that value chain. The moment we realize this, we will
understand the triviality of the question of who controls the mobility value
chain. A small qualification: like online, there will be a small segment of
professional and other services players in this area, but that is too small in
relation to what mobility addresses as an opportunity.

Again, it may sound a little radical, but I have no hesitation in saying that
with the penetration of GPRS and 3G, the operators role would be same as that of
Internet access providers. They will control the pipe. Some of them will also
control part of the content delivered to the consumer. But that will be a very
small part of the entire business that happens through mobile. And it is not
exactly bad news for them. They will earn much more.

It is in this context that I must point to an initiative that Airtel has
taken. It is selling the concept of m-governance to the state governments.
Airtel will of course provide all the connections but it is going to the
governments with solutions that comprise of citizen services applications, built
by an ecosystem of independent application developers. If it succeeds, Airtel
can well hope to influence a large part of that, which will be a true ecosystem
with Airtel at the center. But yes, the word is influence, not control. And it
will be because it has led the initiative, not because it is just encashing its
position as an operator. Anyone could have done that. It is vision, it is not
the fact that it is an operator.