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?

Discuss on: Sify Broadband, Tata Indicom, Airtel Broadband, Reliance Broadband, MTNL – BSNL Broadband, Dial Up, Others

This post was submitted by Dr. Abhishek Puri on the Broadband Blog on Techwhack.

Tags: Airtel, Airtel Broadband, Broadband, BSNL, BSNL Broadband, DoT, DTH, handsets, India, Internet, manufacturing, Media, Mobile, MTNL, Opera, Reliance, Reliance Broadband, Tata, Tata Indicom, Telecommunications India, TRAI, VSNL

Future Trends in Telecom in India

Over the past few months that I have been contributing to this tech portal, there has been a sea change in the telecom industry. Each time I have a feeling that I have nothing to write about and every week I have proved wrong to myself. I am trying to look at the newer emerging trends, which are going to sustain the telecom companies in the future.

The initial roll out of the networks was a boom time for the equipment manufacturers abroad. This indeed would have been a golden chance to ramp up domestic production but opportunity slipped past by. I am told that much of the equipment is imported thus escalating the costs for the roll out. This is a huge dampener for the eventual roll out for the rural areas who have been left out of the ambit of telecom revolution for too long. Part of the reason is the perceived inability to pay and part is the high cost of initial roll out of infrastructure. In my opinion, instead of taking a short-term view of paying capacity of rural areas, the telcos should focus on a long-term game. It was heartening to note that finally the manufacturing arm of the government(C-Dot) was given the budgetary support. How much it pays out in the long run, only time would tell.

There is one word that telecom companies are hearing a lot these days. Volumes. They need volumes to sustain the network and the fancy army of morons they have hired. In this regard, companies like Reliance and Tata’s have gone aggressive over the final roll out of the connections to PCO owners. I heard that Reliance is giving up to 30% commission on each call. How they market out the connections is a tough battle indeed. If and when the carrier access codes are introduced, we could really see a blood bath on the streets, as far as prices are concerned. I am strong in my belief that prices can go down by almost 40% of the present structure. Part of the price cuts could be because of the tax exemptions, if and when these companies can lobby for the same. Part of the same could be to earn through volumes.

The next killer application is made out to be the value added services through mobiles. R connect services from Reliance would be going paid soon. They offer plethora of services, even train ticket booking on mobiles. Recently, the big daddy of Indian telecom revolution, Sam Pitroda was marketing his own services to pay bills through mobiles; in effect moving towards a cashless society. He wanted to patent the same. I have no idea as to how it worked since details were not available. However, NTT Docomo in Japan offered the same facility there. How this is replicated in Indian scenario is worth looking out for.

There is a lot made out for the 3G services. Expect more lobbying in the corridors of power for the scarce spectrum. Should 3G services be introduced in India? Would that serve the purpose? The initial buzz is that 3 G services would give the always-on connectivity to the mobile owners. That was said so about the GPRS and much hoopla was raised in the market. Yet, everyone knows about the pathetic access. Barring a few circles, my dial up is at times faster than the same. And yes, I am using BSNL! In Europe, the operators have actually made a killing out of the same. The fact is that 3 G networks can carry more voice calls than the present networks. If it is the voice network, then perhaps it may be beneficial. How many people, realistically speaking would be carrying the top of the line blackberry s and laptops to access the network? A minuscule minority who wishes to flaunt its latest toy. I am circumspect about 3 G networks really being a “killer application” until the time handset prices fall down to more realistic levels. As usual paid media exposure and exclusive “previews” go a long way to give initial publicity.

The proposed merger of BSNL and MTNL is consuming a lot of ink. There have been various suggestions floated in the media about the ways and means the “synergies” could be obtained. The purpose is not to get in the awkward details here. My reaction to the same is that let the status quo remain. BSNL should concentrate more on rural spread and better Internet connectivity. MTNL should be divested totally. While in principle I am opposed to privatization, MTNL has out lived its utility as a worthwhile company. Interestingly, in the recent quality audit by TRAI, its customers were the happiest for its CDMA services. Strange but true.

Finally Broadband. This is a late non-starter here. In terms of pricing and download limits, this is pathetic for users who wish to consume bandwidth for file sharing or extensive web surfing for any reason. According to telcos logic, they feel that ordinary user should not get more than a few hundred MB’s. This only exposes the socialist mindset, which forces the ordinary citizens for looking up to these “mai baap” bosses. Come what may, the present state of Internet would take another year to come to decent levels. Meanwhile Reliance is getting aggressive over corporate customers for giving out bandwidth for monitoring through video cameras. They have implemented the same across their web worlds. Next time around in a web world, have a look. It is possible that you are being looked at! Their broadband services for home users seem to be in a limbo. Since they are planning to introduce TiVO like functionality across India, there could be a problem in getting across the different entertainment channels on board as of now. No surprise, that Reliance is amassing a huge library of its own. Streaming networks make business sense because plain vanilla broadband is not sufficed here; given the poor penetration of the personal computers. Wireless broadband in terms of WiFi and WiMax may soon be a reality given the fact that Dishnet has planned to roll out its services. The grey area of security remains unanswered as of now. Would that change in the coming months given that the PC prices are falling to realistic levels? I d try and analyze that later elsewhere.

I am keeping my fingers crossed for a decent dial up in my city though.

Discuss on: Sify Broadband, Tata Indicom, Airtel Broadband, Reliance Broadband, MTNL – BSNL Broadband, Dial Up, Others

This post was submitted by Dr. Abhishek Puri on the Broadband Blog on Techwhack.

