Local Touch

Mobile phone content has become one of the highest growing revenue generators for operators in developed markets. In Africa however, where ARPUs are low and many millions still remain unconnected, offering such extras may seem unnecessary and futile. Alex Ritman asks what applications are selling across the continent, and what issues providers are facing.

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By  Alex Ritman Published  March 22, 2006

|~|Danannerose200.jpg|~|Manobi CEO Daniel Annerose says that finding investment is a big hurdle for local content providers.|~|When the Crazy Frog ringtone jumped to the top of many European music charts in the first half of 2005, it was a sign that mobile content had moved from a youth-orientated niche market into mainstream culture. Content is now worth billions, mainly from ringtones and wallpapers, and is only set to rise, with almost all international broadcasters, filmmakers, record labels and other entertainment companies seeing how they can take a piece of the action. According to a report from Juniper Research, the global content market will be worth a staggering US$45 billion by 2009, games and gambling overtaking ringtones to claim the lion's share, taking over 60%. But in Africa, a continent of 61 countries and territories and almost 2000 languages, the call is not for broad content that can satisfy widespread demand. Instead there is a need for more specific, targeted output. “Local is the key. People are interested in the outside world, but local content is the biggest seller,” says Graham Matthews, group marketing director of products for pan-African operator Celtel International. So far the supply of such material has not been that forthcoming for Celtel. “There's less of it than we would like,” admits Matthews. For simplicity, rather than source content from each country itself, the operator has turned to aggregators to do the job for it. “Most is provided by one or two aggregators, and they form relationships with local news and media groups.” According to Daniel Annerose, CEO of France-based African content provider Manobi, it is important to deliver content specific to the African market. “We are not finding services properly addressing the needs of all our communities,” he claims, indicating that with 70% of the African population living in rural areas, there is no sense in offering information on movies, or similar services. “There is a challenge for the operator to decide what sort of content to offer these communities.” Manobi offers an extremely targeted application tailored to Africa's agricultural workers. Starting in May 2005, it launched an interactive service in Senegal providing the latest market data to sellers of produce and others in the agrarian sector. Previously, such industries had borne the brunt of fluctuating market prices, with sellers finding that middlemen were paying them significantly less than the going rate. “We have people on the ground in Senegal who collect market information directly from the marketplaces,” says Annerose. Inspectors visit markets daily, entering the data onto PDAs and sending it across the GSM network to Manobi's database. It is then available to professionals in real time via the internet, WAP and SMS. “We are mixing different business models on our services,” explains Annerose. On WAP the user has to pay for the registration fee, and after that pay for just the connection to the operator. On the web, one has to pay the registration fee as well as for use of the platform to Manobi. “The SMS is free. For WAP it is around US$5 a month, but the registration is free, and on the web it depends on the number of products you wish to receive information about.” While it charges for some of its services, Annerose denies that Manobi is focused purely on making a profit. “You cannot think about sustainability if you do not think about the business model of the service you are providing.” Despite the fact that his clients may have low income, Annerose claims they can improve the economic value of their businesses using his services. “We can show them that for a very small amount, for example using our WAP services for US$5 per month, a farmer can increase his revenue by US$700 per hectare.” By knowing the market price before they get to market, sellers are at a much better advantage to make the maximum amount. Although Manobi is a private company, it is working closely with non-profit organisations to help spread the service, and overcome any barriers associated with its use. “We work very closely with farmers' unions, urging them to build a nice business model to resell cellphones, for example,” says Annerose, adding that without inboxes, distribution is a major hurdle. Price is the biggest concern. “It's very important to give access to these services for free, or for a very small amount. Because while I will not make all my money from them, I will acquire clients who I know are making money and may well be interested in buying other services I have in my portfolio.” In his efforts to keep the SMS service free, Annerose is looking to sell available space on messages to companies for targeted advertising. While it began in Senegal, where Annerose boasts of 20,000 customers, Manobi has now extended its service to South Africa, which he says it intends to use as a hub for expansion into southern and eastern African countries, and the Indian Ocean area. “We are also soon to be moving into the Middle East,” he says, without divulging where the service might land first. Ralph Simon, Los Angeles-based chairman of the Mobile Entertainment Forum, says that a similar service is also starting to be offered in Uganda and Kenya. Having established the first ringtone companies in the US, the UK and Europe, and having helped set up the first in South Africa, Simon is no stranger to mobile content, and sees other applications arising in Africa that perhaps had not been envisaged before. “The government in South Africa is very interested in using mobile entertainment to reinforce health education to fight against the AIDS epidemic,” he says. “Mobile is proving to be a useful vehicle for uses that tie into local and colloquial problems.” Also in South Africa, a service operator and a bank have come together to launch another initiative with a local economical focus. Building on the rapid spread of prepaid mobile customers, MTN Banking, established by MTN and Standard Bank, was designed for MTN's low-income subscribers unable to set up their own account. Less than half of South Africans are believed to possess a bank account, many of them being trapped in a cash economy where securely saving and borrowing money is extremely difficult. Replacing a physical bank, the MobileMoney service from MTN Banking uses a security mechanism and requires just a phone call and identity number to subscribe to. Account numbers are simply the subscriber's mobile number, plus one extra digit, and the account is linked to an ATM card that can be used nationwide to deposit and withdraw money. Using their handsets, MobileMoney customers can transfer funds into South African bank accounts and buy prepaid electricity and prepaid airtime across all networks, allowing people to pay for goods with just a few keypunches. The only cost to the user is individual fees for each transaction, with no monthly charges. ||**|||~|Ralph-Simon200.jpg|~|The Mobile Entertainment Forum's Ralph Simon says that governments are looking to use mobile entertainment to fight the AIDS epidemic.