Calling the COAI as “assholes” is only a reflection of the personal opinion brought about by frustration because of their intense lobbying to delay any customer friendly initiative. After the broadband thingy is sorted out, I would be pressing TRAI for any information to make the telecom companies more responsive. Plus, to find out as to why they permitted the minute plans as existed before and ask them for any compensation if not in monetary terms but force the companies for any excess talk time etc etc.

This maybe a loud thinking but then we should get our money’s worth. It took a lot of time to get Vodafone to work and improve upon their services.

Wait and watch. I feel that the best is about to begin as yet. Let’s wait for the mobile number portability and the magic. The ‘revolution’ my dear friends has come NOW.

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In any case, it would make perfect business sense to cartelise because any fall in the prices would affect all the players together. The new players lack the required experience in rolling out services barring a few established players. Who would pay for the cost of advertisements, getting clearances from local authorites, setting up towers, ordering telecom equipment and the works. I believe that it would be introduction with bundled handsets and in order to survive in the metros, the new companies would play their “better network” card. The value added services are a passe’. Anyone with enough balls and brains would pimp for wireless internet and invest wisely in walled portals; imagine the convenience to shop from your handset and pay via SMS. It would require a generational shift in the way we live and work; nevertheless demand can be created and sustained.

Another wave of cheaper handsets would hit Indian shores. The much hyped Google’s initiative called as Android would pave way for better internet experience and with falling prices of smart phones, it would be an excellent platform for new handsets and better net applications.

I was surprised to see Reliance advertising for mobile blog applications. This is surely a brave thing to do; though their portal sucks. They can’t even get their web pages coded properly to conform to the standards. However, with steep prices per SMS, I wonder how many suckers would like to air their thoughts. I am sure that it would loose it’s steam soon. Or unless, Mr Money bags really wants to burn up huge pile of cash anyway advertising.

One burning question. Would the entry of new players really lower the prices? TRAI has mandated the phasing out the Access Deficit Charge payable to BSNL. In effect, that would make the calls cheaper if the existing players decide to pass on the benefits to the subscribers. I have my doubts about that because BSNL would go down fighting as the access deficit charge reflects in it’s annual profits; some MBAs (see I told you, I dont like them) conceal it as “earnings”. The new players would want to recoup their expenses and play the volume game. I doubt, really really doubt that the claimed 25paise for the local call would ever materialise. It’s like pulling out the rabbits from the hat and then claiming it’s magic.

Lets wait and watch.

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In another significant draft notification from TRAI they have allowed for up to 74% if FDI in mobile TV. The details are sketchy but then let’s not bother. These fossilised morons are up to no good anyway. Still, the fact remains that mobile TV would be a reality and I am sure that a lot among you would be keenly watching midnight hour on fashion tv.

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COAI finally mustered up guts and filed a lawsuit against Department of Telecom. As usual, the media was frothing at it’s mouth and made this the headlines. Reliance jumped in the fray and counter challanged DoT with their own version of lawsuits galore. It was free for all till they decided to call it sober down and indulge in some back room dealings. Lawsuits have ceased to make any more news for the time being.

Spectrum is the main cause of the “fights”. I have repeated this ad naseum and it makes no sense to highlight this fact that spectrum is a scarce resource and the way Government is frittering away it’s advantages should call for an open discussion. The fossilised babus are barely going to move their butts and would be happy to gather moss. The only people who are happy about the opacity of the laws are the lawyers.

Broadband is a non starter this year too. Airtel introduced their 8 Mbps plans with some assinine download limits. I believe that this seems to be a marketing strategy in order to create a buzz around their product. All the while, most people who sign up “shockingly fast broadband” (or whatever the ads claim), they would become aware of it’s potential. Which means that word of mouth publicity would get them more customers. I am not sure that this is their marketing strategy. I believe that this is stupidity of the first lot to make the available resources scarce and not catering to the existing pent up demand. In any case, their broadband pricing leaves a lot to be desired. Airtel has the bandwidth and the mojo and the works. Yet, it is staffed by perhaps one of the worst idiots who ever sat on a gold mine.

Tatas made a lot of news and perhaps for the first time they made it to the Asshole of the year on this blog. Congratulations to them on winning this coveted award and here’s hoping that they would keep up this record. They had their intentions set right and I remember reading in Business World about their grand plans to set up metro ethernet and their deals with Cisco. This was one off news and it wasn’t mentioned subsequently. VSNL lost it’s dominance in international distance calling cards and then Reliance gave them a good competition for international landing stations.

