The wireless medium is a big money spinner !

Imagine a scenario where you are seeding about 6 million handsets in the market every month in the country (India). About 70 million handsets last calendar year and expected to be close to 85 - 90 million this year.

Windfall for the handset makers you believe ? wrong.
Profit margins are being slashed by the handset manufacturers’ to get the volumes since the complete action is concentrated in the lower end of the market where margins are wafer thin. In fact some of the handset makers are selling some of their lower end models at a discount to roll out their stocks and realize revenues locked up in the warehouses which can be recycled into putting up new plants which can roll out fancy gizmos. These gizmos in turn would replace the old generation devices which are getting out of fashion (the upgrade cycle). The replacement period for hand-phones has com down to 3 months from about 18 months which was the norm 5 years ago since the consumer now is spoilt for choices. This actually makes for a gestation period.

So who is raking in the moolah? The Operator on voice services. Wrong again.
India is the most cost effective nation in terms of wireless tariffs for voice and they are still being slashed continously. This is due to the intense competition plaguing the industry to get more numbers since the ARPU on voice services has spiraled down to unbelievable lows in the last 12 months. It takes up more amount of money to service an existing wireless subscriber now, compared to what it took some years back. This is simply because inflation has caught with the service industry and revenue growth has not maintained a healthy trajectory.

Where is the money, Honey ? The Operator with Data services ? Nyet!
Data services have moved out from the fixed fee to pay as you use due to the competing pressures in the wireless environment. Operator decks are not being refreshed regularly, lack of compelling content adapted to mobile and a revenue share grossly biased towards the operator and not the content creator have all resulted in average revenues in the data space to shrink to abysmally low depths. Have a look at almost all the operator decks and try putting a finger to some exclusive content which is not offered on a competing mobile portal. Difficult to find. I agree or rather sympathize.

Ola! So the Content Companies make the kill ? na na na na…..
They are bleeding to put it mildly. A wireless rev share which does not honor the creators of the product is the final nail in the coffin of the wireless ecosystem. Workplaces of most companies are being trimmed to cut the flab and maintain lean and mean reporting structures, just right to manage their working capital requirements and overheads. At other places, talent is making a hasty retreat from the wireless space into consulting/ IT/ projects etc. The wireless space is beginning to become a poorer environment to get into.

So the moot question is where is the money going to? It is all going to the Television channels as telecommunications has moved to the no. 1 slot on the top money spending list category and most of the channels are laughing all the way to the bank.

Money is being locked up in long term projects by the handset makers. They are promoting their extensive range through communicating the advantages…………rather than the benefits. Have a look at all the commercial communication being harped upon by the handset makers and point out one brand where the benefits are being brought out to the fore.

The wireless operators are not getting enough revenues through their subscribers and whatever they make are spent in communications/ BTL activities and PR for voice services even when someone sitting on the sidelines can pinpoint the losing effort. They are too involved in fighting their own personal battles so if it is the pooch who follows you with network A it is the options that you have sitting atop a mountain which gets tom-tommed by operator B.

How many wireless operators have actually tried to educate their subscribers about getting data channels activated and accessing the mobile portals where selling even one game per subscriber would help them improve on their overall ARPU’s.

The content partners are too short sighted to see the long term future. Is there a single killer application (besides the CRBT for the wireless operators) in the last 12 months which has become a cash cow for the mobile content development companies. How many of them actually indulge in providing marketing push together with the wireless operator.

The outlook is very bleak unless everyone in the value chain ups the ante and go beyond their structured regimes.