BPL operates the only GPRS network in India in the hope that financial applications, e-mail, and chat will move to the mobile phone R. Chandrasekhar, CEO, BPL Innovision

Bharti is happy with third-party content, but has just launched a 32-bit SIM. Bharti's new networks are GPRS-ready, but it wants to wait and watch Sunil Mittal, Chairman, Bharti Televentures

Wireless telephony's original killer-app, SMS (Short Messaging System), could, surprise, surprise turn out to be the proverbial pot of gold at the end of the rainbow. An estimated 33 lakh messages crowd the airwaves around us. Picture that; even as you are reading this sentence the air around you is packed with messages. You can't see them, leave alone hear them, but someone is scheduling a dinner party, someone else is catching up on the latest cricket scores, and a few others are just chatting.

Seasoned telecom analysts will speak, at once of the macro-"Data services is where the growth is," says Birla-AT&T-Tata caretaker CEO Sanjeev Aga-and the micro; "With GPRs coming in place and perhaps 3g happening sometime in future, there will be a range of service providers taking internet offerings to mobile internet,'' says Rajeev Chandrasekhar, CEO of BPL Innovision Business Group.

Shorn of jargon, here is what is happening: India has 6.5 million cellular subscribers who, between them, trade in around 33 lakh messages a day. Messaging is bandwidth-efficient: 300 SMS can be fitted into the same bandwidth as one voice call. And at Rs 1.50 to Rs 2 a pop, users don't really mind messaging. As for operators, they could earn as much as Rs 600 (300 SMS messages) instead of the Rs 10-20 they would have otherwise earned from a voice call.

Maybe the content companies have just woken up to the potential. Or maybe cellular operators are looking to generate more revenues from their existing users. Whatever the reason, a clutch of operators and content companies-and these are classic content companies, not those spawned by the dotcom boom-are seeking to leverage the data-services (read: messaging and content; that's where it stands now) boom to their benefit.

There are Bennett, Coleman Company Limited (BCCL), and The India Today Group (which owns Business Today) with large pan-Indian content plays; Rediff with a rumoured co-branded effort; BPL, with its next-gen GPRs (that stands for General Packet Radio Switching and it essentially means a bigger, faster network that offers an always-on internet facility) in Mumbai; Airtel and Escotel with their 32-bit SIM cards; Hutch-Essar with its Telivoice-powered voice-SMS; and Reliance with its hush-hush plans for data-services.

For content providers, the mobile presents an opportunity the internet never did. India has 4 million internet connections today; 20 million users. And no one really wants to pay for anything on the net. In contrast, no one minds paying for SMS and operators are open to sharing revenues with content providers-traffic wouldn't have been generated without content.

Data services presents operators with an opportunity to increase revenues from existing subscribers. And with voice tariffs on a downward spiral the world over, it lends some solidity to their revenues. "As the market grows, content becomes crucial," says Raj Singh of Active Media Technology, the company that has provided the platform for India Today's 2424 (that's the number you dial on the mobile) service.

Content Play

No revenue model could be more transparent. Content drives a user to message, and the operator shares the revenue from that message with the content provider. Neither the operators nor the content providers would share the exact proportion in which revenue is shared. It is unlikely that customers will have to pay separately for content. "Customers won't opt for the service if they have to pay for both the SMS and the service," says Atul Chopra, CEO, Lifetree Convergence, the company whose platform powers the Indiatimes 8888 service.

The emergence of the Indiatimes and the India Today Group as key content players in the wireless domain is a logical next step in the evolution of data services (See Moving On From P2P).

The first stage in this evolution was peer-to-peer messaging that every mobile user is familiar with. Then comes the service where operators respond to a string. For instance, a BPL Mobile customer in Mumbai needs to type in minews and send it to 333 to receive news headlines. These are customised for the company by Mid-Day. Airtel in Delhi has a similar arrangement with the India Today Group.

Today, the market is at the third stage where network-independent content providers have launched their offerings. These can be accessed through all networks that have signed on (for instance, both the 8888 and the 2424 service can be accessed through Airtel in Delhi), an approach the telecom industry calls 'open garden'.

For content majors like BCCO and The India Today Group, the incremental cost of generating content is minimal. Their major investments go into the platform-this could cost anything between Rs 20-40 lakh-and marketing the service.

