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"To be successful - one must anticipate!" - An exclusive interview with Mahesh Prasad, Reliance Communications, President – Applications, Solutions & Content Group [21.05.07]

Andrey Gidaspov: The Indian mobile market has been showing impressive growth, and with voice services increasingly becoming a commodity, the future of operators’ revenues very much depends on VAS development.  I understand that Reliance sees this future very well.  You have such a diverse offering of VAS in your CDMA network. Could you share with our readers some perspective on the company’s history? What were the results of your mobile business operations in 2006? What is your VAS specialty?

Mahesh Prasad:  Let me give you a quick perspective on the mobile business of Reliance Communications. We came in at a time when the Indian telecom industry was moving at a slow pace in terms of monthly additions and growth.  Back in 2002-2003, the Indian mobile industry was run by a few players and voice tariffs were quite high and it was the only killer application during that nascent period of VAS.  

Reliance Communications came with a national network footprint, with obvious advantages in terms of the voice clarity, capacity etc … combined with pan India network coverage for both voice and data services.  But, one should understand that, people don’t buy technology, networks or a national footprint. For exp: If one is living in a small town, it really doesn’t matter whether coverage exists in other parts of country.  What really matters is whether the service is available where he/she lives, the value proposition and the overall customer experience.

We not only came with a large-scale national network that has better quality in coverage and quality, but more importantly a never before experienced products and services, and the best value proposition to the customers.  We changed the telecom landscape and believe that Reliance was the true catalyst in bringing about the change and the hockey-stick growth we have seen in the last few years, further helped by progressive telecom regulation.

Our “Monsoon Hungama” in 2003 broke down the entry barrier for subscribers with Rs. 501 (USD 11) offer, which was a bundled handset, best of voice and data services, and mobile content portfolio never offered before!  And, as far as tariffs were concerned, we offered the best in the industry -- as low as 90 percent of the price points prevalent in the market at that time. 

To sum it up, just in a few years, India has over 150 million subscribers. It’s a great leap!  India is the fastest growing market and let me add, it’s one of the most competitive telecom markets in the world today.  In addition, it boasts of many services that are available elsewhere in the world. And, many firsts to its credit as well.

On VAS: From the very beginning, it was a given that our voice service offering had to be better in all aspects!  But, we also believed that we needed to offer the best in the mobile content and applications on top of it!  We were the first in India to have a nationwide high-speed mobile data network and we leveraged this capability by offering data enabled handsets with complete multi-media capability.

From day one, we introduced MMS, video, audio and gaming capable handsets even in the most entry-level black-and-white handsets.  Thus, for the first time common man in our country could watch a video clip of a TV program, or a movie clip or audio of his or her favorite Indian movies on their own mobile phones. Secondly, we introduced mobile gaming to the masses that only a few in India had experienced before.  We always believed that customers look for something different and new, and we created several applications and services ranging from News, infotainment, music, to complex m-commerce applications with credit/debit card and as well as the bank account payments.  Customer has the right to expect the best from a service provider and Reliance met those market expectations very early on!  As a reference, we offered over 2500 content services and applications in 2006 with access to a catalog of 100’s of thousands of content titles and mobile pages.   We ran a marketing campaign of “Kabhi Mobile Kabhie Computer”, which means “Mobile sometimes, Computer sometimes” to announce Reliance’s handset capabilities. 

For the first time in the country, customer could also enjoy high-speed wireless Internet connection from their PCs and laptops using Reliance NetConnect service.  Within the year of launch, Reliance achieved #1 slot among the wireless Internet providers.

AG: Which handset vendors have you worked with? 

MP: During the launch year in 2003, we worked with LG Electronics, Samsung, and Nokia.   And, today we work with almost all major handset manufactures across the globe including Motorola, Kyocera, UT Starcom,  just to name a few….

Our idea was to bring the cutting edge technology with simplicity of use to our consumers.  We wanted to make sure every customer had the opportunity to experience various new services first-hand.  From the moment our customers bought a Reliance service connection and opened the handset box, we wanted them to experience all we could offer, without going through any cumbersome processes.  Working with the handset manufacturers, we created a special “hot” button to access all our mobile content and data services branded “Reliance Mobile World” services (then known as R World) with one touch.

