http://www.theglobeandmail.com/servlet/story/RTGAM.20060504.gtindiamay4/BNStory/Technology/?cid=al_gam_nletter_dtechal

India a wireless hotspot
APARITA BHANDARI

Special to Globe and Mail Update

New Delhi, India — The sight of a wiry rickshaw-wallah whipping out a tiny cellphone as he manoeuvres his pedal-powered rig through the maze of cars, scooters and pedestrians in the congested streets of Chandani Chowk doesn't warrant even an amused smile from passers-by any more.

With the world's lowest call-rates — below 2.5 U.S. cents per minute — the 75.92 million cellphone users in India now outnumber the 48.93 million landline subscribers. The country added 4.97 million users in January alone, and it's estimated that the number of cellphone subscribers will almost double by the end of the year.

"Today with a prepaid phone running on even a Rs. 10 recharge, which is about 20 U.S. cents, anybody and everybody can afford it," says T.V. Ramachandran, director general of the Cellphone Operators Association of India. "It's now become a mass market product."

That commoditization of cellphones and airtime have meant slimming profit margins and diminishing ARPU (average revenue per user), sparking a surge in value-added services (VAS), says Mr. Ramachandran. North America lags far behind the Asia-Pacific region on the wireless services front, and the accelerated trends in the Indian market are an indicator of what may happen in the Canadian market as cellphone use hits the saturation point here and carriers duke it out to keep on top of the numbers game.

Services such as text messaging, ringtones and mobile gaming have become crucial to the business strategies of carriers in India. Analysts estimate that such value-added-services (VAS) now account for somewhere between 12 to 15 per cent of India's overall revenue from cellphone services — a significant enough number for operators to consider it a profitability margin. Consulting firm Gartner projects the Indian cellphone services market will be $24-billion (U.S.) by 2009.

While the primary use of cellphones in India is still voice calls, text messaging — also known as SMS (short message system) — is growing because it costs less than one cent for local messages. And SMS is proving to be a platform for a number of other types of services - everything from entering contests and finding out the latest cricket scores, to getting stock updates or an astrological forecast for the day, or conducting commerce. M-Cheq, for instance, is a new pilot project from Airtel, the cellphone arm of India's No. 1 carrier Bharti Tele-Ventures Ltd. Partnering with Indian bank ICICI, Airtel will allow its users to text message payment transactions.

Ringtones and caller-back ringtones (the caller hears a song instead of a ring) are all the rage, too, evident by the cacophony of cellphones trilling the latest Bollywood and Indian pop ringtones. The Indian film industry is now using cellphones as a platform to release soundtracks, with songs from movies available for download and creating a buzz even before a film hits the cinemas.

"One manifestation of Bollywood is the caller-back ringtones, what we call the Hello Tunes," says Mohit Bhatnagar, senior vice-president of new product development at Airtel. "Instead of a hello, you greet the caller with a song. Then there are audio visual aspects. For instance, different shots of the movie, clips of the movie, dialogues. So we bring Bollywood alive on the mobile platform."

While additional services such as text messaging and ringtones contribute substantially towards revenue, they also create brand awareness, Mr. Bhatnagar says. With seven operators competing with each other to increase their subscriber base, the lowest cost offer is no longer a viable trigger - juicy schemes with value-added services create brand loyalty.

Just as North America has led the world in the Internet revolution, Asia is dominating the wireless technologies, adds Mr. Bhatnagar, who spent 10 years in the U.S. before he headed back home. But while acknowledging the growing importance of VAS for cellphone providers across the world, Mr. Bhatnagar is cautious of speculating on global trends.

"I am big believer that you can't globally splice services," he says. "For instance, in North America, gaming is huge with devices such as Playstations. In India, we don't have Playstations, and so mobile gaming is catching on. But I would hazard a guess that mobile gaming will never be as big in North America as it is over here."

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