Author Archive for Malapati Raja Sekhar

Mobile as media for rural India

Today someone has sent me a mail with the following question.

What are your thoughts on the role mobile can play in rural india? Are there significant revenue opportunities in either mobile advertising or messaging?

First of all, what is the media that through which you can reach rural consumers? Currently it is TV or Radio or Movies (for the sake of simplicity in our discussion, I am not considering audio or video players or even gaming devices although these can be considered as media). Fundamentally they lack the following elements when you look at urban and rural as separate markets.

  1. Customization: You find that TV/Radio programs or movies are also meant for urban as well. This means they cannot customize their content specifically to rural consumers. There is an another way, they may run specific TV/radio programs at a particular timings customized for rural folks. But then, India is culturally so much diverse that you can’t take all those rural people into a single bucket.
  2. Interactivity: Our traditional media is not interactive. You can’t get any inputs from the consumers. It is always pushing to them.
  3. Mobility: Mobility is missing in all existing channels. However, radio is an exception. But then due to lack of interactivity & personalization, this media loosing out the numbers.
  4. On-demand services: There is no on-demand concept in any of the existing media. However, this is the mantra today.

There are many more issues such as ‘reachability’ etc. All of the above issues can be addressed when you consider mobile as the media. That shows the potential of the market considering the fact that the large number of people reside in rural areas.

Usually because of too much content being supplied in urban markets, urban consumers are started to believe that information is free. And it is the end-to-end service that is to be paid in their case. However, for the next few years, information scarcity will be prevalent across rural India. This means, rural Indians are ready to pay for information provided if that is worthy enough for them. Of course, we have a challenge of understanding, what exactly is worthy for them. Second challenge is that how do you reach them through low cost models.

Bringing constructive changes in education (or the way of learning!)

Some of you who knows me personally are aware that I am extremely crazy about bringing basic services to Rural India (I do have a personal blog in this regard). One of such services is Quality Education.

What causes learning? 

First of all, learning initiation happens through the exposure. For example, if I am watching a movie wherein someone traveling by flight then I may learn about how a flight looks like or even the feeling of journey in a flight. But then I get exposed to a variety of stuff every day. Do I learn all of those? The answer is ‘No’. I learn only few things which I am curious about. Depending on ‘how much curious I am’ about a particular thing, that much I learn about it. So, it is very clear to see that if we are interested in something then we would learn quicker and deeper. Moreover, interest makes our learning much more enjoyable.

How to identify a child’s interest?

How can we understand what the child’s interests are? If we can figure this out then we can encourage the kids in those stuff. We can even personalize the teaching content to each child. For a long time, I have been thinking about this. Recently I could get the answer for this interesting question. If you interact with any child for sometime, whenever he observes some stuff (interesting to him) he starts asking questions. As you answer he would ask more and more. Most parents and/or teachers discourage this process as they get disturbed frequently or if they don’t have answers. Actually asking questions shows his interest on that particular object/thing.

What a child needs to learn at minimum in order to succeed in this digital world?

Atanu has written a detailed post on this topic. Let me reemphasize it. Digital world is full of information (currently it is in the magnitude of petabytes) and it is much much more than any individual can consume. This means, child need not learn whole text-books that are available to him rather he should learn few concepts that are interesting to him. In particular the child must learn how to construct such concepts on his own. Here, technology/schools/parents/friends/etc may help in filtering the petabytes of information and provide qualitative information which suits his requirements. In order to utilize this aid effectively, at the fundamental outset, he must be skilled in “reading, writing, logic or arithmetic and ‘how to learn’”.

 How to train a child to learn on his own?

