5 Nov 2015

Cloud services: the missing piece of the quad play for SMBs?

Technology convergence has created an extraordinary opportunity for telcos to broaden their offer to consumers. The fab four that make up the quad play service set (phone, broadband, TV and wireless) have helped these businesses move beyond their core value proposition and step into the role of content providers.

Now they have many more reasons to be in touch, and many more things to talk about. That’s helping build deeper, more rewarding relationships with customers, generating valuable consumer data and shoring up revenue streams. It’s also setting the stage for these businesses to continue extending their services, moving into areas that would previously have seemed unrelated to their brand activities.

Making a play for the SMB market

But how can quad play work for the small businesses (SMBs) that are an important subset of telco customers? While they’re in the market for mobiles, WiFi and other communication solutions, TV doesn’t rank high on SMBs’ list of must-haves. Given the pressure telcos are experiencing on revenues and margins in core income streams, finding a replacement fourth service for SMBs is something of an imperative.

Not only could it help protect their ARPU, it could even lead to growth. Up until now, however, that missing piece of the jigsaw has proved elusive. Just what is it that could legitimately build engagement and offer real value to SMBs?

Step forward cloud services. More and more SMBs are wising up to the range of help and advice available through cloud-based apps. In our recent survey, 70% said they’re considering accessing this support in the next 2-3 years. Given this explosion in interest, cloud solutions should really be a default part of the SMB quad play.

Don’t lose out to your competitors

And quite naturally, telcos are rapidly moving into this space: to make the most of its huge growth opportunity and to benefit from the boom in SaaS apps being designed to meet small business needs. For those Tier 1 and Tier 2 telcos without cloud service propositions, there’s no time to waste. Competitors are busy, working to establish a presence in this market before it tips over into mass adoption by SMBs. 

But filling that gap and making cloud services the fourth piece in the quad play won’t be enough. As we’ve discussed elsewhere on this blog, if you build it, they won’t necessarily come. As much as you need to invest in the technology behind an app marketplace, you’ll also need to develop a powerful Go To Market strategy and invest in an effective digital engagement platform. Only then will telcos realise the potential that cloud services promise as part of the quad play for SMBs.

“Think with an entrepreneur’s mind & resolve problems using innovative solutions” Interview of Airtel’s Christian de Faria for AfricaCom

Christian De Faria has been CEO of Airtel Africa since 2013. He has over 30 years of rich industry experience across multiple geographies, diverse sectors and organizations such as MTN, Telekom Malaysia, Disc Vision, Deutsche Telecom and Grundig.
He shares his views on Africa’s telecom market ahead of his participation to the keynote panel on innovation at AfricaCom.

AfricaCom: What is Airtel’s position in Africa’s market?
Christian De Faria: We are the second largest operator in Africa by revenue market share.

A: What do you think will be this year’s most game-changing development in Africa’s telecoms?
  • ·    Making the M-payments environment mainstream
  • ·    The bridging of the $20 smartphone which will result in widespread adoption of the Mobile Internet.
  • ·    The Digital dividend will enable more highly accessible broadband capacity at higher speeds which will allow more innovation and greater opportunity for Africa.

A: What services will enable telecom operators to generate revenue from data?
CDF: First, sponsored data – OTT players, App developers, and content owners have an increasing desire to reach the end user, in the process the Operators are losing out on big revenue opportunities. This situation is putting pressure on the top/bottom lines of operators as the data contribution to overall revenue is increasing. Currently content providers do not have any commitment on the consumption limits. Sponsored data is a perfect solution which allows an operator to get revenue from the bulk volume sales to the content providers and the end user can access the discounted services. It’s a win-win proposition for the ecosystem, where the Content providers ensures access to its content at much lower prices, the user gets the service access at a lower cost and the Operator gets a share of the revenue.
Second, shared accounts – as a single account/family gets more devices, a possibility to link all the devices to a single account allows better management of usage and cost to the end user. The user also gets control of the entire purchased volume which can be distributed within these devices; the servicing of the entire account gets simpler and efficient for an operator. This along with products like Data gifting, Internet Me2U etc. will gain lot of traction in the future. In-fact in mature markets like the US, where data penetration is reaching higher levels, over 50% of incremental revenue growth is coming from shared accounts.
Third, customized bundles which can be purchased during Service Access – As the translation of MB into the relevance of content is increasingly becoming clear to the end user, the demand for app/service specific bundles will rise. The in App purchase options, dedicated service/app specific products will become more relevant. This will lead to more sustainable incremental data revenue as end users will get the right value for each MB.
Finally, transparency enablers – Data Volume consumption notification, ability to change the data bundle, always aware of the volume consumed type of services takes the end user experience to the next level. This coupled with transparent upselling will lead to sustainable incremental revenues.

