An article published by the Business Standard, India, states that telecom operators should focus on their most profitable customers, those at the top of the pyramid or TOP, instead of following bottom of the pyramid (BOP)-focused strategies. The article cites a study by BDA, a consulting firm in India, which finds that the TOP contributes a greater percentage to revenue than their lower-income counterparts. 

An interesting debate has ensued, here and here,  on the economics of serving the BOP. Although such figures appear to economically justify abandoning BOP-focused telecom strategies, some argue that there seems to be more to the picture than first meets the eye. 

Rob Katz of Nextbillion.net argues that while the BOP might not be higher-end consumers just yet, they very well could represent the future middle class, and hence, bringing customers into the fold now, could make more sense than ignoring them altogether. 

Furthermore, Rohan Samarajiva argues that a new set of business models to serving the BOP market is emerging which rests less on ARPU than on maximizing revenue-yielding minutes. Such models have enabled operators to achieve falling unit costs and hence higher mobile use, more so than might have been achieved with models serving the TOP. 

More on the TOP vs. BOP discussion is available here.

The committee, which was set up to suggest annual spectrum charges for 3G, has recommended that due to the efficiency in capital expenditure and synergy in operations, operators having 2G spectrum and acquiring 5 Mhz of 3G spectrum should be charged at a higher rate.

GSM 2G operators get 4.4 MHz and CDMA players get 2.5 MHz of start-up spectrum with their telecom licences, on which they have to pay an annual fees of 2 per cent of their aggregate gross revenue (AGR). For spectrum up to 6.2 MHz, the operators have to pay 3 per cent of their AGR, while for spectrum up to 8 MHz they have to pay 4 per cent of their revenues and so forth.

Therefore, for a stand-alone 3G operator, the rate will be equivalent to the 5 MHz slab rate of 2G spectrum or 3 per cent of the AGR. But operators having both 2G and 3G spectrum will have to pay one per cent over and above the present 2G slab rate.

Read the full story in Business Standard here.

Global Telecoms Business, a journal for communications service providers around the world, has named Tata Communications (formerly VSNL) CEO N Srinath has been as one of the 10 most influential telecom personnel.

Among the top 100 telecom personnel named by the magazine, N Srinath has been positioned at number 8. He has been credited for transforming Tata Communications in an international company and for the acquisition of networks like Teleglobe and Tyco Global Networks.

The list tops with Google Chairman and CEO Eric Schmidt, and Apple CEO Steve Jobs at number two.

Other Indians in the list are Bharti Enterprises Chairman and Group CEO Sunil Bharti Mittal (at number 35), Bharti Airtel CEO and Joint MD Manoj Kohli (number 39) and CEO of Motorola’s mobile services division Sanjay Jha (number 41).

Tata Communications’ President of global data and mobility solutions Vinod Kumar at number 68 and former CEO of Vodafone Arun Sarin at 71 are other Indian in the list.

Business Standard

Unveiling a new brand for the group, the third time that the group has announced mega brand changes, Sunil Bharti Mittal, chairman and group CEO, Bharti Enterprises, said, “We are breaking free from our telecom legacy. In the next five years, we hope to get more than 50 per cent of our revenues from businesses other than telecom, which constitutes more than 80 per cent right now.”

Read the full story in Business Standard here.

The charges are paid by the operator, from whose network the call is made, to the operator on whose network the call terminates.

The DoT has asked TRAI to review these charges on a priority basis so that consumers benefit at the earliest. “Given that the central aim of the telecom policy is to provide services at affordable rates, it is suggested that a review of mobile termination charges, based on present and projected costs and traffic, be undertaken by TRAI in a time-bound manner,” the DoT said in a letter to the regulator.

In 2003, Trai had recommended a termination charge of 30 paise per minute. However, the DoT has now reasoned that growth in the number of users, rise in the minutes per usage and declining tariffs will bring operators ample sources of revenue.

Read the full story in ‘Business Standard’ here.

It has written to operators saying they can no longer advertise broadband services that say they offer “up to” 256 kbps speeds, thereby circumventing the rules by offering services at far lower speeds

Instead, Trai has directed all operators to clearly mention the minimum guaranteed download speeds in various packages. The regulator said operators have promised to abide by the new direction.

