3G Needs Creative Business Models from Operators

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Creative business models built around 3G would make sure that operators move up the value chain and succeed in emerging markets.

We are already living in a 3G era but moving forward, as operators vie for better market share, they need to trust on their creativity in order to excel in this highly competitive world. Wireless operators in emerging markets have developed a variety of creative and effective business models around 3G business scenario in India.

There are essentially three main formats that have proven successful in this regard. The first one involves using advertising to either subsidize or entirely pay for services. This approach has been successful in a broad range of wireless application scenarios such as music and game distribution, Internet browsing, social networking, and many others. The second model involves creating a variety of tariff structures that have low costs of entry.

One end of this model involves calculating the cost of a service over many users, such as sharing a broadband Internet connection in an Internet café etc. Another end looks at offering services that have no fixed costs, but only small variable costs attached to it, such as paying for money transfers on a transaction basis, or listening to streaming music on a time charged basis.

The last end of this model involves selling subscribers an essential service at an affordable price (e.g. Internet access on a pay as you go basis), and then cross-selling or up-selling optional services (e.g. applications, music, video, or rich game content).

The third and final business model involves partnering with the government stakeholders and the non-profit organizations to improve the health, education or welfare of a community. By doing so, operators can take advantage of subsidies, credit terms, and/or favorable tax policies. This is a perfect way to involve and develop the overall communications driven ecosystem.

Today there are a number of commercially successful 3G data applications and services which utilize each of these business models and leverage on the number of opportunities in emerging markets like India. Moving forward, more and more of these kinds of models would need to be developed in order to sustain on the longer term.