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.
Existing telecom operators may have to pay more than the new players eyeing the 3G space, in the form of annual charge for the 3G spectrum. A committee chaired by Department of Telecommunications (DoT) Joint Secretary J S Deepak has recommended that an operator having 2G spectrum and 5 MHz of 3G spectrum should pay an incremental 1 per cent more than the applicable slab rate for 2G spectrum. 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.
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).
The Bharti Group is aiming to reduce its dependence on the telecom sector to 50 per cent for the group’s revenues by 2013. At the moment, telecom operations provide over 80 per cent of its revenues with new businesses which include retail, financial services and agriculture just about taking off the ground. 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 Department of Telecommunications (DoT) has asked the Telecom Regulatory Authority of India (TRAI) to review termination charges, a major component of telecom bills. 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.
In a major development, the Ministry of Communications & IT has cleared applications of nine telecom aspirants and is close to issuing them Letters of Intent (LoIs). This will be followed by issuance of universal access service (UAS) licences and allocation of spectrum. The LoIs will be issued during the week, if not tomorrow. However, the allocation of spectrum would take some time as the Department of Telecommunications (DoT) was finalising the amount of vacant spectrum, sources close to the development said. The proposals of the new applicants were pending with the telecom ministry after the DoT’s approval last month.
Responding to complaints from harassed consumers who are offered “broadband” at speeds much slower than those stipulated by the government, the Telecom Regulatory Authority of India (Trai) has taken a tough call. 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.
The simmering tension over spectrum allocation among Indian telecom companies has erupted into a public spat with warring mobile phone operators leaving no stone unturned in their battle to acquire more air waves. 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
Despite the phenomenal growth of India’s mobile sector, broadband growth has severely lagged behind. Pradip Baijal, the former Chairman of TRAI comments on some of the reasons for this sluggish growth. 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.
According to this article that appeared today in India’s Business Standard, TRAI seems to be considering using a base price + beauty pagent mechanism to award 5 licenses (of 5MHz each) for companies to introduce 3G services. 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.
Mahesh Uppal, Director, Com First (India) and a frequent participant in LIRNEasia events contends that the Indian telecom regulator’s authority and independence have been undermined by recent actions of the Minister of Telecom. T V Ramachandran, Director General, COAI [cellular operators association] argues otherwise and states that the Minister’s actions promote Indian consumers’ interest. We would like to get your view on this subject, please comment below. The full debate is available at the Business Standard. 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.