A: How can operators support innovation within their organizations and in the wider ecosystem?
CDF: An innovative culture rests on 5 building blocks: resources, processes, values, behavior and success. Success in innovation and entrepreneurship is not only gauged by earnings but also measured by how well an organization identifies a problem in the market and matches it to a solution. Companies like ours always think with an entrepreneur’s mind and resolve problems using innovative solutions.
The unstructured nature of the African tech ecosystem or entrepreneurial space in general makes it very difficult. Most people who want to invest in Africa are of the notion that they can’t do it here because the ecosystem doesn’t exist. Some ways to support this ecosystem by the telecom industry is focusing on building ecosystems that bring together partners from around the world and to help local startups as we recently did using an app development competition in collaboration with Singtel and Samsung.

A: What will be the impact of the digital transition on the telecoms and media sector?
CDF: With the digital transition, more bandwidth is available for current and future broadband platforms like 4G, 5G, etc. which essentially leads to a better experience for the end user. There will be better experience for TV and VOD users with digitized content. Affordability will improve as the cost to deliver the content reduces through more efficient next generation technology platforms. Consumers will have access to richer global content and at the same time as the rest of the world.

A: What are the regulatory requirements for improving affordable access to broadband?
CDF: Regulators should:
  • ·    Encourage multi-stakeholder consultation on policy and regulations.
  • ·    Reduce taxes and import duties on telecommunication ICT equipment and services.
  • ·    Ensure fair distribution and allocation of Digital Dividend spectrum and put caps where appropriate.
  • ·    Encourage network and facility sharing and utilize Universal Service Funds (USFs) to close the digital divide.
  • ·    Ensure transparency and openness (e.g. by making market data and regulations available).

A: How can telecom and digital brands create more value for African consumers?
CDF: More value will be created by:
  • ·    Bringing more relevant global content at affordable prices.
  • ·    More Localized content.
  • ·    Affordable Packs.
  • ·    Affordable devices.
  • ·    Transparency in Consumption and Charging.
  • ·    Education for the end user through simplified portals like One Touch Internet.

A: How is the role of OTT players evolving in Africa’s market? How are their relations with Telcos changing?
CDF: The African Market is still in the early stages of basic internet adoption unlike the rest of the world where OTT player entry was preceded by few years of internet users’ presence.
A typical African user experiences the Internet for the first time on a mobile device and content that’s come from a digitally mature environment. Initiatives like One touch internet and Sponsored data are the tools that would enable a faster and value added adoption of the end user to the digital world. A lot of intellectual and monetary investments along with innovative data products are required to be delivered by all drivers of the digital ecosystem including OTT players and Operators.
Telcos cannot be treated as dump pipes anymore as they have invested large sums of time and resources to ensure basic, uninterrupted access to the end user while they continue to work on improving the experience further. As Telco operators we are required to comply with local regulations and taxes which are not applicable to OTT players. Both Operators and OTT players have to co-exist and sustain their businesses, thus they both have to take bigger roles while creating  combined platforms for the delivery of affordable and value added content to the end users.

A: How can the communication’s needs of enterprises be met in order to sustain economic growth in the region?
CDF: The communications needs of enterprise customers vary across the different segments and that broadens the portfolio of services required of Telcos to service enterprises. Today, Telco services address many industry verticals with varying product platforms with diverse operations ecosystems.  
Telcos must approach servicing enterprises with a convergent strategy focused on converging infrastructure, products, service delivery and support with the goal of doing more with less using this as a means of meeting the diverse requirements of our businesses in a very efficient way.
As more enterprises continue to expand within the region seeking to reach more customers & markets, Telcos must create an ecosystem that is leaner, more accessible but highly cost effective while providing scalability and flexibility needed to support business growth.

A: In your opinion what are the most interesting debates to expect at AfricaCom this year?
  • ·    The changing regulatory landscape in Africa including Dominance and Significant Market Power taxation and spectrum Licensing – (Note from AfricaCom: Hear about it in the Regulatory Panel in Connecting Africa on day 1 at 12.20)
  • ·    The adoption of data and OTT led services and the role of OTT players within the infrastructure and regulated environments. (Note from AfricaCom: Attend the Vision for Africa keynotes on all 3 days)
  • ·    New digital services for Africa. (Note from AfricaCom: Attend Digital Entertainment (day 1), New Revenue Streams (day 2) and Mobile Money (days 1 & 2)
  • ·    Growth and monetization of LTE in Africa (Note from AfricaCom: Attend LTE Africa on all 3 days)