Meanwhile, the regulator has also mooted a discussion paper, which was released today, on whether the present level of 256 kbps defined as the minimum speed for a broadband connection should be raised to bring it on a par with international standards.

The paper said in countries like France and Singapore, broadband is defined as a minimum speed of 512 kbps.

Read full story in Business Standard here

The fight is so intense that Vodafone chief executive Arun Sarin too jumped in, dashing off letters to Prime Minister Manmohan Singh and communications minister A Raja, complaining against the stiffer spectrum allocation norms proposed by the Telecommunication Engineering Centre, an arm of the department of telecommunications.

Reliance Communications chief Anil Ambani, whose company uses CDMA technology, too wrote to the Prime Minister. He accused some “large GSM players”, a reference to Vodafone and Sunil Mittal’s Bharti Telecom, of spreading “misleading and false propaganda” to block fresh competition in telecom, hoard spectrum and indulge in “anti-consumer practices like cartelisation”.

Read the full story in ‘The Times of India’

Other related stories:

Anil Ambani takes telecom rivals to PM – Hindustan Times

Telcos sweat under spectrum deadlock – Business Standard

Telecom tussle engulfs all major players, Ambani writes to PM – The Indian Express quoating PTI

We always spoken about infrastructure sharing for last mile. The most important infrastructures that can be shared is backhaul infrastructure. BSNL and other operators should be encouraged by the government and the regulator to share the backhaul infrastructure like optical fibre cable, backhaul spectrum etc. Virtual Private Networks are a way of life for medium to large enterprises all over the world and should be propagated for use in villages. Of 6.5 lakh villages in India, the majority are in the interiors. These villages need connectivity for various institutions like primary schools, panchayats, primary health centres, and so on. Most often there are different schemes working in parallel to provide connectivity to each of these institutions. However, the easier solution is to merge all existing project into one project and resources supporting each of them can be shared. This will bring down cost as well as increase penetration.

Read the complete article in the Business Standard HERE

The prduence of using beauty pagents needs to be questioned. The failures of 3G auctions in Europe in 2000 has been mentioned as one of the reasons for opting for a beauty pagent. However the failures of those auctions stemmed from operators’ over-estimating the potential of a new and untested service. It is unlikely that operators would make the same mistake again – my argument being once-bitten, twice shy.

Economists would argue that auctions, with sufficent safe guards to eliminate (or at the very least minimize) collusion/signalling and to enforce rollout is the best method of allocating scare resources. I am not an economist but the arguement makes sense and the process can occur in a transparent and efficient manner. License allocation by beauty pagents don’t have a reputation for transparency. Recent auctions, such the recently concluded USD 13.9 billion license auction in the US (Washington Post article), have learnt from past mistakes (The FCC included some provisions in the current auction to take care of problems that emerged in the big 1990s auctions when one winning company filed for bankruptcy and succesfully took FCC to the courts to prevent them from repossessing their licenses- see the related IHT article ).

Lets see what TRAI’s final decision is, but at the very least I hope they provide sufficent justifications for their choice.

No one’s doubting Maran’s recent initiatives, but the TRAI remains emasculated on critical issues like interconnection and BSNL’s monopoly

Mahesh Uppal, Director, Com First (India) “A regulator without robust control of the interconnection regime can hardly ever be effective” Given the tasks before them, of ensuring a competitive and efficient market, telecom regulators can be effective only if they have sufficient say in entry and exit of players and if they can ensure that new entrants can interconnect their networks to the existing network. Indeed, Trai Act of 1997 was amended in 2000 to fortify the regulator’s powers in these two areas. The amendments made it obligatory for the government to consult the regulator before licensing new players and virtually removed government powers in tariffs and interconnection. In spirit at least, all these amendments have been violated in recent times.

T V Ramachandran,
Director General, COAI
The announcement seeks to introduce unified licensing in the spirit enunciated by the TRAI
It is both untrue and mischievous to suggest that the government is, in any manner, bypassing the regulator. In fact, the recent landmark announcements by the Union Minister for Communication and IT Thiru Dayanidhi Maran constitute a brilliant piece of policy engineering that seeks to introduce unified licensing in the spirit and intentions enunciated by the Telecom Regulatory Authority of India (Trai). I believe that these announcements are fully supportive of the regulatory framework and are intended to implement the regulatory recommendations after fine-tuning them to make them more meaningful and effective.