After Bharti, MTN chose to court Reliance. It sounds like a whorehouse. MTN is playing the perfect mistress to the hilt and has no compunctions to court customers; all in order to increase it’s share valuation. Reliance is eager to get a hold of their booty because it realises what Airtel doesn’t. It can easily scale up it’s investments in other parts of the world, negotiate for better prices of it’s equipment and telecom gear and leverage it’s investments in entertainment by offering value added services.

Anil Ambani’s fascination seems to have stemmed in from watching too many movies (1,2) and his scaling up his investments in Hollywood as well as his maiden venture Big Flix Spearheading these investments is Amit Khanna who is a failed producer of Hindi movies.

Entertainment in Indian terms is very coarse to define. Indian laws are “strict” as far as the western counterparts are concerned and what passes through the censor’s scissors is defended in terms of artistic freedom. It’s futile to comment on the various crop of heriones who serve as a fodder for casting couches but this association of money and glamour has been significant. Anil Ambani is trying to marry the two different worlds of films and telecom; hoping that it would click. He bought a chain of theatres to justify his expansion in US and hoping to fructify his couple of millions in Hollywood.

All in all his efforts to bring forth the broadband revolution have come to a naught. Long time back, I could starry eyed kids jamming on the country wide LAN and getting to play the first person shooter games. It was an idea that was well ahead of it’s time and it’s been ages literally that I have visited a Reliance Web World myself. Have they been given a decent burial? I have no clue. But Anil Ambani is very keen to scale up his investments in portals like Zapak. Not only it has a weird sounding name, it has full scale coding errors. Big Flix suffers from patchy server connectivity and it’s easier to log on to You Tube and watch a movie than suffer endlessly on Big Flix and expecting it to load up.

Movie rentals are yet untested success formula and I’d be happy to visit the neighbourhood shop owner who gives me a better service than a nameless dude giving me a DVD. If Anil Ambani really wants to make it big, he should explore the Broadband route and serve the movies from a decentralised server; single server costs would skyrocket once the service catches on. He should ensure minimum downtime and always on connectivity in excess of 5 Mbps. This is a tall order indeed and needs huge investments. Although, the returns would be manifold.

He is on the cusp of launching his DTH platform (one of his significant investments) called as BIG TV and hopes to catch up with the existing players. I don’t endorse his investments as yet; atleast not in the TV and Media (BIG FM for radio).

Can you see a pattern? He’s aiming for a cyber presence and across the cross spectrum of media. As and when private FM channels are allowed to transmit news (which would be a sad day indeed), BIG FM, BIG TV, BIG Flix et al would be at the forefront with perhaps “BIG Paper”‘ too.

If you click on the links to You Tube, you’d find his reason to marry the actress too. Sadly, she doesnt inspire him much for broadband though.

Tags: Airtel, Anil Ambani, Broadband, DTH, DVD, India, Media, Reliance, Reliance India, Spectrum, Telecommunications India, Value Added Services

Few details have trickled out in the media. Thats the testimony to the fact that these brothers have an iron grip over what is reported and what isn’t.

The settlement hungama over, it was a sob story that was dragged in public. Perhaps one of the most damning exposures was the shareholding pattern of Reliance Infocomm. Frankly, it is beyond me as to how they managed to swindle the shares. No word of it now. Anil Ambani has made sure of that.

Once the hoopla settles down, I personally believe that splitting up Reliance was a folly. Why so? International lenders across the world were more happy to lend to a consolidated company- Reliance India Limited is a cash rich company. In any case, it was funding the infocomm venture. Fragmenting it means that they would be wary of lending it huge sums- leaving no option except to go in for an IPO. Incidentally that is being planned for, by the end of this year. Fund raising would be an important issue this year. There is another factor. Anil has “inherited” cash guzzlers. I really wonder whether he can pull off the “miracles” to make sure that Infocomm venture remains profitable. By last estimates, it was worth almost with losses and expensditues worth several thousand crores( some say almost upto 3500). The truth may never be known anyway.

Then, as I had mentioned earlier elsewhere, Anil has inherited the infocomm full of troubles. The regulatory mess, CBI enquiries( for the compromise of national security by rerouting calls), accusations over TRAI handling and infamous nexus with Pradeep Baijal- the TRAI chief;Broadband roll out mess and the battering on the Fixed Wireless- no one would be keen to get in the hot seat. It seems that Anil is looking out for CEO’s for his company. I wouldn’t like to stake for the top job under any circumstances! Yet, the name doing the rounds would be in a better position to leeway with the government and get the things done on their terms.

In any case, I would be following the Reliance story keenly. Why? Because, for the first time in my life I have been able to say that cheap calls are a reality. One day its going to be even cheaper than this. Backed by excellent infrastructure, they have managed to strike where others failed to do so(30% of the market share in what is keenly contested consumer pie.It’s been less than 2 years since the entered the scene). Plus, they have been able to learn from their mistakes(The earliest DAPO scheme was an abject failure-I heard that they are still honouring their commitments though they have discontinued the scheme). Who would have known that mobile handsets would be sold at neighbourhood grocery stores? Reliance made this possible to a large extent.