We wanted our customers to use these services without adding any hindrances of configuring their phone, book-marking, or any other such chores.  Once they started using Reliance Mobile World, people could easily navigate through the whole palette of services that we offer and in a matter of a few seconds people could experience a whole new, totally different world of information, entertainment and transactional services!  In addition, we also removed any element of price rationalization for customers by offering Reliance Mobile World for free as part of the market trial program which lasted for nearly two years.

AG: So people became addictive to your service offering?

MP:  I would say people got comfortable with the idea of trying and using mobile content services that they had not seen before.  What we did was to move our customers from trying out various services to the point of making them more discerning to pick and choose the services depending on their interest.

In April 2005, we started charging for Reliance Mobile World services; so, for almost 2 years it was provided without any charges as part of the market trial offer. 

AG: Did you have any innovative price structure?

MP: Of course. There were several pricing innovations when pricing was introduced in 2005 that no other operator had tried before. Typically, customers pay a monthly subscription fee, and one has to pay for a download, and on top of that per Kbyte network usage.  These three components were standard for VAS services at that time in India and elsewhere in the world.

We introduced the “Pay as You Go” model across almost all services.  For example, we priced a video clip at an all inclusive price of Rs 15 (U.S $0.30), which was very competitive at that time and easy to understand.  An average video clip was Rs. 30 and was much shorter in duration on competitors’ networks.  So imagine a voice call costing about Re.1, while video was Rs. 30!   Had we charged Rs.30, perhaps, we’d have never seen the kind of traffic in terms of subscriber downloads. 

For the first time ever, we came up with another pricing innovation referred to as “sachet” pricing model to allow mobile content snacking.  “Sachet” concept is very popular in India with the Consumer Goods Businesses extensively to sell shampoo, toothpaste, soap, shaving gel etc... on a one-day usage basis in small packets.  So we brought in a concept that was commonly understood and accepted by customers in the consumer goods space to the mobile industry for the first time in India for mobile content consumption. 

It can be best explained with the example of mobile games.  Until Reliance’s arrival, most of the mobile games were charged on a one-time game download basis. So, users downloaded the games and saved them on their mobile phones.  It allowed them to play that particular game as many times as they wished, since it was licensed or “purchased”.  Game downloads were priced as much as Rs. 99 ($2.00) or Rs 149 ($3.00).  This model was used by most operators in India as well as worldwide.

But we felt at Reliance that nobody is going to use a mobile game forever! Consumers typically master one game or get bored with it and have the habit of trying something new and different. We came up with the idea of “game sessions”.   For one session of game, we charged Rs. 2 – 5 ($0.04 to $0.10), depending on whether it was branded or not branded.  Customer could play that game as much as they wanted during that session.  This really allowed people to try different games, without a large upfront commitment.  In other words, even if one played 20 sessions or times, he/she still ended up paying much less than a full download. 

Initially, many game developers were skeptical, but some agreed to try this model.  Within 2-3 months the “optimists” saw the potential and followed.  A few operators have copied this concept now. 

AG: Was this idea a first only for India or world-wide?

MP:  I would say definitely a first in India and perhaps in the world!  Besides this, we came up with many such pricing innovations similar to mobile games. 

Cricket is a passion in India.  Most including Reliance offered Cricket match score look-ups (if one wanted to check the match score) and it cost Rs 3 ($0.06)).  Reliance introduced what we called “Cricket Day Pass” for Rs. 10 ($0.22) for the entire match day similar to buying a stadium ticket for the day; Instead of paying for every score look-up, customers could see the match progress for whole 7-8 hours of the match as many times as they wished, anytime, anywhere!   This pricing also went well with a scrolling cricket-score ticker on the mobile with ‘ball-by-ball” updates, similar to stock market ticker you see on the TV.  Most people prefer to keep this service ON all the time during the match!, Cricket service and pricing has remained unique, and many of our competitors are slowly catching up.

AG: Just like “Cricket Bloomberg”... I think that with every new and innovative service the company, the management has to have enough courage.  In your case, both in terms of lowering the price for voice services, and with “sachet” pricing, you needed to believe strongly that what you were doing was the right thing to do, correct?

MP: Yes certainly.  And it proved to be right.  India added more subscribers in just 2-3 years as compared to the number of telephone subscribers the country had seen in the first 55 years post Indian Independence.  It is not just the courage, but the conviction and commitment to what Reliance was doing!

