The Indian telecommunications industry is an excellent example of how end users usually benefit from increased competition among service providers. If anything, the intensifying competition among the mobile phone services providers in India has left the consumers happy and always wanting more. If fact, they want the world from their service providers.

The penetration of mobile connections in India has skyrocketed in the last couple of years. According to the Telecom Regulatory Authority of India (TRAI), India added more than 18 million subscribers in August alone this year, taking the total number of mobile users in the country to 670.6 million, which translates to close to 3 percent growth month on month, further consolidating India's position as the largest wireless market in the world after China.

Mobile services revenue in India will grow close to 20 percent this year to $19.8 billion, according to Gartner Inc. The Indian wireless industry is expected to score a double-digit growth rate till the end of 2012 and the penetration of mobile connections is projected to reach 72.5 percent by 2012 and 82 percent by 2014.

Tech all the way
But what do these figures mean for the CIOs of Bharti Airtel Ltd., Vodafone Essar Ltd., Reliance Communications Ltd., and other leading wireless services providers in the country. They are on their feet at all time. IT has to meet both customers' needs and expectations, be innovative, and churn out new services and products in the shortest possible time as conventional revenue sources slowly give way to new services and applications. Declining Average Revenue per User (ARPU) is also a major concern for them.

“In such a scenario, understanding customer profiles and their needs is important,” says Amrita Gangotra, Director-Information Technology (India and South Asia), Bharti Airtel. “We are looking at how IT can help increase revenue as voice ARPUs decrease and we need to offer other services that will compensate them.”

For example, Airtel was able to resolve customer queries and complaints via selfservice interactive voice response systems (IVRs) routed through a Customer Interaction Management (CIM) platform, which is linked to Airtel’s Oracle customer relationship management (CRM) solution. The caller’s account information is then sent along with the call to an agent’s desktop, where it appears in a pop-up window. The solution helped the company segment calls based on various factors such as product or service, preferred language, and the caller’s overall value (for instance, a Platinum customer) and route the call to an appropriately skilled agent. This helped increase the first-time resolution (FTR) rate substantially. With millions of customer calls, it translates into significant savings in time and money.

That these incremental innovations are happening all the time establishes only one thing: CIOs in these companies must shoulder the added responsibilities of cutting cost of IT services and keeping their IT strategies in sync with business goals and all the while keeping customers happy. They all agree that innovation will play a vital role in helping their companies stand out for all the right reasons, in the eyes of the customer.

New Paths
At Vodafone Essar Ltd., India's second largest GSM mobile service provider, director of IT Navin Chadha saw that he could integrate the intelligence the company gleaned via its social media efforts and provided feeds into his back-end systems. By doing this, Chadha's team aided other business functions as well as catered to Vodafone's customers and enhanced their experience. The effort paid off in helping Vodafone discover complaints that were going unnoticed and resolve them to the customers' delight.

Vodafone's IT engineers are also working to capture the required data to build a knowledge-driven 'chat-bot' that will simulate human conversation.

“Innovation is the key to survival and a healthy business,” Chadha says. “We continuously strive to find innovative solutions to business problems and stay ahead of the curve.”

The operators are also intensifying their focus on finding innovative and cost effective solutions to reduce call volumes at call centres, optimise network costs and offer better services to their end customers.

Reliance Communications Ltd., India's largest CDMA mobile services provider,is carrying out an 'Architectural Restructuring for Customer Experience Transformation' to improve the Quality of Service (QoS) for its customers and assuring positive experience,so the provider can retain good, paying customers. It has lined up strategic initiatives across all customer touch points starting from acquisition, service fulfillments, customer support and assurance, and billing.

Apart from falling ARPUs, other key threats faced by these companies include regulatory challenges, customer churn, and saturation in metro and urban markets. Customers are demanding, and looking beyond connectivity from these players. In addition, the competition is no longer limited to within the telecom sector. Device manufacturers and Internet companies are targeting and capturing the same consumer base of these telecom companies for mobile applications.

“Apple and Google have already used innovation successfully to get a strong foothold in the services market,” says Alpna Doshi, CIO of Reliance Communications. “Competing with such players for service revenue and innovation is the game changer here.”

The Apps Boom
Mobile application services are widely classified under the Value Added Services (VAS) family. In India, until recent times, VAS was dominated by handset manufacturers with very little competition from network operators. But that is  about to change with major service providers launching online mobile application stores.

A cost-conscious customer, then, is no longer denied access to applications that would hitherto have been available only on high-end handsets. She can simply download the app of her choice from say Airtel's online store or from her respective operator's online store. Such innovations have therefore made VAS one of the most important differentiating factors as users will soon be spoilt for choice.

Mobile phones may well become the predominant mode of access to the Internet for many users and even small businesses in the emerging markets including Indian and China, according to the definitive Mobile Internet Report that Morgan Stanley released in December last year. Low penetration of fixed-line telephones and an already vibrant mobile VAS services space are important reasons for this, according to the report.

The report also looks at why operators are starting application stores. Using the UK as an example, it argues that users empowered by the mobile Internet change their surfing habits. A majority of mobile Internet users stay with the operator's Internet portals (such as Airtel Live and Vodafone Live) because while public Internet usage is ridiculously expensive, these portals are free.

