M-Commerce

Future of Mcommerce in India. (KBS-2007 International Research Conference).

Prof.S.Balasubramniam( B.E(Comp Science), MBA (XLRI)
International of Business & Media, Pune
Email: [e-mail]

Abstract: "The greatest wealth in the 21st century will not be made from products or services, but rather by the company that creates the conduit for international m-commerce through the mobile device".
Mobile Commerce connects business and customers via the Internet through wireless devices, cell phones, Palm Pilots etc.
In India Mobile phone networking in penetrating much faster than the telephone, internet or other networks. Its acceptance level is also much greater than the others.
In this paper, the possibility of using mobile phones for m-commerce in the rural areas, the enabling factors, government support, the possible business and technical models will be discussed.
Key Words: Economy, Rural Economy, Revenue, Internet, Internet Kisko, Mobile Communication, Backbone Network, M-commerce, Revenue model, Business model, Self sustaining Model.

[pic]Agriculture is the major economic activity in rural areas. Agriculture and allied activities employ 66.23 percent of the workforce of which 13.57 percent are land less laborers. Non-agriculture activities provide livelihood to 39.77 percent of the rural population. Working in agriculture was the primary activity for 82 percent of the young men between 24 – 45 years of age in 1971 dropped to 73 percent in 1982 and 53 percent in 1999. Even though the dominance of agriculture has decreased, it still retains its importance and contributes to 23 percent of the national GDP. In today’s context rural economy is in great crises due collapse of agriculture economy which in turn offers new models for reviving the rural economy.

Connectivity Status

The rural economy remains unaffected by the development in the telecom sector in the country. Thanks to the private operators who for a long time resisted fulfilling their rural (Universal) service obligations mandated by the policy in spite of warning from the (DOT) Department of Telecommunication and the telecom regulatory authority of India (TRAI) who also could not do much in this regard as the rural coverage of even the state owned BSNL was at 1.75 percent of its total coverage. Even though the connectivity of rural India improved on paper the effectiveness of the facility was always in doubt.

All these developments have made minimal impact on the status of the telecom infrastructure in rural India. The tele-density is low and internet in rural India is largely unavailable. The IT and Telecom revolution which has done wonders in urban areas seems to have bypassed the rural India. A better penetration of IT and Telecom infrastructure has the revolutionary potential to empower the people of rural India. It can help to improve the standard of literacy, health care and livelihood. Moreover, with IT and Telecom shrinking the physical distances, the hard working and talented rural lot will get a chance to compete with those in the urban areas and the developed world. (ITU Report 2004)

[pic] While India has a very long way to go in establishing a nationwide network of landline telecom networks, let alone high-speed broadband service, paradoxically, the country could overtake China in the next several years in terms of mobile-phone subscription growth. Rolling out towers and base stations to support wireless networks certainly isn't cheap. But it likely will be wireless networks—not copper-wire fixed lines—that do most to pull India out of the telecommunication dark ages.

TALK IS CHEAP. While India often gets a deserved rap for its rigid labor laws and heavy regulation in some sectors, that's really not true when it comes to telecom, which New Delhi started liberalizing back in the mid '90s. Telecom tariffs imposed on domestic voice services have dropped steadily, and today India enjoys the lowest call rates in the world at 2 cents per minute, compared to 33 cents in Japan, 11 cents in Brazil, and 24 cents in Australia. The arrival of a sizable market of wireless phone subscribers—India's mobile phone user base has exploded to 105 million today from 5 million in 2001. (Business Week Online, 24th July, 2006)
Can the Efforts Scale?
•Creating 100 or 1K or 10K kiosks make no impact to Indian Rural Areas
•To Scale one requires
��Technology
��Sustainable business model and an Organization which thinks and acts Rural

Connectivity Technologies
[pic]

Wireless Technology

• Jointly developed by the IIT Madras and Midas Communications • Provides simultaneous voice & Internet connectivity of up to 256 /512 Kbps Always-on for each user • ��Exchange and tower in town • up to 35 Km radius coverage • works at even 55ºC • low power requirement (1 KW) • extremely low start-up costs Wireless

Towards affordable Cellular phone in a village: even at Rs 80 ARPU
Business Model: -

