Monday, August 04, 2008

Communications Menu

Vasu Reddy from Chicago

Some 300 million people in India own a phone and are communicating with each other wit in the country and probably with many millions more across the world. The number of subscribers in India is growing rapidly and shows no sign of slowing down. In five years from now we could have 700 million or more and perhaps the largest mobile community of the world from India. To estimate the market growth has been is to simply underestimating the potential of the Indian market, and the demand seems constant. Dozens of operators, thousands of innovative companies, tens of thousands of outlets, millions of advertisement minutes and constant press on the communications revolution will keep pushing a variety of options and opportunities for the Indian Communications Consumer.

More 2 G Networks

Outside of the expected 3 G networks, more 2 G networks are inline for deployment. There is plenty of rural India to be covered by the current operators, and as it is mandated by the license agreements to cover the rural markets, there is more people joining the networks.

M&A Factor

Idea, Spice, Hutch, Vodaphone and many other deals will help consolidate the industry even prior to the 3 G operators coming into force. With these deals are happening the market is not just consolidating the numbers but also creating value for both the users and investors. Better management, better network coverage, better offerings and eliminating the inefficiencies of the operations are all commonplace with the mergers and acquisitions activity. It is surprising that the government owned MTNL and BSNL have not gotten into the M&A activity with their huge cash surpluses. If there is no restriction on them to acquire other operators, they should do so now.

3 G Networks Are Coming

Just announced 3 G auctions should give some cheer to potential operators who are not already in the Indian telecommunications markets. With multiple operators contemplated for each sector it will be a new menu of phones and services for the existing mobile population, while delivering advanced services for people who have been waiting for such services.

The 3 G should also deliver a strong boost for the next year’s central government budget. If the estimated 30,000 to 40,000 Crores in license fees are realized, then Indian Finance Ministry can develop many positive economy signals for years to come. If the additional annual collection from revenue base is added the value of 700 million people using communications will drive the economic scenario for many years to come.

Cheap and High End Phones

The high end phones with more functionality allow users to access value added services, and create more opportunity for revenues for the services providers. Be it with the Chinese phones or the coming 3 G phones, both the high-end and lower RPU users will have the ability to use the slew of value added services that are being developed for the Indian market. The cost of the phone eventually will become a non-issue as the biggies of the mobile manufacturing will competitively price their phones if the cheap phones with high end options from China garner a sizable market share. The users can wait and watch the price drop for handsets rapidly.

Declining Rates

Per minute airtime rates have been coming down, and innovative schemes have continued to be deployed by the operators. Free rental or no rental, friends and family plans, free or limited charges for night and weekends, and promotions for use of minutes are all being deployed by the wireless operators. The regulators are also actively involved in keeping the price per minute down. Although per minute cost in India is small, when compared to the GDP verses cost per minute it is still high. With many 3 G and 2 G networks coming into the market, it is quite certain that the prices will come down further, or the value for the same money can be increasingly greater.

Incoming Calls For Free

This is one feature that can draw more and more usage to the market in both business and personal lifestyle of the Indian market. Personally Indians seem to adopt a more social lifestyle and communicating more. The mobility has provided the young and old Indians with communications freedom and it is showing in the increased numbers of users. Businesses which are growing are also use communications rather than people resources and realizing savings in return. Having all incoming calls free will continue to inspire greater number of people to become mobile users and be available to those who need to find them.

We Love To Speak

No question of Indians loving to make their point. We love to speak. This is a good enough reason to look for expanded growth with the markets. We are now mobile and we love to speak. There is no question of just 700 million phones in India. We may be 100% connected very soon if the telecommunications menu is affordable.

The recent pronouncement that there will be no license fee for rural operators might also pull in entrepreneurs to look at making a business case out of the uncovered and unwired markets in India. Subsidizing the wiring of rural India with the already stashed generated with ADC and other charges imposed on the existing operators might lend some credence to supporting rural telecommunications. The Internet and other services which require high speed bandwidth will further the educational and business opportunities for rural India. The consumers can start to pick and choose services, products and plans that will cater to every aspect of their life style. Service providers in India have always been innovative, and the expanded license base will only make them more aggressive and innovative in keeping their customers. A lot of exciting times for the Indian communications markets in the coming months with the market deploying more networks and technology, and customers ready to choose from an expanding menu of offerings to speak and speak some more.

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