Well, I was right in a way. Indian Telecom firms want to get back to status quo on the “controversial” 74% increase in FDI. The increase in FDI limit, in reality comes with numerous hassles- chief among them is the interdepartmental cooperation. Having a foreign CEo wouldn’t really alter the landscape for the company’s balance sheet. Ask the Tata’s who must be questioning the logic of jumping in the fray with below par services.
Come what may. Luckily, there have been some intelligent souls in the Department of Defence/ Internal Secuirty/ Home Affairs, who have spiked the claims of Indian Telecom firms and are really concerned about the ease with which new connections are available- a significant security risk in the absence of proper documentation. They have been tightening the noose around the companies’ necks and it’s producing the results.
Whatever may be the specifics, Indian firms are on verification spree. They have identified that one third of their so called “cusotmers” are fake and instead represent that section who have booked multiple connections in fictitious names. A major reason was to bag the frequency which is based on the archaic conecpt of having more customers.
The increasing numbers have their own tales. The recent spat over the allocation of 3 G frequency should be seen in this light. Previously, it was widely assumed that a beauty parade would be held which would make it “attractive” for allotment of the frequency based on the number of “millions of customers. 3G handsets are still terribly expensive which is beyond the reach of most of the people. Plus the famed Internet on the handsets hasn’t excited many due to lack of applications. 3G has been technically a non starter.
It now seems that an auction would take place. Keep peeled for the updates here (as and when I have time!)
It now seems that the frequency hassles are a concern only in couple of Indian cities. Pan India, the present frequency allocation can be easily managed and accomodate more subscribers.
Reliance is betting big on GSM and has recieved licences to the same effect. Part of the reason is supposedly cheaper cost. I always held the belief that CDMA was a better platform for Data access and hence could support wider applications- R world is a proof of concept that mobile applications can be worked out profitably. Reliance offered streaming videos (albeit patchy pixelated stuff) much before any other company could possibly think of. But GSM? Are they nuts to offer a different platform under the same brand? Just like what the Tata’s did and learnt it the hard way?
It all boils down to the cost of the royalties being payable to Qualcomm for using their proprietary chipsets. Couple this to higher handset development and acquistion costs which is not pushing down the prices for Reliance customers. Anil Ambani is touring China (where else?) to source cheaper handsets. He is also in talks with the parent company to decrese the quantum of royalties- something that should have been negotiated earlier on. In my personal opinion, if they think that they are smart, they could have diverted some funds to develop their own standards either in collaboration or edged on the Government of India, to make it happen.
It hasn’t and they are the loosers.
Meanwhile, I am seeing a new wave of glossy adverts in the media for Reliance. Hard to imagine that a staid company is trying out new gimmicks to make themselves relevant. Young models (all made up with latex and perhaps silicon) are trying in to woo new customers with the promise of something “really better”.
Changing fortunes and changing landscapes. The true impact may not be known ever.
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