(Use Local Entrepreneurs
•Entrepreneur-driven operator assisted Mobile Centres (Duplicate the model)
Today in urban areas: • 950K PCO’s covering every street of smallest town • generate 25 % of total telecom income • 300 million people use these PCOs
•Lesson for Rural: • To serve Rural people with incomes less than Rs 40/day, aggregate demand and let Entrepreneurs drive it
Aid/Grant does not scale Successful Enterprises can scale to all villages
Characteristics of a Local Entrepreneur • grade 10 graduate: need not have seen a computer • effectively communicate and network in the community • Provides telephony, Internet access and various services to the local community • Channels information needs of community to application and content providers • Needs to earn Rs. 3000 pm providing: -Mobile, stand-alone computer services and Internet services

(E-kiosk in a village • n-Logue Communications: a Rural Service Provider • Gets an entrepreneur in every village to set up a kiosk • Enables setting up of the kiosk infrastructure • including multimedia PC with web camera, printer, power back-up, software, training, 6 months unlimited Internet at a cost of just US$ 1200 • Partners with the Government, NGOs, private enterprises, schools, hospitals to offer various services through the kiosk

Kiosk: Bouquet of Services

• Education and Vocational Training • Learning typing, Computer education & E-learning • Photography, entertainment and movies • DTP work, Email/voice & video mail • e-Government • Tele-medicine & Vet Care • E-Agriculture • Crafts • IT based Services : - Banking, Trading & Commercial services • VoIP

Rural Micro-Enterprises are the Wealth Creators:
[pic]

Current Rural GDP in India = Rs 6000 Billion For a Population= 700 million people GDP / Person = Rs 8000 per year

Rural Prosperity

DOUBLING per-capita

Rural GDP Rs. 16,000 per person per year

Working With Private and Public Local Service Providers
In parts of rural India—particularly in small towns and large villages—there is a modest mixture of private, public, and NGO local communications service providers. These entities may be providers of small-scale cable TV services, regional ISPs, VSAT and agricultural e-commerce systems, or national telecommunications services. These local operators can cover the “last mile” to some villages, or are at least within technological reach of it.

Each of these business types offers an important opportunity for ATN-PSUs to become the prime movers in extending their rural outreach through a form of partnering. By offering access to their low-cost trunk bandwidth and networking with local service providers—which could act as both joint-venture partners and franchisees or potentially under a local form of broadband authorization—they can, at one remove, act as retail service suppliers. In order to do so, ATN-PSUs need to become more actively involved with local and regional service providers.

Traditional copper wire links can provide simple dial-up services. On-going developments in wireless technologies—such as the advent of Wi-Max—mean that the range of methods to reach out from the widespread ATN OFC networks is rapidly increasing, thereby contributing to the potential for new modalities for cost effective rural ‘last-mile’ services delivery. By seeking local partners, exploiting the latest technologies, and using well understood and tested business models, the ATN-PSUs can support the kind of public services to rural communities that will introduce them to the advantages of broadband knowledge streams including access to market information and trade through the Internet.

What is m-commerce?

Mobile commerce or ‘m-commerce’ is part of the shift of technology into mainstream business and everyday life. It is the use of handheld wireless devices such as mobile phones and palm pilots to communicate, interact and transact via high-speed connection to the internet.

How it applies to consumers

While these technologies may provide benefits and new opportunities for consumers they may also give rise to sharp practices that can affect vulnerable consumers in particular.
Although mobile phone technology has been rapidly adopted in Australia, m-commerce is presently in its preliminary stages. However, the popularity of SMS (short message service), the introduction of third generation (3G) networks and increased functionality as well as international experience suggest wireless uptake and services will continue to expand.
Consumers will be able to access the wireless World Wide Web (WWW) via a mobile ‘always on’ connection facilitating access to valuable information and the entry into fast and efficient commercial transactions.
What kind of transactions is possible through m-commerce?
As wireless technology is advancing by the day, many are of the view that m-commerce will surpass even wire line e-commerce as the method of choice for digital commerce transactions.
According to Search Mobile Computing, the following industries will benefit most from m-commerce:
Financial services, which include mobile banking (when customers use their handheld devices to access their accounts and pay their bills) as well as brokerage services, in which stock quotes can be displayed and trading conducted from the same handheld device.
Telecommunications, in which service charges, bill payment and account reviews can all be conducted from the same handheld device.
Services and retail, as consumers are given the ability to place and pay for orders on-the-fly.
Information services, which include the delivery of financial and sports news, and traffic updates.
Besides these, the travel industry, in realizing the possible benefits of m-commerce, is working on technologies that will take care of travel arrangements, update customers on flight status, notify them when the information changes and will offer to make new arrangements based on preset user preferences requiring no input from the user.
What are the main payment methods used to enable m-commerce?
The main payment methods used to enable m-commerce are:
Premium-rate calling numbers.
Charging to the mobile telephone user's bill.
Deducting from their calling credit, either directly or via reverse-charged SMS.
How big is the m-commerce market?
According to a study by Juniper Research of the US, the global mobile commerce market excluding mobile entertainment will become a $40-bn industry by 2009, fuelled by a growth in micro payment volumes.
Though the current m-commerce market is dominated by digital goods such as mobile entertainment (ring tones, games, wallpaper, gambling and so on), other markets such as ticket purchases, retail and person-to-person payments will emerge as additional application areas, with revenues totaling $39 bn by 2009.
The purchase of tickets (such as car parking and cinema tickets) using the mobile phone, will dominate the growth in m-commerce. Mobile users have started already to show interest in ticketing particularly in Europe and Japan, while in the retail sector, initial applications are geared towards vending m RFID and infra-red technologies are likely to have major influence on future developments of mobile as a payment device.achines, but this will see slow growth, according to the Juniper report.