|~|Such a service also enables the government to use the accounts to deposit monthly pensions and grants, assisting those in need but minus the often-long walk to distribution centres. With MTN's African footprint spread across countries such as Cameroon, Nigeria, Uganda, Rwanda and Swaziland, successful operations in South Africa could mean a change for banking across the continent, much of which remains a cash economy. As part of the IranCell consortium that won the second GSM licence in Iran, MobileMoney could also be coming to the Middle East. While such useful and sociological applications are obviously looked upon favourably by local communities and governments, the real profit for providers is to be made from universal entertainment offerings such as ringtones and wallpapers. According to Celtel's Matthews, even in the low ARPU markets that the operator services, the demand is certainly there. “The demand for content has been more significant than we expected it to be honestly. It has been a pleasant surprise, and we've had to take it a bit more seriously than we thought we'd need to,” acknowledges Matthews, who adds that music from local African artists is one of the biggest sellers. Spread across 14 African countries, Celtel has built its business in markets with relatively low ARPU, showing that a profitable business can successfully be undertaken in such markets. Matthews believes the same can be said for content, especially through the revenue share agreements it has drawn up with its aggregators. “It's all incremental revenue. It costs relatively little to deploy the infrastructure over and above what we already have.” Scandinavia-based Inmobia is Celtel's principal aggregator and sources content from the local markets. It is also providing the new portal in Celtel's east African operations of Tanzania, Kenya and Uganda, where 2.5G networks are being commercially launched. “As we now launch GPRS and EDGE it is becoming richer content, but it's more of the same, just larger files,” says Matthews. The new WAP GPRS content portal first opened in March 2006 to Celtel's Tanzanian subscribers, with Uganda and Kenya to follow shortly. “The initial use has been much heavier than we expected,” says Matthews, indicating that the rapid penetration of capable handsets has helped drive this usage. One of the new offerings over the EDGE network is a soap opera shown in 45-second chunks. “It's very much a trial,” admits Matthews. The current assumption with regard to the richer content is that users of the advanced networks have a basic grasp of English, but Matthews claims that there are also plans to introduce Swahili language content into these east African markets. Languages aside, there still are universal passions across the continent that can be transferred onto the mobile. “One unifying aspect that is very consistent across Africa is the obsession with sports, in particularly football,” says the Mobile Entertainment Forum's Simon, who adds that a lot of content comes from football imagery. Dubai-based mobile device retail chain Cellucom has branches in Tanzania and Kenya, and through its mobile content and VAS arm, U-Club, is looking to introduce its array of offerings into the African market. “U-Club will be there very soon,” says Vijay Jadhav, U-Club's business development manager. “We'll be offering local content along with our existing content. So that means bringing our existing portfolio of English, Asian and Arabic content, plus looking at developing exclusive Swahili content as well.” For its Arabic content, U-Club works with Saudi-based distributor and licence holder Rotona. “We'll be looking for a similar Swahili brand in Africa. It's a case of finding the right company from whom we can procure licences,” says Jadhav, who claims talks have already begun. On the operator side of the equation, he says U-Club has already been talking to Celtel, amongst other parties. Having a range of international content is one thing, but, as mentioned by Matthews, local material is vital, and U-Club will be conducting its content aggregation and media planning from its local African offices. Another content aggregator looking at Africa from the Middle East is IMImobile. Its new Dubai office has recently signed up operators Starcom in Nigeria and Exact Mobile in South Africa as clients. Like U-Club, it intends to offer its range of content, but is also looking for a more local focus. “We're going to be employing local French-speaking people,” says executive director Jay Patel, who admits that low ARPUs are obviously a major concern and probably the reason that the more developed markets of Nigeria and South Africa were IMImobile's first African territories. “I think Nigeria, Ghana, South Africa and maybe Kenya are relatively decent markets to target.” Headquartered in Hyderabad, India, IMImobile is likely to benefit from its experience in its home country. “The market there is about a year ahead of the African market,” says Patel. One issue he says has been learnt from India is the importance of voice value-added services, especially in areas where people might have difficulties in using SMS. “There's greater propensity for people to ring a number and hear the news or prices, rather than trying to work out how to text.” He points to the information lines in India, such as a service which tells users cricket scores, and believes similar offerings could be provided in Africa, allowing people to hear information on grain prices or the weather, for example. “Voice value-added services will be just as important as data value added services in India and in Africa.” Annerose at Manobi says that for specific, localised content such as his, the difficulty is finding the financial support. “It's not very easy because in Africa you don't have the investors,” he says, claiming that it has been a major issue for Manobi. Backers are happy to support mobile companies already with a large number of clients, but not those developing more innovative concepts or products. “I hope that we will succeed, because we will prove that you can be innovative in Africa. We will show that you can make money, and you can be attractive and stand out,” Annerose adds. ||**||

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