Speaking of Reliance, they made news for all the wrong reasons. They got into acquiring Adlabs and then fancied making movies. There was a talk of convergence and “lightening fast” broadband. (Notice the way they describe their pathetic products). So far, there has been NO shaking news about broadband; they are stuck in the 128k era. Ouch! Reliance has not ventured much in landline business and they are holding their cards close to their chest. At best, they set up shadown companies like Swan and Cheetah Telecommunications (what names!) to bid for the telecom licence.

Anil Ambani has been a true “also ran” in the marathon all the while trying to carve out some “niche” for himself. He knows that he is being compared to his elder sibling and when crores of accounted and unaccounted money is at stake, blood is thinner than water indeed. Mukesh was sensible to exit out from telecom and focus instead on retail and gas. It was Anil who still seems to be glamour struck (remember Tina Munim nee’ Ambani?) It shows for him.

HFCL Connect is a small time player along with Spice Communications run by Modis. They seem to have mustered up enough courage to apply for pan India licence and spread their wings. They remain, at best, marginal players and would interest the foreign companies in case they wish to set up shop here in India.

Hutch became Vodafone after protracted legal battle and it was a personal victory for Arun Sarin. However, the change of the name and rebranding has not changed anything with this company. I have been after them to improve the quality of their services but then nothing has changed. As usual.

I had expressed hope that the year 2007 would be the year of Broadband. However, this was not to be. This was more about spectrum wars, legal wranglings et a which I am sick of reporting here again and again. This has also resulted in slowing down of the posts here. I believe that the best news of this year is the announcement of number portability, initially limited to the metros. It would be scaled up at a later date to rest of the country. I hope that with low migration charges, the competition to retain the customers would be intense and it would be the quality of services that would speak for itself.

Let’s keep our fingers crossed.

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A quick low down of the ensuing events. According to the norms, the spectrum would be issued to the companies who garner the maximum share of the subscribers. This means that apart from the bloated number of subscribers, the whole mobile user base is a BIG suspect. The specturm wars broke out in the public because Raja wanted to ration the scarce resource and act God. There are often shispers of BIG money floating around but then that isn’t the focus of this write up here. At first, the government decided to relax the norms for spectrum allocation. In the meantime, it allocated 10 Mhz of “free” spectrum to the two upgly sisters, BSNL/MTNL. This was challanged by COAI, the motley coalition of the private telecom operators in TDSAT, which is tribunal body to decide the disputes. To add to the confusion in the midst was the huge number of applications that waited to get their turn for spectrum allocation. DoT decided to issue letters of intent to the new players.

In the meantime, the media jumped in the fray and raised the issue of 3G licences and there were various interpretations of the original licencing norms. Government of India thrives in controversy and no wonder that it was very happy to roll in the mud. The motley association was split right through the middle and they could not get their act quite right. After a couple of days, COAI made quiet noises about “settling” the 3G row.

Now comes the icing on the cake. Reliance got an entry in the GSM club by paying a paltry sum of 1600+crores and got their CDMA licence converted to some kind of a “universal access” crap. Whatever that means. Reliance’s entry in the cosy club and hence the scarce spectrum being gifted on the platter was too much for the association to digest. Anil Ambani and the rest exchanged verbal duels clothed in their gobbledegook. In other words, both the parties were fingering each other. When the war of words went out of hand, the DoT wanted to play Godfather and summoned the chiefs of all the telecom companies to “thrash out a solution”.

Raja realised that the game was clearly up and set up a shadow boxing competition. In effect, to announce as to who is the boss. Since there was no consensus on the telecom chief’s meet, he decided to get the PMO involved and had a smiling manmoron to back up his decision.

Thus ended the saga of the “spectrum wars”; the last word isn’t written as yet. I would wait for further news to unfold in the near future. Nevertheless, the mess persists and the ultimate looser is the public exchequer. Without going in detail about the merits of the case, I believe that this telecom mess would tangle itself like a hydra headed monster. No respite!

As usual, the watchdogs were quiet and it was only Business Standard who spoke out at length about the mess around here.

Phew!

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I was expecting and it happened. The COAI chief reacted on expected lines and cried foul. Reliance is waiting in the wings to get the GSM licence for pan India licence and is willing to fork out astronomical sums of money for the same. Real estate developer Parsavnath has thrown it’s hat in the ring.

All for a simple logic. The “relaxed” norms for the foreign ownership is bound to attract the global majors. We have already seen Vodafone owning up the Hutch brand. It makes sense to scale up a brand new service, share towers with the existing incumbents and then sell out at a profit. What else explains this? It isn’t the crap aboout the “fastest” growing market but for the existing segmentation of the customer base. It becomes easier to identify a set customer base and lure them with a better service offering than their existing service provider. All the while it’s the incumbent that spends huge amount of adver tising to get them on the network, the new players lure them with “better offers”. More so, I feel that it might be as well that Indian market may get to see the segregation of the services. For example, we might have new players exclusively for data services rather than plain vanilla voice applications.