What is the state of m-commerce in India?
In India, till now, only low-value transactions like music downloads, logo downloads, picture downloads and ring tone downloads are dominating the m-commerce scene. Some banking transactions and stock market alerts are also being conducted via this mode.
The m-commerce market in India is yet to mature compared to the likes of Europe, Japan, Korea and the US.
However, according to Dr Madanmohan Rao, an internationally acclaimed Internet and e-commerce specialist, m-commerce is going to pick up exceptionally in India in the coming years.
"E-commerce took some time to pick up, due to low Internet penetration in the country, but m-commerce will definitely see better days," a report quoted him as saying. To justify this, he quoted a global report which points out that the share of mobile phones is expected to be around 50 percent of the total market size by 2010.
"This kind of mobile penetration will definitely spruce up m- commerce in India," says Rao. According to him, the PDA technology could further the services offered by cellphones.
According to a study by Merrill Lynch, SMS will drive the m- commerce trend in India. SMS could bring in as much as $75.6 mn of revenues for Indian GSM operators by the end of this year, according to the report.
What are the advantages of m-commerce?
If you will look at the advantages offered by m-commerce, you will tend to forget its drawbacks.
Simply put, for one, the benefits of m-commerce include customer satisfaction, cost savings, and new business opportunities.
M-commerce can be conducted anytime, anywhere with a light- weighted device.
A single owner has control over data as the mobile device can be highly personalized. M-commerce can bring the buyer and seller together more easily and facilitate greater profits and a closer customer relationship.
Credit: The Economic Times, India

M-Commerce Models: In the following diagrams, the self explanatory models of M-Commerce in Rural India are Explained:

[pic] [pic]
Fig1 Fig2 Model for First 1-2 years.

[pic] Fig3 Model for 3-5 years

Authors Profile: Prof. S.Balasubramaniam
Presently teaches: SCM & Information Systems
B.E (Computer Science) Osmania University; PGDBM, XLRI Jamshedpur
More than Twenty years of industrial experience in companies like TATA Motors and Ciba Geigy, LTV Steels (USA); 5 years of teaching experience in management institutes.

References: 1) International Telecommunication Union, Sep, 04 Reports. 2) Indian Telecommunication Statistics DOT & TRAI performance Indicators. 3) Research Approach to Mobile use in Developing world, Jonathan Dononner, The Earth Institute of Colombia. 4) Global Events Local Impacts. Microsoft Report. 5) IT Vidya.com, Jan 2007 6) Opportunities for action in Consumer market. BCG Report. 7) The Business Week. 8) How Life will Change in Future Mobile world. Prof.A.Jhunjhunwala
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• In India, fibre connectivity to most county towns (talukas)provided by State-owned incumbent. • Fibre has capability for infinite bandwidth • 85% of villages lie within 20 Km radius of talukas • Typically 300 villages in 30 Km radius300

Indian Rural economy.

Rural India has 700 million people in 600,000+ villages (about 1000 people per village with per-capita income of Rs 20 per day) per capita GDP of Rs 8000 per year. • Can technologies make a significant difference in lives of such people? • Can it bring to them Education & health • Can it significantly enhance their incomes?

• Micro-enterprises need Finance Knowledge, Training & Support Quality control, Packaging Buying, Selling & Logistics Risk Sharing

• Can Communications Enable these?

The bers Number of fixed and wireless telephone connections has doubled in the past two years, to about 150 million, and Indians are signing up for mobile-phone service at an extraordinary fMbpt?‚ÈÉÔ
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uive million new wireless connections a month. The Ministry of Telecom has set a target for India to have 250 million connections and mobile coverage for 85% of the country—from about 30% today— some time in 2007.