Market Insight

Carrier billing support will give the Indian mobile content market a much needed boost

May 05, 2016

Jack Kent Jack Kent Director, Media and Advertising

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Idea Cellular has become the first Indian mobile operator to support carrier billing for Google Play purchases through a partnership with UK-based operator billing vendor Bango.

Third-placed operator Idea counted 172m mobile subscribers at the end of 2015, behind Bharti Airtel (243m) and Vodafone (194m).

The agreement covers all Google Play content including apps, games, music, video and books and is available for both pre and post-paid customers.

The Indian launch means Google Play carrier billing is now supported by almost 100 operators in 45 countries.

 

Our analysis

The launch of carrier billing will provide a major boost to the Indian mobile content business. India passed the 1bn mobile subscription mark in 2015 and is one of the fastest growing mobile markets; smartphone shipments in India will overtake the US in 2016, making it the world’s second biggest market behind China. But, Indian mobile content revenues have struggled to match the growth in devices and mobile subscribers. IHS found that in 2015, mobile content spend per capita in China was 10 times greater than in India. Despite India’s lower smartphone penetration and more limited mobile data access, which have been primary barriers to mobile content success, the lack of carrier billing support was one of the major hurdles in monetising existing smartphone users. Android smartphones account for more than 90% of the Indian market, but the relatively low penetration of payment cards means that many customers have been unable to make mobile content purchases.

The move to support carrier billing had been anticipated, and hoped for, by local content companies for some time. Unlike many of their Western counterparts, Indian operators continue to play an active role in promoting their own mobile content services and so have been reluctant to support billing for a third-party store. Historically, Indian mobile operators have also demanded revenue shares that have made it impractical to support third-party services. The Idea launch shows that the market is shifting and that operators now recognise the benefit from providing billing support.

Google has had to change its approach to ensure Indian operator support. Rather than have Google absorb all the fees and operator revenue shares, Indian customers using carrier billing will be charged an additional "convenience fee". In the example demonstrated at launch by Idea, a Google Play charge of Rs 10 would incur a convenience fee - to be paid by the consumer - of Rs 1.6.

The Indian mobile content market still faces a number of challenges. Despite strong growth, mobile data usage and smartphone penetration remain relatively low. Other operators will also need to follow Idea’s lead and support Google Play billing to really drive the market; Idea’s subscription market share was just 17% at the end of 2015. India is home to a diverse and innovative mobile content and services market, with domestic companies attracting strong investor interest in the music, commerce and payments space in particular. IHS will provide further analysis of these innovations and challenges in its forthcoming country report on the Indian mobile content.

The deal is also a big win for carrier billing vendor Bango. Margins are tight, and there is a lot of competition in the carrier billing industry. The Indian Google Play market had long represented a major goal for vendors given its scale and continued growth potential. 

 

Geography
India
Research by Market
Mobile & Telecom
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