News Analysis

When IT meets telecom

IT companies are walking hand-in-hand with telcos to offer innovative services, says Chirasrota Jena.

It’s a match made in IT heaven as IT vendors are teaming up with telcos to offer fresh, path-breaking services that are being lapped up by consumers. What happened in the US about a decade back is now hitting the Indian shores. The great Indian cellular subscriber base is now ripe for value-added services. Moreover, Average Revenue Per User (ARPU) has been plummeting thanks to lower call rates. All of which has compelled telcos to innovate or stagnate. With the entertainment segment also pitching its tent in the field of convergence, telecom and entertainment are turning into a converged industry rather than two independent ones working together.

Who’s with whom

Zoom in for a closer look at the Indian convergence landscape and you will see that there are many strategic tie-ups and joint ventures announced by various players. These tie-ups and joint ventures are built on synergy. HP recently partnered with Nokia to announce that it will provide a service called Visual Radio in India. Hutch is the telco that will roll out this service to its subscribers and Radio Mirchi will provide the content.

Shankar Krishnan, Services Principal, Communication, Media and Entertainment, HP says, “The service will be made available to listeners in Delhi and later be extended to other markets such as Mumbai and Bangalore. On the basis of global programming between Nokia and HP we will provide the back-end hosted infrastructure.” The consumer side of things will be handled by Nokia, Hutch and Radio Mirchi.

In a similar vein, Bharti Airtel has announced a strategic tie-up with Microsoft to offer Windows Mobile 5.0 technology in India. What it means is that Bharti Airtel mobile users who opt for Windows Mobile phones will be able to access corporate e-mail via push technology.

Bharti has also announced another contract with Ericsson to expand mobile services and reach out to all towns and cities in 15 telecom circles. Ericsson will also upgrade the network with mobile softswitch (media gateway and MSC servers) solutions and pave the way for an all-IP network. This will enable Bharti Airtel to reduce its operational costs and introduce new services in a cost-efficient manner.

Motorola and Tata Teleservices have announced a collaboration to bring ‘Style’ to CDMA mobile phones for the Indian consumer. Motorola and Tata Indicom will jointly market, distribute and support a particular series of handset across the country. Tech Mahindra, the IT arm of Mahindra Group, has also announced a joint venture with Motorola to develop and deliver innovative applications. The JV will enable network service providers and enterprises to launch and manage applications that will help differentiate their services, reduce the total cost of ownership and raise ARPU.

Inside the business model

Spotting opportunities in the sphere of value-added services, IT companies are setting up or revamping divisions that target service providers. For instance, HP has renamed its network and service provider business division as Communications, Media & Entertainment. This division looks after solutions that address digital content management and distribution and also sales coverage in connection with new efforts.

Krishnan opines, “In the tie-up with Hutch and Radio Mirchi for value-added services, technical training will be provided by HP executives to the radio station and Hutch executives. The business model is based on revenue-sharing. The whole process took six to nine months to finalise. We are the system integrators.” HP is involved with other providers like Idea and it plans to extend the reach of Visual Radio by tying up with Airtel.

Synergy for the people

Synergistic tie-ups are commonplace abroad and have been so for quite some time. The trend is now catching on in India. The Mobile and Embedded Devices Division is Microsoft’s fastest-growing division. It was formed to spearhead the development and availability of the Windows Mobile Operating System for mobile devices.

Through the Microsoft Windows 5.0 Airtel will be able to go after potential users in the large enterprise segment running Microsoft’s Exchange Server. Access to MS Office documents and Exchange e-mail on the move is a compelling proposition to users from the large corporates.

There is a need for deep understanding between the players involved in delivering any kind of business to customer service.

Krishnan opines that there are some strict regulatory issues which need some flexibility in India for the smooth functioning of this kind of synergy. Flexibility, scalability and compatibility are the basic requirements for any kind of synergy between the various players.

IT players are chalking up their growth strategies to enter the SMB sector by providing various kinds of services in the field of IPTV, Mobile TV, wireless areas and also working with radio stations. These business models are cost-effective and attract Indian customers. For the IT and telecom players it’s a win-win proposition.