The economic conundrum of CRBTs

For the uninitiated – CRBT stands for Caller Ring Back Tone.  It’s the wonderful song you hear in lieu of a ring tone when you dial into someone’s number.

CRBTs are expensive.  Here’s how much it costs:

* Cost of calling into a chargeable IVR system to select your music – Rs 10

* Cost of downloading a CRBT – Rs 15

* Monthly rental for playing a CRBT – Rs 30

* Average frequency of changing a CRBT – 0.8 times a month

* Total monthly cost = Rs 30 + 0.8*(10+15) = Rs 50

So, this is expensive right?  In a market where few people pay Rs 75-100 for a legit album, there’s a bunch of people paying Rs 50 p.m. for a song they don’t even listen to!

How big is this?  Very.  Mobile music revenues account for 50-60% of several music albums, and CRBTs are a dominant contributor to that number.

Now here’s the conundrum.  Who actually downloads these tunes?  If you checked on the average office-going city slicker, you’d probably find a 10-20% probability of these persons having a CRBT.  But if you went lower down the SEC ladder – to the carpenters, drivers, household help, coffee boys etc – you’d witness a 70-90% penetration of what is probably the most expensive music in the world.

Why do people with an average income of Rs 3-10K p.m. spend so much on a tune meant for others?

Data Post: India’s cellphone subscribers and average revenue

Here’s some interesting data to sink your teeth into. I am sure you already know that India is the second largest mobile market in the world, and is expected to become toe largest market soon, as it overtakes China.

There’s some great quality data available on the telecoms industry in India. Some of the data is posted by the Telecoms Regulatory Authority of India (TRAI), and other data by the COAI (Cellular Operators’ Association of India).

The one that caught my eye was the data on the number of subscribers and the average revenue per subscriber. The ARPU, as it is called, is one of the lowest in the world, and falling. The worldwide telecom game really is to drive down the costs of operating a cellphone service in order to make money on a much larger subscriber base. This cost game is what’s driving the developing country mobile providers to merge into each other (as in the case with South Africa’s MTN’s attempts to merge with Bharti and Reliance).

Here’s a data table, complete with bars. Raw data is available online as well. As an aside, I had a tough time getting to build a useful XY plot. Some other time, perhaps! 😉

Paying for an MBA

Back when Amt Grg and I did our MBA at IIMA, the program was not too expensive. As salaries have risen in India, the cost for an MBA have also gone up. While an MBA is still worth it, many people might find it hard to pay for an MBA.

Here’s an interesting article about how to pay for the rising MBA fees in India.

Several IIMs recently increased their fees by 100,000 rupees or more. A two-year management of business administration program at the coveted IIM Ahmedabad now costs around 1.4 million rupees ($31,500), while the fees are 1.35 million at IIM Calcutta and 1.3 million rupees at IIM Bangalore. Only a small percentage of students qualify for breaks in fees at these schools.

Luckily, there’s help at hand.

India’s banks have been increasingly boosting their education loan portfolios and new players are entering the market. In December, home loan giant HDFC Ltd. bought a 41% stake in non-banking financial company Credila Financial Services, which specializes in giving education loans. HDFC hopes to eventually buy out the entire company.

@Amit, I am not sure if there are any people left in India who question whether an IIMA MBA is worth it. Do you think we still need to make a “business case”?