Generation Gap

While Service Providers and Vendors across the world plan 4G and 3.5G deployments, in India we are still dabbling over when the 3G auctions should occur. As of now the 3G auctions should occur in January 2009. However with mud-slinging over the under-pricing of the 2G spectrum continuing, this might get delayed. Currently we are stuck with 2.5 G technologies which are a generation behind the world.

The question facing GSM operators is that as and when the 3G spectrum is allotted should they launch with vanilla WCDMA or straightaway move to HSPA or even HSPA+. It would make sense as HSPA and HSPA+ are backward compatible to 3G and require only software patch upgrades.

If they do start with HSDPA the next year will change the way people view mobile internet in India. Currently the peak download speed one experiences on the EDGE network varies from 30kbps-100kbps. However if operators launch with HSDPA this might zoom up to 10Mbps. Basically implying that the 5 MB video which took an eternity to download would reach your device in 4 seconds! Now that is lightening quick. The good news continues with uploads speeds reaching 384 kbps. Ofcourse these speeds will come with riders like handset type, base station backhaul capacity, signal strength, subscribr location entwork loading etc. Every factor accounted for the user experience will still be far better than what is currently delivered.

This is good news for content providers and application developers who can develop rich mobile content for better customer experience. Mobile operators on their part will need to come up with data tariff plans which encourage more data uptake and are easy on the customer's pocket.

You have Won...

Off late a lot of mobile subscribers have been receiving SMSs saying they have won some lottery or prize and to claim the prize they need to call a particular number. The number is generally international and the prize money is large enough to coax the subscribers in to giving it a “try”.

The subscriber dials the number and is generally led to an IVR which guides the subscriber through different menus which try and keep him/her engaged for as long as possible. Unsurprisingly generally there is no prize received. However a surprise awaits the subscriber at the end of the month when the service provider bill is received. The international number dialed would generally belong to a group of countries which the Service Providers categorize as ROW II or remote destinations. The per minute tariff to these countries is around Rs 40/min. So all the while the subscriber is on the IVR menu he/she is being billed at Rs 40/min. Service Providers keep a tab on these numbers and try and block them, however new numbers keep cropping up every month. These numbers are advertized by individuals who have revenue share arrangements with some shady operator running this service abroad.

So next time you get that message try and resist the temptation to “try” and inform your Service Provider immediately.

TPM

TRAI of late has been examining whether intergrated service providers are passing more of their Mobile STD revenues as NLD revenues and saving on license fee. Also RCOM has been alleged of booking its mobile data revenue as ISP revenues. In both the cases service providers have been charged with passing revenues to entities which is less taxed.
These are classic cases of Transfer Pricing Manipulation (TPM) or in common parlance Transfer Pricing. Though the governement by the Finance Act 2001 is within its right to probe such pricing mechanisms, Service Providers are within their right to pass a higher Carriage fee as long as it is within 65p.
The solution could be to adopt a cost plus approach and reduce the maximum carriage charge. This however will hit BSNL Carriage revenues the most and thus again hit governement coffers. The trick would be to arrive at the optimum maximum Carriage Charge which would maximize governement's earnings.

India Calling

Today NTT DoCoMo joined the bandwagon of foreign operators investing in India with a 26% stake in TTSL for a whooping 2.7 bn dollars! Interestingly the investments are meant for Tata's GSM roll out. This has been on the heels of investments by Telenor in Unitech and Etisalat in Swan telecom.
The two factors driving these investments are a large population and low penetration. India with a population of 1.3 bn has penetration levels of around 30%. Pundits believe that this penetration will rise to 80% over the coming decade. With Television the most penetrated white good in India reaching 70 mn households,this seems like a distinct possiblity. The mobile phone is a personal device while a Television meant for the entire family. There will eventually be more number of mobile phone connections than cable TV.
By the time the new operators launch late next year the penetration levels would be around 40%. Thus they would have an opportunity to compete for the balance 40% pie. Assuming ten active players in the market gaining a fair share of the incremental subscriber growth the new operators would have around 40 mn customers each. These new customers would be primarily from the low income group and would fetch an ARPU of around USD 4. Thus with the market saturating these operators would be lookingat an annual revenue of USD 1.9 bn.
Thus the new entrants have plenty to fight for and it will be interesting to see if in the near future the rule of 4 will apply in this industry. The coming years are going to be intense..

World's first Virtual Country Code

Yesterday Voxbone launched "iNum" the internet's first Global Country Code. Traditionally numbering plans had been alloted geographically and this had worked fine till the concept of portability emerged in US in 1996 when the first movement towards binding the number to the subscriber rather than geography/service/provider occured.

Voxbone has extended this portability concept to the global level with a "glocal"country code. The series used is the ITU series +883 for International Networks.

The key to the popularity of this service will be the cost incurred byPSTN customers to call these numbers.The cost of terminating to the iNum series needs to be lesser than termination charges for most countries in the world which is not the case as of now. Carriers supporting calls to +883 charge more than a dollar as of now. Add to this the retail margin and calls will be prohibitvely expensive.

Even if Voxbone Carrier partners carry calls to iNum numbers for free it will remain a challenge getting the code series opened across retail networks without an established revenue model.

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