Hear more from Christian de Faria in the AfricaCom opening keynote’s Innovation Leadership Panel (Tuesday 17th November, 9am), where he will discuss how to support a culture of innovation and entrepreneurship in digital Africa with other tech leaders: ), operator Marc Rennard (EVP AMEA, Orange Group), OTT player Markku Mäkeläinen (Director, Global Operator Partnerships, Facebook), investor & Forbes 20 Youngest Power Women in Africa Dr Jackie Chimhanzi  (Senior Strategist, IDC), broadcaster & tech specialist Larry Madowo (NTV Kenya) and entrepreneur & WEF Young Global Leader Bright Simons (President, mPedigree).
For more information on the programme click here

4 Nov 2015

“Africa is now at the inflection point of Mobile Money 2.0” Interview of Srinivas Nidugondi, Mahindra Comviva for AfricaCom

Srinivas Nidugondi is Senior Vice President at Mahindra Comviva. He will lead a workshop in the Mobile Money conference at AfricaCom on Wednesday 18th November. He shares his thoughts on the subject ahead of the event.

What is Mahindra Comviva’s position in Africa’s market?
We are the global leaders in mobility solutions with an expansive footprint in the emerging markets of Africa, Latin America, South Asia and the Middle East. We were one of the first to enter the African mobile money market with the first deployment of our solution mobiquity® Money in 2008. Since then, we’ve grown exponentially, and now mobiquity® Money is the single largest mobile money solution with over 40 deployments and a 28% market share in Africa. Most of the major operators in the region have chosen to go with our solution. Our leadership in the market is evident from the fact that we are powering 3 of the top 10 deployments.  
How did the company become a mobile money specialist for Africa?
We have formed a strong and emotional connect with Africa dating back to our first ever solution in the region. PreTUPSTM , our flagship electronic recharge platform was received very well in the market, creating a strong base of future users in the region. Today, PreTUPSTM is deployed by 57 operators in over 40 countries, with Africa alone accounting for 39 of the deployments.  The success of our flagship electronic recharge system provided us with a strong base for launching mobile money solution.  
Yes, we’ve always championed mobile money as a means to increasing financial inclusion in Africa, Latin America, South Asia and the Middle East. Thanks to our expertise in tailoring solutions in emerging markets, we have always made a big difference in solving local issues transforming the lives of the local people on the ground.  For example, we were able to anticipate early that mobile money could play a big role in boosting financial inclusion within the unbanked and under-banked segment in Africa. Not only this, we provided solutions that were truly device agnostic and customized to needs of each country, increasing our reach across a wider demographic area.                  
We have always believed in investing in new and innovative solutions and technologies that help our clients to provide the best in customer experience to their end customers in Africa.  We have been a pioneer in mobile money in Africa and have many firsts to our name:
·         First to provide MasterCard companion Card in Africa
·         First to facilitate domestic interoperability between mobile financial services in Africa
·         First to offer closed-loop NFC merchant payments in Africa
·         First to enable mobile based international remittance service in North Africa

What do you think will be this year’s most game-changing development in Africa’s mobile money market?
Africa is now at the inflection point of Mobile Money 2.0 with higher user adoption on the cards as many fresh and innovative initiatives are gradually taking shape. We think the big game changer is going to be the move from a siloed “closed approach” to collaborative “open approach”. A number of mobile money providers have already embraced the ‘open approach’ with great results. Tanzania which has embraced domestic interoperability is a shining example. I think the “open approach” is not just one initiative, but a group on initiatives. We define “open approach” as an initiative where the mobile money service integrates with an external financial system. There are a number of ways by which mobile money providers are adopting an open approach
o   Domestic interoperability – Two or more mobile money providers facilitating direct account to account money transfer. Examples are Tanzania and Rwanda.
o   International interoperability – Directly transferring money from mobile money account in one country to another. E.g. Direct Money transfers between Airtel Burkina Faso and OrangeIvory Coast
o   Open-loop payments – Mobile money provider collaborating with open systems like MasterCard and Visa to offer companion cards which are accepted at MasterCard and Visa licensed POS and ATM worldwide eg EcoCash MasterCard Companion Card in Zimbabwe
o   Integration with MTOs – Mobile money provider integration with MTOs like Western Union, Moneygram and WorldRemit to facilitate inward remittances
o   Integration with bank account – Mobile money providers interconnecting with banks to facilitate direct money transfer between bank account and  mobile money account transfer
o   Open APIs – Exposing the APIs to enable merchants and businesses to offer mobile money as a payment channel
What topics will you expect to dominate the debate this year?
A lot of water has flowed under the bridge since Kenya struck gold with its single operator led mobile money service. Neighboring countries like Tanzania and Rwanda have also shown significant uptake in mobile money in recent years. It is important to note that Tanzania and Rwanda have taken mobile money in a direction completely different to that of Kenya by banking on interoperability. It is early days yet, but as the market matures, it would be interesting to watch the benefits of interoperability.      
Another hot topic of the day is improving the activity rate needed for sustaining long term growth. One of the troubling details lies in the number of users who are aware about mobile money services, but who are inactive due to some reason or the other. I think the challenge lies in converting inactive users to active users and even product evangelists.    

