3 G Opportunity
BSNL and MTNL have a great opportunity on hand with 3 G network rollout. Because of their government backing and ownership they have natural advantages that can be immediately translated into huge payoff for both the companies themselves and the government of India.
Although the license fees that can be expected by the government can be in several billions for 3 G auctions, there is an immediate opportunity for both the government to realize the market based opportunity with 3 G networks. A little bit of imagination and a little bit of planning can bring enormous returns along with larger customer base with very high value customers to these networks.
The government owned networks have huge cash reserves and the government itself as the checkbook for never worrying about the network deployment. The is enough capital available for these network to fully rollout the 3 G network and make the highest value services available immediately. When money is not a concern, there is no reason to delay the deployment, and we can list out the multiple benefits that will come with planned 3 G rollout for MTNL and BSNL.
For various reasons the government has delayed auctions 3 G auctions for a number of years, and the past weeks news story claims that the military that holds the spectrum has objections to release the spectrum, which will invariably delay the plan for actually moving forward with the auctions. BSNL and MTNL already with spectrum on hand can move rapidly to deploy the network and the services. They are at least a year or more ahead of the other players with 3 G strategies and specially the available capital makes it a natural monopoly for some time to come.
The market competiveness comes with is deploying network and make services available to the demanding customers. This is a special case of natural monopoly for BSNL and MTNL, as to the delay in the auction is not monopoly by policy but by circumstance. Even a 2 year advantage is a crucial advantage that can be fully exploited to fullest advantage to these two companies.
Government can extend multiple options to customers to entice them to begin using BSNL and MTNL. Imagine the subscribers that are government employees both state and local, politicians that can make a statement by using government owned networks, contractors and other suppliers to both government and the networks themselves, and everyone that can be enticed with great service and uncluttered network.
Some of the largest networks in USA are experiencing quality issues because of the network rollout has been much slower then customer acceptance of the service. Global giants such as ATT have been learning the hard way that having an accepting customer is not good enough when the network will not support the technology that is sold to the customer, and the advances in user needs can only be met with network deployment. Network expansion or upgrades is not an issue for the government owned networks, and they can demonstrate this today. They don’t have the quality issues that the private carriers in India already have (without 3 G) and stressing the quality aspect is not necessary to demonstrate as customers will know this instantly. With number portability the unhappy customers from other networks can migrate without much fuss, and cost. The high value customers are clustered in the metros and for them to switch services or adapt to 3 G is simply a matter of the service being available. If you add the incentives of quality, support, availability and immediate access, then BSNL and MTNL can turn these lethargic and bureaucratic businesses into global leaders.
There is no problem of customer readiness with the Indian Telecom market. It is the greatest opportunity despite a 40% penetration. The high end usage that comes with 3 G networks has a pent-up demand and when introduced to market will satisfy the customers in waiting.
BSNL and MTNL have always had good quality networks compared to the congested private networks. The congestion is a function of the growth and acceptance of the mobile services, and the private networks have not been able to cope with the great demand for expansion. Private networks have to meet the demands of the shareholders along with the network expansion needs and the government owned networks have no such compulsion. This is a time for BSNL and MTNL by changing their existing market perception of not too keen on providing customer service to great customer service organizations by treating a customer as customer, along with providing state of the art services.
The opportunity in telecom market expansion and market valuation is enormous. By taking advantage of the natural monopoly that has been afforded to BSNL and MTNL, along with a little bit of planning will bring huge rewards to government of India, while providing to the immediate needs of the customer. Its funny how is made out of simple tweet comments by a minister of state, but imagine if the same political machine puts it mind to taking advantage of the available market conditions to bring great benefits to the coffers of the government without major policy or political mechanics. The finance ministry can be smiling all the way to the bank for many years to come.
September 20th 2009
Optus Technologies, Inc.