This announcement was something similar to a bamboo stick loaded up with chillies and thrust on their sorry orifices. The department of telecom seems to have woken up to the menace of the telecom firms. Mercifully better sense prevailed and spectrum allocation guidelines have been rationalised. Atleast in theory.

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.

The next battlefield for eyeballs is not your desktop. It’s your mobile phone. The advertisements claim that Mobile phone is the nearest thing to a computer. The user experience may belie this fact but then let the ads claim whatever they wish to.

Primarily, the most exciting development is development of Opera Widgets (which is as simple as designing a web page) and make it work with Opera 9 and Opera Mobile browser. This means the content of rich applications suite that can be easily developed by the web masters in terms of Value Added Services or making the mobile browsing more feature rich.

This post was initially intended to compare the showdown between Opera Mobile and the new development suite from Microsoft. Opera definitely has taken a lead and the battle for the next playground is your mobile handset. The details would be too technical and I believe that it would defeat the purpose of this blog. Suffice to say is that Apple’s iPhone strategy is being carefully watched and anything can be commented upon only after June/ July launch. It has definitely opened up a vast range of possibilities for feature rich ownership experience. The new smart phones can also connect on to the telephone networks to make calls.

It holds up a lot of promise for India. If the price of the web enabled handsets come down sufficiently, we could see aggressive marketing from the mobile companies to get people signed up for the same.

Mobile companies have started getting on an advertising binge. Hutch is promoting this as “live search” and expects to reap benefits from increased usage. There have been dissertations written about mobile search and I don’t want to add anything to confusion. However, we were happy anyway without the “search” happening in any meaningful manner earlier on and most of the search engines index only a fraction of the net. Nevertheless, this is first for an Indian mobile company and for the partnering portal to generate revenues for their investments. (This is in no way an endorsement for Hutch).

The companies ought to explore the Wireless internet in much more meaningful manner than games/ringtones or logos. While they would remain a money spinner, people would find ways and means to circumvent the controls on the media. I am not opening up the debate for Digital Rights Management; content alone (or means to index it) cannot remain the exclusive purview of the chosen few. Hence, it makes sense to keep the content free from the walled portals and instead allow free access. The companies retain the right to charge for the access or as “enablers”. This would make much more sense than pooling in money to create “exclusive portals” as one stop access.

Coming back to applications, a feature suit of software for mobiles would do much good. Ubuntu recently announced development of a mobile edition for mobiles; I am sure that the likes of Microsoft would be shitting in their pants and sharpening their knives for their FUD campaigns.

The possibilities are endless.

I have the numbers finally. Something that I have been alleging but could never get the right numbers because it was impossible to break in through the opaque structures.

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).