It is now being whispered in the Indian media about the inflated subscribers; a fact that I have been talking about ever since this blog came into existence.

It’s more than 3 quarters of the year now. No new initiative on the broadband front except for the customary noises about IPTV. Bah. What do customers really need?

So far, Raja (our “hon’ble” minister) has not been able to exert himself. He remains a pale shadow of former M(o)ara(o)n. If the Indian Government falls to the blackmail of the screwed up commies, expect our broadband dreams to be rolled back by another decade. Most of the operators would hold it because they would be more interested in knowing the exact “policy” of the new guy who warms his ass on the chair.

Madness indeed.

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Roaming charges have a rip off for years. I was wondering as to how does Airtel or for that matter any other company could declare profits (obscene profits) for years on end quarter after quarter. Sunil Jain has written an article in Business Standard which has been reproduced on Rediff.

Much of it was motivated by TRAI’s consulation paper. However, this paper is full of legalese and in case you don’t have patience, read the salient features below. (Emphasis mine)

The government, the order goes on to say, reduced the carriage costs (an important determinant of roaming costs) in February last year, but this “does not appear to have been fully reflected in the retail tariffs applicable for long distance calls and roaming services”.

Similarly, the sharp reduction in access deficit charges on long-distance telephony (again, a significant cost) was not fully passed on to customers; the sharp reduction in licence fees, from 15 per cent of revenues to just 6 per cent, was not passed on, either.

Just how much all this adds up to can be seen from the fact that while the GSM (cellular) firms charged between Rs 2.89 and Rs 3.09 a minute for outgoing local calls while roaming, Trai reduced this to Rs 1.40 in January this year; outgoing long-distance calls were charged at Rs 3.09-3.79 a minute and this was cut to Rs 2.40; incoming calls were charged at Rs 3.09-3.99 a minute and this was cut to Rs 1.75 a minute.

As for the funds-starved argument, the tariff order cites various reports, including one done for the Cellular Operators Association of India, to show this is not true. The PWC/COAI study, for instance, says EBITDA margins of the industry have grown from 15 per cent of net service revenue in 2000 to 44 per cent in 2005.

Trai has estimated this cost and it ranges from 7 paise per minute for the most efficient firm to Rs 1.09 for the most inefficient (for seven firms, it is around 25 paise and for five it lies between 30 and 50 paise).

While you’d expect the regulator to benchmark against the best, Trai decided to use a cost of 75 paise (of the 17 firms, only two have a cost higher than this-one is 76 paise and the other is Rs 1.09). So there’s a huge cost benefit already. In the case of long-distance outgoing calls, the benefit allowed is even more.

Even after taking an inflated 75 paise cost of roaming, Trai arrives at a total cost of just Rs 2.05 per minute-yet, it has allowed the firms a ceiling tariff of Rs 2.4 a minute. Trai says the costs incurred by the telcos when their subscribers send SMSs do not increase when they’re roaming, yet it chose not to regulate this-as a result, telcos charge Rs 3.45 for outgoing SMSs, a number that is far more expensive than even a phone call!

And the piece de resistance: Trai’s cost calculations were based on the 2003-04 subscriber data. Since the number of subscribers has trebled since then and the call minutes by even more, it is obvious the costs of offering roaming (the 7 paise to Rs 1.09) would have declined even more.

These firms are in hand in hand with the media and the Government to rip off the consumers and as highlighted above, none of the benefits have been passed on to the customers.

Sunil Jain then raises a pertinent point:

As for not having funds for funding capex, how do you explain the world’s largest cellular operator buying Hutch at an enterprise value of $20 bn if there aren’t huge profits to make?

So there it is. I have been vindicated. So far, the exact costs have never been reflected in the mobile bills. You get to pay a lot of “shit money” to pay those “executives” and line their pockets. All the while they shed crocodile tears about loosing money.

This is nothing but oligopolies and shutting out the new incumbent who would otherwise have to pay huge licence fees and administrative costs to set up brand new infrastructure.

(Another interesting article appears on the regulatory bodies for infrastructure on Rediff; while not related to the present write up but would nevertheless give you an idea about the way Government of India escapes accountability).

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Of course, it wouldn’t be affecting the execs in their plush offices because it is the deceit that keeps them comfortably on their asses. During a routine criminal investigation in Haryana, the police discovered huge number of connections in a single person’s name. After further probes, they discovered that a number of telephone connections had been booked in the name of fictitious entities. In simple lay man’s terms it means that anyone could potentially “misuse” the phone numbers without the fear of being traced.

