Change and how we react to it

Its an oft repeated statement that an optimist see opportunities where others see challenges. It can not be truer in a business scenario esp when something changes drastically in the overall environment.

Change - reactions

One such change has been the TRAI’s gag over SMS- the true bane of India’s mobile growth. We used to get 20 SMS daily about new housing projects and a similar number of messages for increasing height or losing weight. So apart from the customers who are genuinely happy, its very interesting to see how businesses are reacting to this change. Do remember that mobile (& SMS specifically) has been a very strong and efficient channel for many businesses because

  • It ensured delivery + view (unlike emails which might not be opened or hit SPAM)
  • It was real time, so alerts could be sent and verifications could be done while the customer was online
  • Cost effective, the cost per SMS from many a providers was as low as 3-4 paise

So once the SMS were put on hold, earlier this week interesting responses have been witnessed from players.  Here’s some of the interesting ones:

  1. Talk it out with the regulator – The JustDials of the world seem to have done this, coz by the evening there was an announcement with a new clause that allowed JustDial/Zatse and few others to send SMS to customers who call in for local search. Similar benefit has been extended to Google/Facebook etc kind of brands. This is interesting because all along, the draft that was circulated contained only a few pre-decided categories where transactional SMS  would be allowed.
  2. Read the fine print and find a way out – Apparently all this applies only as long as you use the pipes of Indian telecom operators to push text SMS to customsers. There are players now offering SMS’s delivered through international gateways (although at a much higher cost).
  3. What? When did this happen – Its very funny to talk to some call centers and hear their agents give the standard response that you will get a SMS from our side. Here it seems, no one within the company bothered to check/find how it affected their processes. I am sure their Ops guy in on an extended vacation.
  4. No Problem, we will innovate – well this is the segment that does proud to the word – “Jugaad”. There are players out there selling a “missed-call” solution in lieu of SMS verification. A very smart alternative indeed and the robustness of the current system is the only constraint.

While the change is very recent and many more innovative solutions would come up, one thing is certain- it has casted a death spell on very many business models (read that as VAS services, players selling mobile numbers, mobile marketing services).

Is someone at TRAI listening?

TRAIWe might be the world’s most watched and talked about telecom market but come Feb2011, there would be a lot more noise that this industry would make. and all of this because of TRAI’s latest guidelines on NDNC (National Do Not Call) list. While the motivation cannot be questioned (hell, most of us get more than 5-6 irritating SMS/calls everyday), but the solution surely is far from good.

In one single swipe, TRAI would hurt a big chunk of online/ecommerce players – lead generation portals typically need further qualification or undergo tele-sales , and that cannot happen now- atleast for the customers on the NDNC list. Never mind that the customer himself applied for the product/service you are selling – if you are not a bank, insurance co. education institute, airlines, Indian Railways or a government agency you cannot talk to a NDNC customer. Even these privileged few can talk to customers only about their account status and such alerts.

The way I read the notification, even banks would not be able to call customers who applied on their own for a personal loan/credit card if the applicant is on NDNC.TRAI guidelines just give two sets – Transactional communication and everything else. With the first being defined so narrowly that most businesses would fall under the latter category.

This could mean

  • That I will not get a SMS with contact details next time I call Just Dial.
  • If i buy a ticket from BookMyShow – i would not get the booking id on SMS. Will need to note it from email or something or do some other process.
  • If I apply online at ICICI Bank.com for a credit card, they cannot call me to tell me what docs and what limit apply etc.
  • Most free SMS sites can only send SMS to non-NDNC customers.
  • All operator subscribed Astrology/Joke/Cricket alerts are a big NO. Go get that android today for cricket updates.
  • Applications which sent emails as SMS would be rendered useless unless the subscriber got himself out of NDNC.
  • Google reminders would not work on SMS, even those helpful services for medicine/health checkup reminders.

And to top it all, you would still get those irritating SMS, coz  those guys dont use the enterprise services. They would just shift from one pre-paid number to another . I just wish someone at TRAI was listening and understanding the impact this will have on the SME sector – many business models would lose their viability even when the customer need exists .

Update: This finally went live on 27th Sep 2011 and its very interesting how people/businesses are reacting to this change.

ABCDJ – what now

Indian-Mobile-Value-Added-ServicesIn India, the Telecom Value-Added-Services (VAS) was referred to as the business of ABCDJ – Astro, Bollywood, Cricket, Devotion and Jokes. This was the volume and revenue driver for almost all mobile operators beyond the voice and text revenues and it sure was a significant one (if we include the ringtones and call-back tunes within Bollywood or Devotion category).

With the TRAI’s new SMS guidelines, the VAS players cannot send SMS based content to users who are on NDNC. There are talks of partial NDNCs but the fact remains that this business has been hit in a big way. The VAS players had been using SMS both as a channel for marketing and for delivering content too. The ones who have been hit the worst are the ones where the content is the text.