We have a private school of 700 children (Sarojini Vidyalayam) in a rural village near Guntur (Andhra Pradesh, India) and experimenting this process in the following manner. Every week we have one specific day called “FUN-DAY”. On this day, we conduct some interesting stuff to entertain children. One of such thing is called “Question Hour”. In order to attend this class, each child is expected to bring a note (Doubts book) wherein he mentions his doubts those came into his mind during the week. These doubts could be anything like, why sky is blue? or  why don’t fan falls down? or why is air invisible? etc and need not be specific to their class subjects. Now assuming the classroom containing 50 children, all are divided into 5 batches (10 students per batch). Now batch-wise, that is, 10 children are to clarify their doubts among themselves. When they can’t answer certain questions which will be written on teacher’s notebook along with the names of the students who raised those doubts. Now the class teacher answers whatever she knows and passes unanswered questions to Principal. Question hour ends with this. Then the principal arranges a “Dial an expert” hour on the next FUN-DAY. Wherein, on a speaker phone an expert answers some of those unanswered questions to the children.

The goal of this process is to make sure that children ask right questions (obvious ones are filtered out much before it comes to the expert level). Now the expert is required to give answers filled with many more questions and provide examples/reference books/programs/etc. So that the children get the answer but then they become much more inquisitive to answer those questions (of the expert) on their own by reading the reference materials. We are considering the rewarding program for the children who answers these. Yes, learning happens through practice. So why, we have created this process in order to make the children learn on their own.

Can this process be scaled to the national level?

We are piloting these concepts at our school. Once we have matured processes, we want to use technology in order to automate and scale it to the masses across India (or elsewhere). This is what I am currently working on. If anyone is interested, then write me a mail to my gmail id: malapati.

NOTES:

  1. Expert could be anyone who is relatively higher educated and regionally known person.
  2. Children (for that mater, anyone) learn by observing others or things around.
  3. Before inventing such system, our initial constraint was that not to disturb existing school system procedures.
  4. I am writing a book on Google tricks in order to help children to filter information on their own.

Opportunities for service providers in education

During the last two weeks I have attended my brother’s engagement and as well as his marriage in Andhra Pradesh. As these were planned on a short notice, I had to travel on busses from Hyderabad to Tenali (via Guntur) and Guntur to Hyderabad. As usual, through the bus window I was observing at all sorts of changes happening here since I left (12 years). Although I observed many interesting things however I like to stick to one particular thing for the discussion here.

 I was observing each bill-board present on the road sides of these journeys. I found at least 30-40 percent of them are about engineering colleges. I am familiar with the similar scenario in late 90′s, most ads on all newspapers/local cable channels during the summer are about admission to schools and junior colleges (mostly boarding ones). This clearly shows that Andhra is the hub of education. Here, competition is fierce. Although such competition did not yield improvements in the education system per se, it does provide good infrastructure to think on global scales. Education is controlled by government and so, fees are fixed. Then ..

 Where is the money, honey?In the case of engineering colleges it is mainly the management quota of 15 p.c. which yields the enough money for competition. Regular fees for the students under management quota is Rs. 90000 p.a. and this excludes donations which may run into several lakhs depending on demand for a particular college. I have done a little arithmetic and found that a typical college earns about 7 crores of rupees per annum(see below for details). The reasons for such change in the mindset of parents for sending their children at any cost to engineering colleges are usually attributed to opportunity to collect higher amount of dowry (yes, it is academically proven fact), attraction towards USA returnees, social prestige, etc.

Assuming 300 private colleges are present in Andhra Pradesh, revenues on all colleges equates to half billion dollars per annum which is a decent market to provide enhanced services to this segment. If I also consider private boarding junior colleges then the number would perhaps be more than 5 times (for example, there are more than 2000 private boarding junior colleges offering intermediate or PUC course wherein a typical student pays anywhere between Rs. 20000 to Rs. 50000 per year). 

Now if we look at the opportunities: finishing schools, e-learning or m-learning, softwares for colleges, infrastructure up-gradation etc are the low hanging fruits using the competition between those institutions. So I think, anyone who wants to provide services to education segment should start from southern states — Andhra, Tamil Nadu, Karnataka (in that order). Anyone listening?