The Haryana police booked a couple of Airtel employees and it took considerable resources (my guess) to avoid a PR disaster for them. The whole matter seems to be subdued and suppressed and talked off only in hushed up tones. It is not getting the attention it deserves. By rough estimates, if the proper physical verification takes place now, it would shave off one third of the numbers which the companies gloat about. No wonder, Ramachandran, COAI chief, is keen only for the random verification of the subscribers. They cite huge logistics problems for the same.

This has grave implications for the internal security of this nation. In the name of driving up subscritions and ramping up subscribers, the norms have been thrown out. It didn’t apply to them in the first case either.

Getting a pre paid is simple. One has to furnish a “proof” of residence/ photgraph. That’s it. No questions asked. The “verification” is done at the level of the shopkeepers who is supposed to know the local residents. A little “consideration” and things get rolling for a new connection. Prepaids cannot be traced to the original subscribers and the SIM card can be destroyed and a new one had.

Post paid norms are tougher and no wonder, I get to hear delays on the part of the companies to verify everything at their end.

This wouldn’t be solved overnight and is a clear cut violation of licensing norms. Why haven’t their licences been cancelled?

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It says:

The phenomenal growth in mobile subscriber base being reported by the operators every month may not be entirely true.According to a new study done by the US-based research and analyst firm Yankee Group, the addition of new cellular subscribers in the country may be exaggerated by about 10-15 per cent.

Reacting to the report Mr T V Ramachandran, Director-General, Cellular Operator’s Association of India (COAI), said that reports from China has also pointed out lower handset sales as compared to new subscribers added.

(Which reports Mr Rama? Readers, you are at your liberty to laugh at this chap. He’s lampooning himself and suffering a fit of verbal diarrhoea. Oh China indeed! Just because it “supposedly happens in China, it has to do in India too?)

This could be because there are subscribers who have two connections but only one handset due to high price of the devices (:-)) By the way, getting a connection is not easy either. Further, the so called “cheap prices for the connections are valid for 15 days. Even if someone goes in for a “free incoming” offer, thats roughly equivalent to Rs. 1000/- Some one can easily pick up a second hand handset. Who would want to change SIM cards? Two handsets? Bah! Tomorrow, you could claim 3 or more!

We could do with less of these people around here. Mr Rama has a good lawyer and I don’t to trouble him with drafting anything out in my name. Though, enough said about the posts they hold. I can understand the need to protect your interests, but in such a blatant manner? Inexcusable.

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Airtel introduced the prepaid voucher, thus raising the stakes for others to follow. Within a span of two weeks, all others had “me too” schemes. The last (and laggard as usual) was BSNL. It was indeed surprising that it took it’s CMD to announce the scheme. It just shows the kind of importance that they have attached to it.

Now, how do they plan to make money? Simple. They would get the call termination charges from other networks. Albeit they are planning for a low margins, high volume game. However, the outgoing call charges are nearly double of other packages; simply because they have no other means to recoup their investments.

Why the “incoming for life” then? Scaling up customers for spectrum allocation. Simple. Though Tata’s were motivated by absolutely nothing to show off in their accounts. It was then vehemently opposed by COAI (the trade body of cellular operators) who termed it “ILLEGAL”! Well, why then they have eaten their own words? It’s called as “foot in the mouth disease”. According to TRAI’s norms, this scheme is valid for 3 months. Tata’s are nearing the end of the tenure for the same. The game has just started off for GSM fellows.

High outgoing call charges are seriously a dampener. This defeats the purpose of “low paying customer”, or affordable mobile. Still, as companies go on an advertising binge, they violate the advertising norms without disclosing the intended costs or the churn on the acquired customers if they fail to recharge.

Haven’t we seen this happening before?

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Would it actually happen? Walla! Let’s hear the criticism of TRAI order in the coming few days. They would raise noise about Customer privacy. For years on an end, Telephone directories were the only source for the subscribers; true that telemarketers did bother to no extent; but then one has the option to stay out of the proposed directory.

Let’s analyse the order. This would mean that these companies would have to spend out extra cash to keep their house in order and share the customer details. High spending customers would avoid; despite the fact that all of them cosy under the umbrella of COAI, they wuld be glad to poach from the other operators. As of now, it is blind marketing. I might get a call from Hutch to migrate to their plans; being on CDMA I wouldnt want to invest all over again. Hence a database of GSM subscribers makes much more sense; they could focus on the select group and hence save on money.

A more “sinister” affect would be that these companies would be forced to account for the numbers. Simply becuase they have avoided doing so, millions of subscribers would just vanish in thin air. What would happen to their valuation? Or perhaps the way that these companies fool others in believing?

Expect litigation in TDSAT or their lawyers getting hefty pay checks. True, TRAI has kept these lawyers very happy; though failed miserably as a regulator to safeguard end consumers interests.

Somehow my biases get revealed in this, isnt it?

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