Home > India, Telecom > Trickle up innovation in telecom

Trickle up innovation in telecom

There has been some buzz recently about the idea of taking innovation from emerging markets to developed markets (FastCompany, BusinessWeek) and these articles are worth reading if you haven’t already.

I spent some time this morning with the strategy team for one of the largest western telecom operators. They are scouting for innovation to borrow from India to deploy in their own markets. As we brainstormed, it was obvious that some of the usual places to look will not yield much.

  • Business model innovations will not transfer easily because telecom ecosystems are so specific to each market. For example, mPesa has established a parallel retail banking operation in Kenya. Neither will that travel well to India (the regulators won’t allow it), nor to the US (entrenced special interests).
  • Data services have a very regional flavor. Europe first, then the Pacific-Rim and then South Asia popularized SMS – the US lagged by several years. When Americans took to texting in a significant way, they were looking for flat rate plans which have not been very profitable. India favors voice services for mobile applications since there are so many regional languages, but westerners have never fancied IVR systems for mobile services.
  • Devices are cheap and basic in the emerging markets but Americans/Japanese/Koreans are beginning to adopt smarter devices. The Apple iPhone and App-Store are the new benchmarks in the US. Japan and Korea are driven by high speed connectivity. Again the device innovation is going to be very localized despite the flattening of the world.

What India has done well is squeeze costs out of the network and customer acquisition so operators are still adding 15M subs each month at $4 ARPUs but profitably. If I was a Vodafone, O2, T-Mobile, Verizon, AT&T looking at the Indian market, I would be looking to figure out how to improve my margins for my less profitable customers (pre-paid, rural, etc.). The lessons to be learned in India are especially relevant for their cost of acquisition, opex and capex at the fringes of their footprints especially where the tele-density or ARPUs or usage patterns are comparable to India’s.

Categories: India, Telecom
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