NOTES:

  1. Estimate on revenue of a typical engineering college: Civil, Mechanical 120 seats each, Computer, ECE 60 seats each and 1-2 other branches having 40 seats. So it is like 400 students per batch. This means: 1600 students on campus on a particular year (engineering course is a 4 year one). 15 p.c of 1600 students pay Rs. 90000 pa and rest of the students pay Rs 30000 pa. This equates to: Rs. 6.2 crores (62 million). Coming to donation part, on an average if each fresh management quota student pays about 200, 000 and this equates to 1.2 crores (12 million). So total revenue of a college on engineering is about 7 crores of rupees.
  2. There could be many more science students studying MSc or MCA or even MBA on campus. But for our estimate, I sticked to engineering students.
  3. Number of engineering students graduating from Indian engineering colleges: 400,000 students is actually a 5 years-old number. This year the capacity of intake into AP engineering colleges is about 150,000 students. So I expect the student intake in overall India would be more than 8 Lakhs.

Who will tell telecom operators?

Few thousands of people travel on any Mumbai local train. These trains run with a period of every 5-10 minutes. This means, you have thousands of people present anywhere on track and at any point of time. Many of them belong to organized sector. Each person would spend at least an hour or two on an average (to and from). In any case, all the commuters represent a good economy for consuming various services on move.

It is clear to see that during local journeys people prefer Mobile VAS services in order to pass their time. Forget the quality of network in accessing data services on move, even when one wants to make calls or receive calls (from train commuters),  call drop is very high and voice break is very much persistent. I could never find the reason why telecom operators don’t install sufficient towers on pathways of train track routes/ bus routes/traffic signals.

 I strongly believe, any directions in this regard would lead to increase in usage of Mobile VAS. What do you think?

Strategies for entering into rural market

The following are very generic comments for companies focused on rural market.

  1. Focus: The company/organization must focus on a single service unlike Drishtee or n-logue or Akshaya. However after achieving success with a product/service you may broaden your portfolio.
  2. Training: Training is essential for all the stakeholders in the company – employees, customers, vendors, etc. Why? Because in rural India, you have an abundance of raw talent that must be aligned to your requirements. In fact, sometimes you may have to start from creating the whole ecosystem before actually scaling up your operations.
  3. Adjusting to local needs: Rural India represents varied cultures, traditions, languages etc. So your model should be sufficiently flexible to adapt to local needs.
  4. Technology for masses: Use technology wherever is possible.
  5. Processes: Standardize operations in order to create scalable business processes. Actually, this paves the way for more technology adoption.
  6. Word of mouth advertising: In rural India, people love to be your brand ambassadors and talk about all good things about your product/service if they like it.
  7. End-to-end service delivery: You need to make sure that the consumer gets service-as-a-whole delivered. For example, if you just collect a resume and charge the customer rupees twenty for feeding into computer- this may not be scalable. However, if you collect a villagers’ resume, provide him a job earning him rupees 5000 a month and collect rupees 20000 for your efforts – this would definitely work with rural people.
  8. Emotional Attachment: Rural people place their trust in your product or service – so you must live up to it. It is not just a commercial transaction that you engage in with them but more an emotional agreement between you, the marketeer and your consumer.
  9. Communities: Rural people live as communities or extended families. You need to align with local communities following the trick, “trust is transferable”.
  10. Efficient distribution: Rural India is sparsely populated and so it is obvious that the distribution costs are high. Hence, you need to innovate to bring down these costs.

Services going mobile in Rural India

Offering services to Rural India is expensive. That is because, peasants live in sparse locations and so, distribution costs are very high. That is why, one needs to innovate here. One of such innovation is to offer the service, mobile.

