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The Long Tail in microtelecom – Enhancing lives through mobile communication 8 Aug, 2008

With his article “The Long Tail,” in the October 2004 issue of Wired, writer Chris Anderson popularized the idea of the “long tail” in explaining why online retailers such as Amazon.com, Netflix etc. are uniquely positioned to fill a huge demand that traditional retailers cannot serve cost-effectively.

Sites like these try to market more obscure products to a large number of customers, realizing profits in doing so.

This same concept can impact the business models of mobile operators as they also face a similar market curve (see figure below).

Long Tail market curve

Until now, operators haven’t offered mobile services to villages because it has been impossible to do it profitably.

The reason for excluding the “Long Tail” from mobile services is simply because of the threshold of viability – explained in the figure below:

Threshold of viability

By adjusting the cost base, we have been successful in driving down the threshold of viability to $3. Now, with the advent of WorldGSM™, it is possible to connect the unconnected long tail – and help to improve the lives of billions of people around the world.

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A big dip in ARPU 11 Apr, 2008

According to the latest figure from TRAI, average airtime and SMSs sent per subscriber in India have noticeably decreased.

Indian service providers say that the lowered ARPU (Average Revenue per User) is caused by two main factors: extending networks into rural India, and the downward tariff spiral.

ARPU in rural areas is lower, as rural users tend to call and send SMSs less often.

Both pre-paid and post-paid plans are getting cheaper as India’s mobile market matures, and as competition gets fiercer.

So the big question is: how long can the exponential growth of India’s mobile market offset the lower ARPU trend?

Learn more: “Minutes of cellular usage & SMS per user hit new low