That, by itself, serves as an entry barrier for smaller media companies. "The market will never be large enough to support fresh investments in content creation," explains Times Internet CEO Mahendra Swarup. "Customers want bullets," adds India Today Group Online COO Kalli Purie, referring to the form in which content is best disseminated. "Nobody wants a thesis."

Third-party content provider on SMS platform; high on personalised content and interactive gaming Mahendra Swarup, CEO, Times Internet

Early mover in content aggregation; believed to be considering launch of co-branded 32-bit SIM Ajit Balakrishnan, CEO, Rediff.com

Operators stand to gain, irrespective of whether the subscriber dials 8888 or 2424, or any other number for the news, but that doesn't mean they are happy with the existing state of affairs where content providers have also started managing the user interface.

Thus while Escotel CEO Manoj Kohli admits that "owning content is just not cost-effective," he goes on to add, "I cannot match India Today in content, just like they shouldn't try and match us in (managing) the customer interface."

Operator Play

It is that loss of control that has perhaps stung some operators into action. Two of them, Escotel and Airtel, have launched 32-bit SIM cards, an upgrade of existing 16-bit SIM cards (the cost of upgradation is a few hundred rupees).

Short for subscriber identity module, a SIM card is essentially a memory-plus-application utility. For instance, some of the things your mobile phone can do are built into it; others are capabilities bestowed on it by the SIM. 32-bit cards have a larger capacity for storing numbers and data; but they don't offer an open garden service. Instead, they offer users a wider in-built menu. "It gives the user access to information through three simple steps: scroll, send, and receive," says Airtel CEO Sarvjit S. Dhillon.

The user interface in this case is managed by the operator. That means content providers earn a fixed amount-they don't share revenues.

The higher order SIM card also offers what operators term end-to-end security, crucial for mobile commerce, if and when that chimera ever flies. And all 32-bit cards come with location modules that keep the network posted on the latitude and the longitude of the user, rendering location-based services possible. These could range from informing users about special shopping offers in the vicinity to enabling them make payments through the mobile.

If the buzz is to be believed, Rediff is in talks with several companies to launch a co-branded 32-bit SIM card featuring its entire suite of content. The company neither confirmed nor denied this in a response to BT, but while it does make sense for the company to become a network-independent content provider, a la Indiatimes or India Today Group, the business sense of a co-branded offering doesn't seem all that compelling.

In Mumbai, BPL Communications has launched the country's first (and at the time of going to press, its only) GPRs network. The service, which costs Rs 750 a month plus usage-based charges, provides an always-on internet connection and has found 3,000 takers so far. "I know people who have stopped using the desktop as the GPRs internet connection is more reliable and always on," says BPL's Chandrasekhar.

Only, there's little content to drive usage, says Atul Jhamb, the Chief Operating Officer of Airtel, Mumbai, which will launch its service by June-end. "GPRs content has a long way to go. There is no killer application available on it anywhere in the world." That could explain the reluctance of other operators to upgrade to GPRs.

Chandrasekhar, and anyone else upgrading to higher order networks, will have to look for a new killer app. In South Korea, for instance, this is gaming. BPL plans to launch a gaming service in Mumbai soon, but the company is hoping that the movement of internet applications like e-mail, instanet messaging, and online financial transactions to the mobile will render its GPRs network viable.

Escotel launched the country's first 32-bit SIM to begin location-based services; it hopes to generate 15 per cent of total revenue from SMS Manoj Kohli, CEO, Escotel

Chandrasekhar's bet on GPRs is likely to pay off in the long term. 32-bit SIMs are but a transitory step in the progression of cellular networks, a mid-course rest-stop as they move from 2g (second generation) to 2.5g to third generation . Only, as the 2.5g and 3g experience in Europe has shown, content and applications will have to keep pace with the capabilities of the network (imagine an eight-lane expressway for bullock carts).

Still, it could be a while before we see more higher-order networks in India. Most of the country's cellular operators are just starting to make money (operating profits) and are loath to invest huge sums of money in upgrading their networks. Ergo, the 32-bit and network-independent content-provider phase could last a while.

In the meantime, Reliance Infocom could well be the company to watch. It has made little noise about the impending launch of its basic-plus-mobile service (on a platform that is as close to 3g as you can get) in 17 circles, but the company is expected to launch a bells-and-whistles service with value-adds like content in vernacular languages and gaming.

The Supreme Court's ruling on whether basic telephony companies can offer limited mobility services could make or mar the company's plans, but right now, it isn't Reliance Infocom that's making the biggest play in telecom. It's content. And it is finally King.