I used to wonder about the business model on providing Internet service on cycle rickshaw to Rural population in India. Ultimately it failed in terms of scalability. And nowadays I hear about many such services offered on move. In all of those services, Direct-to-consumer is the mantra. These are:

  1. Court: Indian government launched its first mobile court – an air-conditioned bus that travels to far-flung villages in order to bring justice to villagers doors. A judge follows the bus in an air-conditioned sport-utility vehicle.
  2. Hospital: “Smile on Wheels” is the mobile hospital project of ‘Smile Foundation’. Under this program, five vans equipped with X-ray machine, ECG machine, basic pathological services for blood and urine test, ante-natal and post-natal services and an out-patient department for common ailments travel on the roads of states (UT, CG, MH, OR, UP) covering 750000 population.
  3. Hospital on Train: Impact India foundation in support with Indian Railways has launched a train equipped with three operation tables, modern surgical equipment and accessories, kitchen, restrooms, sterilisation equipment, recovery room for the patients, audiometric/ophthalmic room and X-Ray room, including training facilities for up to 50 paramedics. Surgeries are conducted during its four-six week stay at a particular location. Each five-week stop costs around Rs.2 million (Rs 20 lakhs).
  4. Science Train: The Science Express – a mobile science exhibition on a train that showcases current and futuristic research in various areas, including information technology, biotechnology, health technology and systems, technology of materials and space and is aimed at inspiring young people to pursue scientific research. Reception of this service was amazing.
  5. Automobile Spare parts: Satyam has created a mobile auto showroom cum service center, which can be taken door-to-door in a Bus, called Edow. This bus will be equipped with everything an auto dealer needs, a display area, a workshop, a sales office and systems, hi-tech display systems and high speed connectivity. It expects demand of 40,000 for such buses in India.
  6. PCO (manned pay-phone service): Idea Cellular Ltd has launched an unique Shared Access (Voice & Data) PCO for Rural India. Rural entrepreneurs can sell airtime on their mobile phones to people in the community wishing to make a call or send a text message. This innovative approach allows entrepreneur to set up a payphone business for just the cost of a handset. Specially devised software with a printer will be developed to enable the owner of the mobile handset to provide a bill if required to the customer making the call. Call charges are also displayed on the handset to ensure transparency in the transaction. Additionally, Idea will offer shared Internet access in these rural communities to provide an even broader range of data services.
  7. Female on move to sell FMCG products: Shakthi is, a very innovative program of Uniliver, for distribution of FMCG goods to Rural population. Uniliver trains rural women in order to improve their selling skills and turns them as Uniliver’s saleswomen.
  8. Micro-business school: Mann Deshi Udyogini is, a Micro-business school on a mini bus, to solve the skill shortage among entrepreneurial rural women. Courses do not have any pre-qualification criteria and the curriculum is entirely driven by the needs of rural women. Courses range between one week and three months in duration and course fees start from as little as Rs. 25 (less than a dollar). Courses focus on technical skills, marketing skills, managing finances and confidence-building. Courses to develop technical skills, such as goat rearing, screen printing, selling cell phone recharge coupons, bag-making etc are being offered currently. Certificates and graduation diplomas are issued on completion of these courses which can be used to obtain micro credit.:
  9. Retail stores: 3A Bazaar is India’s first mobile retail company running on vans. These vans carry goods worth 2-2.5 lakhs of rupees everyday from a storehouse to about 700 villages. However, most of the villages are visited weekly or fortnightly or monthly. This fits with the irregularity of incomes of villagers and the mobility eliminates the drawbacks of a static rural retail shop. The daily average sales are in the range of 8-10 thousand rupees.
  10. Tools on a Truck: ‘Bosch Vaahan’ is a mini-bus which carries sophisticated Power Tools to rural areas. A wide range of woodworking, construction and metalworking tools catering to the needs of rural carpenters, metalworking artisans, plumbers etc are carried by the ‘vaahan’, which visits different villages. Product demonstrations and information sessions are conducted by the ‘vaahan’ officials in rural areas. Rural artisans can try out these tools for their work. The tools are available for purchase to rural artisans at subsidized prices. Bosch has tied up with several banks, including Canara Bank and Andhra Bank, to offer attractive loan schemes for the rural folk to buy these tools.

There could be many more such services.After listing all these services here, two points came to my mind.

  1. Which of the above projects are scalable & sustainable?
  2. Are there any other potential business opportunities to launch them as mobile. For example, I believe, cellphone spare parts on wheels can be a good candidate for the future.