At Reliance, we follow the vision of “Think bigger. Think better”! The number of mobile subscribers in the country will only grow, and it is going to be 200, 300, 400 million and so on.  We never built the business for 10 million – we were looking ahead and wanted to build the business for 200-300 million! That’s exactly what we did and will continue to do in the future.
AG: Moving further along the road to 3G technology, what is your view on that?

MP: Let me first start by sharing what 3G will do that 2G could not.  3G is better in speed of the network, it provides a better user experience for data services.  On the voice service side, the user experience is going to be pretty much the same on 2G, 3G or 4G except for capacity improvements and efficiency.  However, as far as the mobile data and content services are concerned, certainly the experience that you have for video or rich media services will be much better than that what we have now. You will have a significant consumer advantage with 3G!  On 3G, there are some new kind of services we can offer. 

But, everything should be considered from customers’ point of view.  On our 2G or 2.5 network, whatever you want call it, we are already offering several cutting edge services.  But, we have optimized the services to current network capabilities.  For example, in video, we have played around with frames per second, the screen size, the download file size etc… to optimize customer experience. As and when the regulatory framework allows us, we will roll out 3G services. 

Whether it is a 2G or 3G network, India will continue to be an interesting and challenging market.   There are 2 broad groups of customers.  One – the “Global Indians” (or the high-end users) as I call it, and the other “Aspiring Indians.”  There are tremendous growth opportunities in both these groups.  We will have to continue to address the needs of both these groups of consumers.

Global Indians have seen and used the best of handsets and services and can afford the latest and the best.  They are very much aware of what’s happening around the globe!  These high-end customers fully expect Reliance to offer the best of technology and services. 

Then, the group I call the aspiring Indians, want the best of the services around world combined with a great value proposition.  This set of consumers are improving their lifestyle, spending patterns, telecom/entertainment expenditures, and their expectations are getting bigger and better!  And when I say the ‘aspiring Indians’, it does not necessarily mean they want inexpensive services.  They have the same needs you and I have and perhaps much more!!   For example, they may not have the Internet access at their homes, but may have used it in the offices; their children have used it in the colleges and schools.  Mobile Internet is very attractive to this group as it bridges the gap.  People don’t want to stand in the queue for the latest cinema tickets, when he or she can book them on a mobile? Similarly, they don’t want go to the travel agent or railway station to book a train ticket anymore.  They no longer want to visit a bank branch or an ATM machine to check account balance or to transfer funds!  It’s more convenient and saves them time to do all on the mobile.

So we need to strike a balance in terms of the services we offer.

And, you asked me earlier whether 3G will be deployed in metros for VAS and mobile content..  But, let me tell you that it is a myth that only metro and urban areas offer better take-up for mobile content or VAS or 3G services.  At Reliance, we don’t have pockets of VAS users just in Mumbai or Delhi. VAS users are everywhere - in small towns, big metros and agricultural states;  they are rather evenly spread I would say.

Another myth is that only the youth use VAS the most.  Again in Reliance, it is not just the youth who use ring tones, caller ringback tones or videos and cricket or other these types of services.  It is people in the 19-45 age category.  Also, let me point out that 8-10% of VAS user group are above age 50!  Now, are these people using RT or wallpapers, you may ask? No, not necessarily! They may be checking their e-mails, catching up on the News or cricket score updates or whatever the services that meet their needs.

AG: Would Reliance be interested in working with a Russian partner for 3G rollout?

MP: Yes, everything depends on what the “partner” has to offer.   We have some Russian software and games developers registered in our Reliance Developer Program, which provides a platform for applications and content developers around the world to showcase and market their services to Reliance customers.

AG: What is the secret of your success?

MP:  I think my success is reflected in the company’s success. First and the foremost, as part of Reliance Communications, I place a very high importance on customer needs and interests.  And, this applies to anybody and everybody.

Secondly, one must anticipate!  Understand from the trends what is going to happen next and prepare for that in advance. 

Thirdly, thinking out of the box, finding out what will work and what may not!.  Identify things that have potential and give it a try.  Even if you fail, it is part of your learning experience that will be of great help in the future. 

And, finally there is always a little bit of luck you need.  And, bit of luck with hard work help you succeed!

AG: Thank you for your interview!

March 2007, Mumbai