Are mobile money transfers still the major part of mobile money strategies and how are they developing?
P2P money transfer being the primary use case will remain a major part of mobile money strategy. However, as the mobile money market matures, there will be an increase in the level of complexity of mobile money transactions from P2P transfers to business payment like merchant payments, salary payments, bulk payments, and B2B payments as well as micro-financial banking transactions like savings, loans and insurance.

What other mobile money services are you focusing on for future growth?
In order to increase the reach and scope of our service in Africa, we are constantly exploring new avenues and creating new synergies with our partners and clients to enable mobile money services across the board.  We have identified several key growth opportunity areas for this purpose like NFC merchant payments, companion cards/virtual cards and micro-financial services.
Merchant payments are 10 times bigger than P2P transfers. It is clearly the next big opportunity in mobile payments and we have already taken steps to cash it. We have collaborated with mobile money providers in Tanzania and Rwanda to provide first-of-its-kind NFC based merchant payments. The solution equips merchants with mini-calculator sized portable NFC POS linked to their mobile money account. Similarly, consumers are provided with a NFC card linked to their mobile money account. For low value payments consumers just need to tap the NFC card at any NFC enabled merchant POS.  We are bullish that our NFC enabled payment system will soak up a major share of the low-value high-volume (long tail) merchant transactions in the future replacing the old pin based system with easier “tap & pay” system. High value transactions request users to enter a password providing an additional layer of security for POS payments.
Another step to boost merchant payment is the open loop payments. An open loop payment system expands the merchant acceptance network, increasing adoption of mobile money service. Our partnership with MasterCard enables our clients to offer MasterCard companion cards and virtual cards linked to mobile money accounts. Companion cards can be used at more than 30 million MasterCard merchant locations (POS) in more than 200 countries. Companion cards can also be used at MasterCard licensed ATMs to withdraw cash. Virtual cards can be use to make online payment at large number of e-commerce websites. By matching synergies with the leaders in mobile money (Mahindra Comviva) and the leaders in payment processing (MasterCard) companion cards/virtual cards bring new users on the bedrock of scalable merchant networks, security, cost efficiency and easy integration. 
Micro-financial services are the third prong of our future growth strategy. I think the future of banking lies in leveraging the ubiquity of the mobile for facilitating micro-savings, short-term low-value loans and micro-insurance. This will disrupt banking landscape as we know it today using mobile airtime and mobile money usage for defining loan amount and formulating insurance policies.  In Zimbabwe, Tanzania and Rwanda we are enabling mobile money providers to extend micro-credit to their customers for short-term (1 month). Unlike conventional loans there is no need to attach documents of salaries and address proof or deposit any security. The mobile money providers are using a novel approach, tying loan disbursements with usage of mobile line, mobile money and previous loan payment behavior. In Zimbabwe, we have digitized the traditional savings clubs (known as ‘maround’ or ‘mukando’), facilitating group savings via mobile money.

How can operators create more value for African consumers?
Many service providers make the big mistake of trying to copy & paste examples of successful mobile money deployments from around the globe without even trying to understand the success factors that were driving those deployments.
 Every country is different, with unique market specifications, calling for bespoke solutions rather than a “one shoe fit all” generic solution copied from successful deployment many thousands of miles away.
 We think mobile money providers should focus more on providing services that solve an actual need for that market. A ‘need based service’ model will be beneficial for both the consumers and the mobile money provider. Educating consumers about new services and gaining their confidence is the key here.
Also, mobile money operators could invest more on features that enhance consumer experience, such as confirming the name of recipient before sending money and thus reducing cases of wrong transfers.
With the rising ubiquity of the smart phone, introducing mobile app or web portal could also go a long way in enhancing usability.

For more information on the Mobile Money programme at AfricaCom, click here

"MNOs are best-positioned to emerge as primary financial services providers" Interview of Ambar Sur, Terra

The Mobile Money conference is generating ever more interest at AfricaCom, showing the importance of the opportunities for operators and other organisations. Ambar Sur, Founder and CEO Terra  shares his views on the specific challenges and opportunities the African market presents. 