List of mobile services and limitations

I believe that mobile is one of the most revolutionary thing happened in our lifetime. It would become the key enabler in the process of human development (socially/economically). The reason, for this, is the following services which would be available on a mobile sooner or later if unavailable now.

Note : All the following services would never be available on a single mobile phone. Any subset of these services would be sold in the market. So it means, one will keep multiple mobile devices.

  • Voice/Video Calls (local/national/international)
  • Documentation/Video Recording/Audio Recording – Blogging, Remotely updating office work, Softwares- Word/Excel/Powerpoint/etc, Creative Designs such as drawing,
  • Messaging/Chat/File Transfer – one to one, group messaging, group discussions, automatic notification, RSS feeds,
  • Music – Tune/songs identification through audio recording in order to download on iTunes kind of a platform,
  • E-Commerce – ordering groceries, Insurance policy, Photo-prints,
  • Ticketing or Booking – Air/ Train/ Bus/ Car/ Movie/ Hotel/ Events/ Any professionals’ appointments/ etc
  • Video/Audio on Demand – Movies, Story telling for children, Live video/audio streams
  • Access to content on web – Videos/ Images/ News Papers/ Magazines/Horoscope etc
  • Friendship/Dating networks
  • Matrimonial services
  • Search for person/object/location details – where, who, what, how, when-, object identification through photos,
  • TV – With time shift facility
  • Stocks/Investment
  • Navigation systems - Maps, Diksuchi, Driving directions
  • Banking
  • Location based payments (similar to credit/smart card) for uses such as parking lot fee, AVM, Pay any merchant such as autowala
  • E-Books
  • Teaching/TrainingE-Pen, Live streaming lectures, Materials such as Lecture notes, Presentations, Audio/Video Lectures,
  • Interactive Gaming
  • Diagnosis - Temperature, BP, Pulse reading through Stylus
  • Scanning - paper/photo,
  • OCR
  • Barcode Reader
  • Object Location Identification – RFID
  • Dictionary/Encyclopedia
  • Translation (Text/Voice)
  • Voting
  • Survey/Quiz/Feedback/Complaints/examination systems
  • Application filingJobs, loans, admission, other government services,
  • Remote access – Computers, Mobiles, TV, Fridge, Micro oven, Electric switches,
  • Identification – Software Key, Digital signature, Finger print scan, password,
  • Alarm/Watch/Timer -
  • Mirror -
  • Radio -
  • Mouse -

However, there are certain limitations to mobile which are the reasons for having limitations on the number of services. These are:

  • Display size – May have TV/Monitor output.
  • MemoryRemote storage may be used
  • Processor performanceMay use the resource of another remote high performance computer
  • Battery power
  • KeypadA foldable printed paper type wireless keypad may be used
  • Interoperability
  • Signal reach - signal boosters may be used
  • Environment
  • Water/Heat/Cold/Fire/chemicals issues
  • StandingPhysical stand may be used with flexibility in height and width

I am documenting complete details on each of the above services. If anyone wishes to collaborate with me, please write to my gmail id, malapati. Thanks.

Innovations waiting in selling Insurance policies for Rural India!

My heart beats for Rural India. Venturewoods will have many posts from me in this regard. 

 

Till date most of the companies in India are always focused on urban market or at least they sell their products/services with the same models that of predominantly urban-market oriented. However, of the late, there is a significant shift due to the popularity of so called, “Bottom of the Pyramid” model.

One of the main vocal point of BoP model is that understand low-income people as your consumers and make your product affordable (cost or units) to the BoP market. Most of the companies, these days, have started to remodel their products/services according to this principle.

However, targeting BoP market means more than this. You need to make sure your offerings suit to the local needs. That is exactly missing in Insurance sector.

