Ring Back Tones: Latin American operators should pay attention to the Asian Model

Brough's COMMUNICATIONS Blog from 12/08/2007 talks about Ringback Tones Adoption Rates, a service that has been very successful in Asia as a money maker and music distribution channel:

• Nearly 55% of Korean subscribers have ringback tone service; China Mobile has close to 50% adoption.
• In contrast, adoption rates in Europe were below 10%; the US has ~12M subscribers or 5%.
• What about Latin America? Based on our experience with operators in the region, the best cases have about 2% service penetration.

Brough pays special attention to the fact that operators in Korea and China have more than 20 content providers just for this service. In contrast, the typical operator in the US or EU is usually the only source of information or content.

In Latin America, with the exception of some early adopters like Movistar Chile, most operators launched the service during 2006. For the most part, penetration has been low and the uptake slow, even the most successful cases like Millicom Colombia (formerly Ola) and Movistar Colombia are probably around 2% penetration after a little more than six months.

In our opinion the hype surrounding this service and the intense competition among operators made Ring Back Tones a "must have" service for Latin America, yet it has not achieved significant penetration and probably not yet a source of significant revenue for operators.

There is no reason, however, for this service not to be successful. It has everything an operator wants: it is device agnostic, does not require major network upgrades (with some exceptions) and is an attractive service for the end user. An adequate pricing strategy should help make this service very successful, and it seems most operators have all the elements in place.

With service revenues still coming mostly from voice (~85% per Pyramid's estimate for 2007), there is still plenty of room to grow in data and content services in Latin America. Operators should seriously pay attention to Brough's observations on the Asian model and find new ways of introducing content into their services without wanting to do it all themselves.