What is your company’s position in Africa’s market?
Terra, a mobile-first international payments services network is institutionally backed by Mahindra Comviva, a global leader in delivering mobility financial solutions in Africa.
Founded with the vision to send money to any mobile, Terra interconnects mobile wallets to facilitate seamless cross-network, cross-border transfer of funds. Terra has successful conducted its first international money transfer pilot between MTOs in UAE and Asia and operators in East Africa. Terra services would be commercially available by June 2016 across several markets in Africa.

What is your background? Did you always see yourself being a champion of services for emerging markets?
Mahindra Comviva, Terra’s parent company, pioneered mobility financial services in Africa and has a 30% share of the global mobile wallet market.  Since its market foray in Africa in 2007, the company has partnered with mobile wallet service providers to strengthen services supply, which has resulted in bringing 120 million previously excluded unbanked customers into the financial mainstream.
The remittance market is awaiting a similar revolution. Terra, aims to be a game-changer in the low-value transnational payments marketplace.
 Terra is building the “digital rails” for faster and reliable financial transactions between South-South countries. Our services are targeted at low-income, unbanked migrants, who have a latent demand for convenient and secure cashless instruments for low-value intra-household transfers.  The ability to remit money in any denomination using one’s mobile device would unlock market potential and enable a range of use cases. A parent, for instance, who wants to send a gift of USD 20 to their child, would be able to do so anytime, and almost anywhere, in Africa.

 What do you think will be this year’s most game-changing development in Africa’s mobile money market?
Just as the quality of retail broadband services is determined by the availability of the backbone services infrastructure; in an increasingly integrated regional economy, well-functioning and efficient backend payment services infrastructure is needed to facilitate interregional cross border payments and e-trade and commerce. 
Mobile network operators (MNOs) own the largest financial services infrastructure in Africa, but, currently, services function in silos.  MNOs are best-positioned to consolidate their role and emerge as primary financial services providers by interlinking services to boost Africa’s digital economy.  

 In your opinion what are the most interesting debates to expect at AfricaCom this year?
In the African continent, mobile money has transformed from a product to top up mobile airtime accounts to becoming a platform for delivering a range of payment services to unbanked as well as banked segments. There is a need to accelerate the transformation in terms of introducing a breadth of service and improving per capita consumption of financial products. This would bring to the fore the second generation of mobile financial products needed to grow the market, ways to improve financial services uptake via customer profiling and targeting, and the need for greater services interoperability to accelerate the supply as well as the demand momentum.   

Are mobile money transfers still the major part of mobile money strategies and how are they developing?
Money transfers remain the anchor service as they represent a stable and recurrent source of credit for additional transactions on the money network.  Currently, the region lacks a scalable services infrastructure for real-time, low-value international transfers.
Interlinking mobile wallet accounts would boost remittance volumes and fund inflows into the money network. Regulators in several countries --Tanzania, Rwanda, Ghana, and Democratic Republic of Congo are promoting domestic interoperability between e-money issuers as well as banks and e-issuers. The early results are promising. In Tanzania the positive network effects generated by facilitating account to account transfers between  Airtel and Tigo networks has improve monthly person to person transaction volumes by 15%.
Many MNOs have also forged bilateral correspondent arrangements with other MNOs for cross-border transfers along select corridors. Characteristically, bilateral models prevent quick services scaling. A multilateral approach connecting any network to any network such as the one offered by Terra can help mobile money service providers to gain a larger share of the USD 65B African remittances market. 

What other mobile money services are you focusing on for future growth?
The Terra model facilitates the essential shift from remittances being a transactional tool to becoming a system of economic enablement for financially underserved migrant households. Terra drives the creation of a wide services ecosystem by enabling third party service providers to “ride on its rails.” Products such as cross-border e-payments, bulk aid disbursements, micro-insurance can be offered regardless of the customer’s affiliate network.
Further, partners benefit as direct credit of monies into the beneficiary’s wallet account encourages more transactions and promotes financial deepening.

What is needed from regulators to support the development of mobile money services in Africa?

In the context of mobile-enabled international remittances network scale is a critical success factor. Regulators are yet to define clear guidelines for an international remittances hub, which interlinks multiple service providers. This is a significant policy gap. Further regulation requiring mobile wallet service providers to seek fresh approvals at a per partner level for each corridor hamper agility and need to be  re-assessed in the context of  building a “one network” for money transfers in  Africa. 

Ambar Sur will be joining the Mobile Money conference, taking place at AfricaCom on Tuesday 17th and Wednesday 18th November. For more information download the agenda here.