So what now? I think one of these may happen

  1. Telcos/VAS players will build a case & convince TRAI. Given the fact that Telco’s almost enjoyed a significant portion of the VAS revenues, this is surely already happening. The VAS players would need to show that the content is being delivered only to subscribed customers and the customers have an easy way to opt out it. (Airtel had started a on/off service for all products, now all might have to adopt it). There would surely be a lot of genuine customers who need a regular dose of ABCDJ delivered on their handset.What the VAS players might not get, is the use of SMS as an advertising channel to sell their services. If this happens, the cost of customer acquisition will go up, and hence the profitability metrics would be negatively impacted.
  2. Non-SMS channels for delivery. SMS was the ideal channel for content delivery as it allowed the VAS player to just focus on acquisition and content. Delivery was a no-brainer. There was no classification needed basis handset type etc to see if the content was delivered or not. With SMS gone, the players would want to explore GPRS based rich media delivery of content. Here the customer’s handset type will decide whether the specific user should be targeted with this content or not. Maybe now Telco’s will start focusing on selling smart phones either bundled or as part of a special deal. Any smart phone sold by Vodafone, gives them a customer to whom rich-media VAS can be sold. Maybe now the likes of CellTick will have a second lease of life in the Indian market.
  3. More active role by Telco in selling VAS. Till now, the role played by Telco in selling VAS content was restricted to sharing data with the players, and opening up a pipe for them to deliver. Now the Telco will remain the most important touch-point, and if they want the VAS revenues to grow, they would need to “sell” it now. Telcos might invest in a VAS emarketplace of sorts so that pulling the content is much easier.

Time will tell, what finally happens, but my guess is, that it surely is a critical discussion point at most Telco board rooms.

TRAI on overdrive ! Telecom business to see a complete overhaul…

The last 7-10 days have been filled with a lot of action in the Telecom sector, and the regulatory authority TRAI seems to be at the centre of it all.

TRAIConsider these:

– 3G policy is launched

– BSNL MTNL given a go-ahead for an early 3G launch

– Net Telephony proposed by TRAI supported by DoT

– Legal threats to GSM players for failing to provide interconnect to Reliance’s GSM

– Proposal to allow takeover of 2.5G players without the wait period

– Allow callers to choose their STD/ISD carriers

While the 3G announcements were much expected, a few others have indicated a growing discomfort of TRAI with the current players.Else why would all these suddenly be proposed in a matter of 3-4 days.

I personally feel the option to strongchoose the STD/ISD player /strongwill see the light of the day much earlier than other proposals. Here’s why:

– Existing players will not oppose it as much as other changes coz adoption of calling cards etc requires a lot of marketing muscle from stand alone players. I am unaware of the technical issues involved in ISD traffic where the current players will not be able to sell the purchased minutes of talk time. But am sure they will be able to adapt soon with some kind of a predictive tool.

– Customers will be happy with the announcement and TRAI would have scored a brownie point ot two.

– Primary impact would be the ISD calls as STD are not considered so costly that consumers would pull out a card punch the long series of numbers therein.Even if look closely at the ISD market, that itself is very segmented coz

a) Well off people who have relatives/friends/clients abroad will not bother too much unless the differential is high

b) most empeople with internet connection /emcalling family friends aborad are using Skype/Google talk for longer regular conversations. So they would rather wait for a Skype phone to be allowed in India

c) People without internet access typically calling Middle East SE Asia locations will be the first ones to adopt this. But typically here also, the Indian party more often than not recieves the call- not originates it.

d) Corporate- they should be the only ones to see significant cost reduction by choosing the service provider. And they would want some smart solutions, wherein the code is automatically punched in when the user calls from an enterprise connected device.

The most disruptive proposal of it all would be the Net Telephony– as that would not only take away the key revenue drivers for all existing players, it would suddenly reduce the entry barriers in a very significant way.As consumers we should welcome this, coz the rates would surely plummet, but if you have expsoure to telecom in your investment portfolio (through the current players)- it could hit you hard. Though the new players waiting to enter the market with their Net-Telephony-only services, highlight that this is as secure as the incumbent technology- I have my doubts that they would be able to convince the final decision makers. Given the strong lobbying from existing players the recent terror experiences – security issues could become the Achilles heel for Net Telephony.

The other proposal to do away with the waiting period for a new player strongto take over an existing player/strong- seems to send a very strong and positive signal for Foreign players- Indian Telecom sector is now ripe for M&As. With

– Vodafone already having its wide operations

– Virgin running an MVNO with TATA Tele

– MTN having courted dumped both Airtel Reliancebr /Indian Telecom market is already high up in the radar. With Chinese market still being unaccessible- many more foreign players will try come down to experience the Incredible India.

One might ask- what will tempt them to come here with falling ARPUs and an even worse scene predicted. Apart from the sheer numbers, I think Indian players have been able to sell the idea to the world that they know how to operate on a large scale with lower costs (playing on volumes rather than margins). This was what everyone felt when the MTN courtship was taking place in full media glare.

Phew! So much action is anticipated that most of us had forgotten about the iPhone launch for a while…. Over to some more exciting glamorous developments in the business of staying connected !