Affordable Telecom in India
The most important aspect of affordable telecom is a cost effective mobile handset. Surprisingly I did not touch on that because high priced models, which did not merit enough attention, dominated much of the market. It was in recent months that much noise was made out and with recent tax cuts, this is indeed exciting development for follow up. Nokia has the biggest advantage of brand recall, given the thrust on the marketing initiatives in India. It was the decision to set up a manufacturing base in India that focused the attention on the same. Most of the phones were imported earlier, giving a robust demand for grey market phones. Subsequently, with the drastic budget cuts on the imposed duties, the margins on the grey market became unattractive. This gave a major spurt in the demand.
There were a number of the operators who formed a consortium and floated global tenders to provide cheap phones. Motorola won the contract for the same and we could see the bundled phones in the market soon. Bundling the connections gives a real benefit to the operator. It is easier to drive down the prices to more manageable levels. Ostensibly, this is to fund the expansion in the rural areas. My only grouse is that this could have been done earlier. Given the spread and reach of the telecom companies, it would have been easier to see sub $40 phones in the market; giving a real boost to the mobile phone usage in the cities too.
The icing on the cake goes to Tata’s who have introduced a cheap bundled Kyocera phone for around Rs.1600/- It remains to be seen as to how the market reacts.
With this development, smaller telecom players like Spice Telecom have recently entered in the handset manufacturing business. What could be the reason for the same? I believe that once they sell out their mobile telephony business (which is inevitable); it would be far more lucrative to offer a manufacturing base for the mobile handsets. Or else they might settle in for assembling the same. This can expand to manufacturing the telecom equipment as the volumes grow or the research and development are stepped up. The future is pregnant with possibilities. I have always stressed that rural areas hold the key to future telecom wars and a further fall in prices, which would benefit all.
Another notable development that has taken place is the reduction in the international bandwidth prices. I had earlier mentioned that TRAI had forced the telecom companies to reduce the prices given the near monopolistic hold that they have. VSNL remains one of the culprits. It was splashed all over in the news that they had approached TDSAT for reviewing TRAI’s order claiming that the fall in prices would benefit mainly BSNL for their broadband roll out. On a commercial basis, it does make sense for them to cry hoarse. Yet, it dismays me that none of the “respectable newspapers” applied their minds that VSNL too is in the process of rolling out their broadband where they would be competing against BSNL barring New Delhi and Mumbai.
If and when, BSNL chooses to offer unlimited Internet for a fixed affordable price in the price band of Rs.700-Rs.1000, it would spell trouble for VSNL who would be forced to match the same or rather less than the same. Given their asinine attempts to chase the same bunch of customers across the cities where they are rolling out their networks, it would frustrate their pricing plans to ramp up initial investments as early as possible. Little realizing that volume is the name of the game now. A more pragmatic approach would have been to target tier 2 cities in India, which offer a real potential for broadband. They could introduce streaming videos with set top boxes over their networks, like Reliance plans to do. Plain broadband does not make much commercial sense given the low PC penetration.
In this regard, so much for the dial up plans too. Since I have not been able to get one for myself, I am waiting to narrate the entire sequence of events. This would only reflect the way of their functioning. For all those who claim that privatization can cure all ills, they would be forced to eat crow.
Broadband through cable remains the mainstay in India. However, most of the companies have claimed the last mile access to be a big problem. This indeed is the state of affairs here. However, merely giving bandwidth to the local Cable TV Operator does not really solve the purpose at all. The commitment to the service levels is all-important. Over the period of time, there has been a segregation of the customers. Some of the them who use Internet extensively and given to believe the broadband utopia would be achieved with the present infrastructure. However, there have been many complaints of low level of services and breakdowns in the midst of a gaming session. These are what I call as Power users. However, majority of the people are happy with the ridiculous services, as the demand for bandwidth is maximum for checking mail and perhaps chatting. It is to this segment that companies like Sify are catering to. I maybe wrong but in the media reports, they all appear to be the good boys who brought “broadband” to India. Indeed. So much for the Sify iWay that dot the country with pathetic computer systems to boot. The main money-spinner for them at present is the Voice over Internet, which was legalized recently.
My own experience with VoIP remains very limited, partly due to my non-technical background and partly due to lack of exposure. However, VoIP remains one big field that remains untapped. It is being taken up by the enterprises in a big way giving a significant cost reduction to make is affordable. As the standards evolve, it would be as commonplace to have VoIP plugged in high-speed broadband networks, something that Vonage has done. It has sounded death knell for the old public telephone systems; one of the most happening issues in US. Is anyone aware of its adoption in South Korea or Taiwan? Please post your comments here.
Broadband has to happen FAST! How long do we wait here?