ET had an interesting article a couple of days ago on declining SMS usage in India –…

While the absolute number of SMS’s sent continue to grow (simply because Indian operators continue to add subs at a mind-boggling rate), the average SMS message per user fell significantly in the Sep. quarter relative to the June quarter – a trend that apparently began in late 2006, according to the article. While a number of possible explanations are put forth for the decline, I think the biggest factor is that with over 200m mobile subscribers we’re now well past the 70-80m subscribers who are English literate (I’ve seen some numbers as high as 100m for the English literate population). With over 50% of the user base unable to send/receive a “standard” text message, is it any wonder that SMS usage is falling? The bigger question in my mind, is when the operators will wake up to the fact that Value Added Services beyond SMS (yes, operators treat SMS as a “VAS”, simply because its non-voice, rather than a source of differentiation) is not something they can continue to soft-peddle if they want to stem the inevitable decline in ARPUs. Operators also need to take a long and hard look at their revenue sharing arrangements (in India 60-70% of VAS revenue goes to the operators vs. 25-30% in most other countries) since that’s leading to a chicken and egg situation – smaller share of the VAS pie stifles innovation in VAS and lack of compelling VAS applications means operators continue to milk whatever they can from SMS based quasi-VAS services. On a related note, the opportunity for non-text based as well as multi-lingual applications is real, and compelling. There are 3-4 companies in this space, but there’s room for many more. Would love to hear thoughts from others.

RJ Sridhar

RJ Sridhar is the Founder and Managing Partner of Radical Shift, an India/Singapore based personal development, coaching and training company.

Prior to founding Radical Shift, RJ was Head of South Asia investments for JAFCO Asia, a leading pan-Asian venture capital firm based in Singapore. He invested in many early and growth-stage ventures across India, South East Asia and Australia. As a Director on the Board of several portfolio companies he advised CEOs and senior management on strategic, financial and operational matters and helped to scale their business and attain profitable exits.

Previously RJ was an investment banker with Morgan Stanley in New York, where he worked with CEOs/CFOs of major Fortune 100 companies in the technology and telecom sectors and helped take multiple venture funded companies public. He also held senior product development and engineering management roles with industry-leading companies and startups in the San Francisco Bay Area, where he build, led and managed large engineering teams developing next-generation communication products.

RJ holds the ACC credential from the International Coach Federation and is also a certified NLP practitioner. He mentors several early stage companies in the region, serves on several advisory boards and is an Entrepreneur-in-Residence at INSEAD, Singapore.He holds an MBA from Duke University and a Master’s degree in electrical engineering from The Ohio State University.