Tags: 3G, Airtel, Airtel Broadband, Broadband, BSNL, BSNL Broadband, CDMA, DoT, DTH, File Sharing, GPRS, India, Internet, laptop, manufacturing, Media, Mobile, Mobiles, MTNL, Opera, Reliance, Reliance Broadband, Spectrum, Tata, Tata Indicom, Telecommunications India, Telecommunications India, TRAI, Value Added Services, Wifi, Wireless, Wireless Broadband

Talking about idiocies in the Indian Telecom scene

There have been idiocies enough in the Indian Telecom scene. I came across an article by Sunil Jain in Business Standard, which mentioned the indirect costs Reliance Infocomm had to pay out to roll out their services. One parting shot was that he had raised questions over the quality of managerial advice that these companies get.

In case of Reliance it is clear that they assumed, and wrongly though, that they could get away with anything. The fact is that other operators, feeling cheated, did not take it lightly enough the attempts by Reliance to rough shod them. The recent TRAI order over the Fixed Wireless Phones has to be seen in this light. However, it is more right to say that they too were mislead over the same! It is not feasible to fix a wireless phone at a permanent place and in all probability would be appealed in TDSAT.

Airtel leads the pack in goofing up most of the times. First, they gave their network away. In my opinion, Network is sacrosanct. Airtel did not do the right thing to give it away to third party in this case. In the name of cost cutting and savings, it does sound good, yet what has been scaled up after so much deliberation is asinine. Yet it is for them to evaluate the pros and cons of the same.

The recent advertisement by Airtel to meet the super stars Shah Rukh and Sachin again seems to deflect the attention from more pressing problems. Airtel could not win any circle in the recent bid to expand to rural areas and in any case, they would have to do it from their own funds or so it appears to be. Their quality of network is pathetic, again based on the customer feedback; in the recent TRAI quality norms, they were nowhere in contention barring a few circles.

I believe that marketing managers ought to get in the hibernation and let the quality of service be improved. Of course, it points to the crisis in the low average revenue per user collections; the gimmicks are clearly for increasing the number of calls. I am happy that Airtel is lucky enough to have few star struck subscribers who would happily do its biding. How this drains out their pockets is another matter though.

I read a recent article by J Mulraj in Times of India who had talked of the “happy times in Indian Telecom industry”. Well, it is a different matter altogether that it remains extremely low on the credibility index. Yet, good enough for the people who have no idea about the way this industry works. If privatization is so good, well then the real telecom revolution has missed most of the populace.

I have had a frustrating experience trying to get VSNL in my hometown. When it does happen, there would be no holds barred story. Promise. For the time being, these antics just reinforce my belief that telecom revolution appears rosy in the metros; given the large captive audience, it is easier to ramp up margins and volumes. Also to do gimmicks with the superstars.

Why celebrity endorsements for “lifestyle products”? This defies explanation. I had tried to analyze the Advertising trends in the industry earlier, but clearly, I could not come to definite conclusions. In this regard, Reliance has had a very low-key advertising. Yet the icing on the cake is BSNL. Once again, it reinforces the fact that whoever thought of the advertisement and got it executed through lowest tender must be really high up or indulging in favoritism!

It shows a developing child with an umbilical cord. The next scene shifts to a growing child and a telephone plugged in the socket with a wire. Whatever I could make of it was that telephones are somehow related to conception! At this point, it was so. Then they show the same lady calling up her son who is working on a laptop. The camera focuses on the telephone with the wire again superimposed with the picture of the developing child with the umbilical cord. With a crappy background score, the logo of BSNL gets splashed saying “Connecting India”. If the foregoing account made no sense to you, it does not to me either! I narrated the advertisement as it happened. Another instance of taxpayers’ money going down the drain.

Finally, it is the Access Deficit Charge regime. For years, after it has been introduced, ADC remains a drain on the telecom companies’ earnings. Indirectly on to us. If any Hutch subscriber does not own a BSNL landline, he/she is subsiding the cost for the ones who do. If this is unfair, the persistence with the same is idiocy too. In the idealized world, the ADC should go. In turn, it would expose the companies to the market play and bring the call prices further. In terms of purchasing parity, we still have high call rates. There is enough scope to reduce the same. Why tax telecom equipment? I argue on these grounds because the IT industry is untaxed. It has not benefited the country except for privileged few. This is debatable indeed but has created distortions in the local economy wherever the IT companies have set up shop.

In any case, Infosys is happy serving its shareholders and the foreign companies rather than the local populace.

Last but not the least is the number portability across the networks. The present scenario gives no indication about the quality of services or the number of customers a telecom company has. Airtel has dubious track record in the same as I had mentioned earlier in the same columns. Retaining the same number across the networks would give a real power to the customer. I believe that the regulator has floated this idea but it is finding itself handicapped over the implementation of the same.

The idiocies of Indian Telecom indeed.

Discuss on: Sify Broadband, Tata Indicom, Airtel Broadband, Reliance Broadband, MTNL – BSNL Broadband, Dial Up, Others

This post was submitted by Dr. Abhishek Puri on the Broadband Blog on Techwhack.

Tags: Access Deficit Charge, Advertisement, Advertising, Airtel, Airtel Broadband, Appeal, Broadband, BSNL, BSNL Broadband, Business Standard, Hutch, India, Internet, Landline, laptop, MTNL, Opera, Reliance, Reliance Broadband, Tata, Tata Indicom, Telecommunications India, Telecommunications India, Times of India, TRAI, VSNL, Wireless