Nowadays, I have come across many insurance companies selling their policies as low as Rs. 10, Rs. 25 (much less than a US dollar). This is really a welcome step. And now coming to the other innovations part:

  1. Insurance policies should be completely flexible. Typically these are separately priced like health insurance, life insurance, vehicle insurance, farm insurance etc. I think, you should price them as a combination (as a flexible percentage and choice is given to the customer). Now let the customer choose the way he wants.
  2. Second comes from distribution aspect. Do not try to keep a separate chain of distribution. Utilize 1-2 millions telecom retail distribution chains. For the simple reason that these bring the structural efficiency in order to reduce the costs.
  3. Third comes from social angle. Most of the rural people live in joint families or at least they would love to consume services as a family. This is evident from their consumption patterns such as marriage/functions, pilgrim trips etc. So your service should consider this trick and offer them a group oriented policies. In fact, one may even consider community based policies. That would possibly become an instant hit.

In all of the above scenarios, recent advances in technology would play a great role. So insurance companies should start looking at the benefits that new tech developments could bring them.

Cash card transactions are much higher in India. Why?

This is my first post here. First of all, thanks for Alok for creating such a nice platform.

There are two types of e-commerce transactions on Internet. First, the consumer who makes the transaction on his behalf or family or for a friend and secondly an agent (ICT kiosks, Internet Cafes, etc) who completes the transaction on behalf of his customer.

Indian e-commerce industry minus IRCTC is almost like industry is still in infancy stage. So it is clear that insights from IRCTC would help us in understanding the e-commerce trends. Fortunately, every month, IRCTC publishes actual statistics on transactions with complete details on its website.

If you observe statistics of any month, at first you would wonder that cash card transactions are like one-third of total transactions (rest are credit or debit or netbanking). And in fact you find, cash card transactions growth rate is much higher than all other modes of payment. Then you would start feeling like, you have never heard of them anyone using it, but then how come such large number of transactions?

I used be working as IT Security consultant for payment card industry (now I work on rural services) and so I would like to you give you a detailed story behind this wonder. Business model of any cash-card company (ITZ Cash, Done Card, iCashcard) would give the reason behind it.

Platform: It is two sided. Cash-card companies just tie-up with numerous merchants/service providers (like telecom or ticketing etc). And later they start acquiring agents to use their technology platform. Typically these agents are: ICT Kiosks owners or Cyber cafes or computer education centers or the latest PCO/STD 2.0 etc.

Target Audience: Who all can’t goto a website and/or can’t pay through credit or debit card for remote payments. India has less than 50 million regular users of Internet and large number of people are outside of the formal banking channels. That gives you the reason for much higher number of transactions on cash-card mode. This indicates, those agents become the middlemen between the remote customer and the service provider.

Commission: Most times, cash-card companies get discount from the service providers (usually 3% to 5%), a portion of which would be passed to their agents (for example air ticketing works in this manner!). Otherwise, customer is charged (for example, IRCTC don’t give any commission to cash-card guys and so, agents would charge customers on top of the ticket cost).

Other revenues: Of course there could be a small percentage of direct consumers who would use the cash-card on web. But that is not what makes significant cash-flow for a cash-card company.

Future: So it is obvious that cash-card transactions would become much higher than credit or debit card transactions when cash card companies can acquire much more agents (in particular rural areas) along with more service providers (such as electricity/water distribution companies).

———————–

Now comes the biggest disclosure: In fact, strength of any payment card system lies with the following three points.

  1. They must tie up with as many merchants as possible.
  2. Technology/process that makes the consumer to use the card for payment.
  3. Card distribution should be efficient.

Now, how are the famous credit card companies (VISA or MasterCard) placed in the above points. Firstly, they are accepted with innumerous merchants. Secondly, consumer can use the card at merchant outlet or online or telephone or SMS or etc. Thirdly, Banks issue credit/debit cards to the consumers on behalf of VISA/Mastercard. Now coming to the costs of this ecosystem of digital payments is usually less than 5% of the value of the transactions (VISA, Banks, Merchants share this 5%). As the Mobile payments is getting matured, this value is getting closer to 3%.

Of course, companies involved in this payment ecosystem also have additional revenue through other value added services such as interest charged to the customer by providing them credit, etc.