Airtel’s app store that went live in February, with over 1,200 applications, got a million download requests within 20 days of the launch. Airtel was the first Indian operator to attempt replicating the highly successful business model of Apple, the pioneer in this space. The company launched its mobile applications store — Airtel App Central through which customers can access applications for business, games, books, and of course social networking, with some apps costing as little as 5 rupees. The cost is added to the customer’s mobile bill or deducted from available talk-time in the case of a prepaid connection.

For Airtel, VAS accounted for 11.8 percent of its total revenues as on March 31, 2010. SMS revenues had risen from 4.1 percent in the previous fiscal to six percent. Non-voice revenues, which are considered to be the core mobile VAS category, had increased from 9.5 percent to 11.8 percent.

Airtel's not alone either. Reliance Communications, Vodafone and Aircel all have their own versions of the app store. Reliance Communications and GetJar, the world’s second largest app store, formed a strategic alliance in April. GetJar will offer Reliance Communications its extensive catalog of over 65,000 free mobile applications. Reliance Communication’s over 100 million subscribers will gain immediate access to GetJar’s massive library of applications via a GetJar apps store through Reliance's VAS platform R-World.

GetJar will also enable RCOM to offer its Apps Store on a large array of mobile handsets across multiple brands and not remain restricted to a few high-end smartphones. Reliance Communications will offer the GetJar Apps Store across GSM and CDMA networks.

This year alone, mobile users across the globe will pay more than $6.2 billion to buy apps, including games, social networking tools, productivity and entertainment-based mini programmes for mobile phones, says Gartner. Worldwide downloads in mobile application stores will number as many as 21.6 billion by 2013, the research firm forecasts. Free downloads will account for 82 percent of all downloads in 2010, and will account for 87 percent of downloads in 2013, according to Gartner.

“Telcos may become mere pipes providing bandwidth if they fail to innovate,” says Chadha. “Now is the time to innovate, and leverage the relationship with the customer.”

Finding Intelligence
One way that operators are increasingly exploiting that relationship is to analyze all that they know about their customers. With data analytics most of these companies have a major thrust on how they can segment their customers and carry out campaigns for service and product offerings. Analytics will provide them with intelligence to improve conversion rates.

Vodafone revamped its Business Intelligence (BI) architecture to meet the business growth the provider was seeing. The company decided to implement BI tools to support analytics and Customer Value Management (CVM) for executing marketing campaigns. Data-mining tools and analytics would be used in identifying potential segmentation, priorities and retention efforts while CVM tools would lead to increase in conversions at lower cost of communication, says  Vodafone’s Chadha. The new tools deployed increased the conversion rate, which in turn led to increase in base management revenue due to better segmentation and use of modelling inputs.

Chadha adds that using the BI tool, the churn percentage on postpaid business has reduced by 0.5 percent in a year, translating into substantial revenue saving and generation due to ongoing relationship with churn subscribers.

“Differentiating yourself from the competition is a crucial factor,” says Reliance's Doshi. “We want to think through the way we use various functionalities of each of the systems that we have. We want to derive intelligence out of them and analytics is certainly a huge part of our differentiating game.”

Analytics will help the telecom operators not only earn revenues but also act as enablers in the value chain, while customers get personalised services. With Mobile Number Portability (MNP) and 3G on the horizon, operators have the onus of creating services to increase customer stickiness and offer more for less.

Emergence of MNP and 3G
After innumerable delays, MNP  wherein a subscriber can retain his number while changing his operator is set to be launched. It will be first tried in Haryana, from November 25 this year, and across India in a few months.

“The industry is expecting a huge churn” says Kamlesh Bhatia, Principal Analyst, Gartner, as subscribers move from weak operators to major operators who offer better services. “There is an opportunity for the new operators who are looking  to grab the high-end subscribers from the established operators. This move is bound to be beneficial to the operators who offer congestion-free network and excellent customer service.”

As the ARPU from voice based service goes down, mobile service providers are tapping many other opportunities to increase their revenue. The 3G roll-out has also opened new vistas of business. Data is expected to contribute 29 percent to 3G ARPU from handset users, according to a study by the The Federation of Indian Chambers of Commerce and Industry (FICCI) and consulting firm BDA.

With 3G services, carriers’ margins are expected to improve as data services offer higher margins than voice services. MTNL witnessed a rise of 15 to 20 percent in its ARPU after 3G services were launched in select cities in the country.

“We have invested money to upgrade our network infrastructure and make it 3G ready. We see a big opportunity to leverage 3G infrastructure and combination of cloud services with mobile devices,” says Chadha.

All this points to a shift in the point of focus for the CIOs – from hardware to software. It will also soon be a shift in the way CIOs themselves see their roles in their organizations. The convenience of the mobile device – note that we say device and not phone – to deliver applications and services to customers, be it for business or pleasure, makes it the new battleground for wireless market share. The mobile platform's relevance to people's lives today is such that CIOs will find that they will be asked to contribute big time with not just the technologies, but the technology-led business strategies that might make or break tomorrow's wireless leaders.

By Ashwani Mishra