A lot goes behind the Reliance name indeed.

Tags: Anil Ambani, Broadband, CEO, handsets, India, Media, Mobile, Reliance, Reliance India, Telecommunications India, TRAI, Wireless

Snippets from the Telecom Situation in India

At the height of the Reliance imbroglio, the brothers has split apart and all of a sudden, the complex shareholding pattern was revealed; how Reliance India Limited financed the telecom venture of the Mukesh Ambani. Once the resolution was in sight, the charges leveled by Anil Ambani camp in the media ceased to exist. I had been reiterating all the time that much of the media exposure is either paid or favors granted at a later stage. I am glad that the family has rallied behind the two warring brothers and the dispute seems to be heading for resolution. In that case, the telecom venture would land in favor of the younger brother. How would that make a difference? I had earlier mentioned that Reliance had entered in the GSM market in the North East, albeit on a low scale. What wasn’t mentioned was that it was owned and managed by Anil Ambani. By all accounts, the service quality was good enough despite being the lone service provider. I am not aware of the kind of services it offers now. Given the fact that Anil has limited exposure in Telecom, it would be worth seeing as to how he steers the company in the present times.

Clearly, he would have to carry out restructuring at the managerial levels and get in the new team. For too long, Reliance has had to pay out excess money over and above the original license fees. That it chose CDMA over GSM is not disputable. The fact is that it needs to inject urgency in the broadband roll out. BSNL is snapping up its potential customers rapidly. Let us see how this one works out. Finally, when it comes to managing the company, according to media reports, Anil Ambani is more on hands person being able to project a younger profile of the company. As I say it again, telecom is fast changing field here and it would be too premature to say as to how the company would change its fortunes for the better.

TRAI did something that was not expected out of it. It actually admonished VSNL over its decision to challenge the telecom order reducing the international bandwidth rates. For a company used to monopoly for too long, artificially high prices for International bandwidth was a cash cow. TRAI has gone on record saying that the domestic bandwidth prices are to be reduced by the end of this month. VSNL has been cut to size, for a company with Tata brand name; it paints a sorry picture when it comes to execution of projects. Suddenly in tier two cities, it develops cold feet, even though their infrastructure is excellent. But more on that later.

Would broadband become cheaper by that account? Well, as the media goes gaga over the reduced prices and paints a rosy picture of the broadband reach, let us face it. Reliance, Bharti and VSNL own the international gateways. Bharti offering its services under Airtel Broadband can easily offer unlimited data at reduced prices. Yet, it fails to do so. Bharti has always been watching the situation and drops its prices in anticipation of the loss of revenue from existing customers. I remember they had made a positive buzz in the market when they reduced the STD rates for long distance calls. However, it was already in the air that BSNL was looking forward for doing the same. It was enough to fill up the columns in the news papers as to how the true potential has been achieved in the Indian telecom market. At that time, this website was not there too, to refute the “facts”!

Bharti did it again this time with the broadband offering at Rs.249/- only. Yet, the download limit for the same? Remains a few hundred MB. Is that cheap or cost effective even for sparing use? Yet, it was enough to guarantee Airtel enough headlines. In the final analysis, Airtel has been a me too player rather than taking proactive approach in the market. For example, they could have one offering across the board. 512 kbps unlimited starter pack for a fixed sum. I would gladly wait for Airtel in that case. And BSNL would be forced to follow suit; would be “real competition” in terms of speed and customers.

The same argument goes for VSNL. Yet, one can understand their frustration. They are being forced to play on an uneven ground. Setting up a brand new infrastructure in terms of metro Ethernet is expensive. They are forced to provide DSL subscription after laying down their own loops. Herein lies the tragedy of Indian telecom. Unbundle the local loops; force the telcos to offer dirt-cheap prices for broadband access, which would have a multiplier effect in the economy. The bulk of the customers would invest in a Personal Computer only if there are guaranteed returns on investment. As people became aware of what mobile telephones can do to their businesses or perhaps to their lives, it was being considered as a worthy investment. As the benefits of the broadband trickle in over the period of time, it would virtually create a boom. This is what I analyze the trends as. Therefore, infrastructure duplication is avoidable in the long run and some day or the other BSNL would be forced to part with its local loop. British Telecom did the same thing. Yet, no one is happy in Britain with the government owned services.

The current estimate of number of broadband users is around 20-30000 only. That is indeed a minuscule percentage. The estimated number of subscribers in the next 5 years would depend on the proactive approach of the companies. Yet, the figure thrown around in terms of millions is a figment of imagination indeed. For that low cost computing is necessary. How is that possible? Well, that is another matter really. Finally Reliance broadband. The exact date is still not certain. Could be it be next month or two or by the end of the year? This is not certain at any rate as of now. Still waiting for a decent Internet access.

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: Advertising, Airtel, Airtel Broadband, Anil Ambani, API, Broadband, Broadband access, BSNL, BSNL Broadband, CDMA, Computing, DTH, GSM, India, Internet, Media, Mobile, MTNL, Opera, Reliance, Reliance Broadband, Reliance India, Tata, Tata Indicom, Telecommunications India, Telecommunications India, TRAI, VSNL