In Country Long Term Plans for Indian Telecom

Vasu Reddy from Chicago
vasureddy@aol.com

It will not be expensive. It will not require big budgets. It will not need any investment bankers. It will not need any government approvals. It will not need shareholder consent. It will be a simple strategy to look for greater revenue sources with long term profit for telecom companies.

India still offers great internal opportunity for long term growth with sustainable revenue and profit opportunities in telecom.

Telecommuting
Billions of hours and dollars are spent on the streets fighting traffic and consuming fuel. Let us not forget the pollution and all other costs of travelling. The stress is another factor in simply getting from place to place. There is no place in India big or small where traffic doesn’t far exceed the capacity of the roads, and it is only getting worse.

With most urban India well connected, companies can start looking at telecommuting as an option to ease the burden of traffic and cost. Internet and phone service is no longer expensive, and can be deployed for a multitude of support services, and work at home options for many jobs. Specially the telecom related services can be well handled away from the offices and can be effective. Indian enterprise should take a leaf from many of the western environments where working from home, and remote locations is common.

Wireless Villages
Close by tower can provide internet to villages nearby, and provide Internet access. Each village can be a self containing telecommunications center albeit small. Many people from the villagers already have mobile phones and already in the mobile user group and bringing internet to every village will further develop their ability to access the world through computers.

Village Web Sites
Probably the most fascinating thing about India is its villages. Nowadays there are many well educated people from the villages who no longer live there, leaving behind their families. There are also a huge number of NRI who belong to the rural India. Adapting to telecommuting, introducing wireless services into the villages will only enhance the community to become a part of the global landscape. A simple website can be very inexpensive to create and maintain. Perhaps this is also an initiative that the government can undertake in real rural development programs.

Voter registration, weather bulletins, agricultural programs and updates, political news, people and productivity issues, local happenings and other individualized information can be instant to the village websites. Involving the local talent from the village will help in keeping things up-to-date and informative.

Government can post the local project activity, development plans and any relevant issues to the locals. Local schools and colleges nearby can be made responsible for making every effort to keep data current and help maintain the websites. It may be a great idea to include such activity into the daily learning for school and college going kids, who will enthusiastically work on them and will learn the mechanics at the same time.

Online Education
Simply linking the wireless villages, websites and complete communications access will enhance the ability to learn from long distance. Both the rural children and adults will benefit from online education.

Outside of the vast amount of free information available on the internet, it is simple to design and provide online education. Every school with a small computer center can serve the purpose of both real time and offline education.
Children during the day time and adults during the evening can benefit from learning.

As the country continues to grow, it is also important to have intellectual growth to continue to make the nation reinvent itself and adapt to the changing times. Be it agricultural methods or software development India needs to keep learning and improving to prosper for ever, and no better ways to keep providing the edge to the people than education. Online education is inexpensive and available all the time for people who want to learn.

While we should support global expansion of our homegrown telecom companies, we should plan for continued growth with in the country. If the new government plans to wipeout all slums in India within 5 years, it can easily support to incorporate telecommunications reach to 100% of Indians in the same timeframe.

June 7th 2009
Vasu Reddy
President
Optus Technologies, Inc.

Indian Telecom – The Case for Faster Growth

Vasu Reddy from Chicago
vasureddy@aol.com

Some 429 million or more users and adding quickly to this is quite an attractive case for faster growth. Government of India and the private sector should push for more rapid and positive changes in telecom. The positive effects on the overall economy due to the communications industry are enormous; 13,000 Crores of possible revenues for DOT in 2009, with 55,000 Crores of revenues in past five years, with a 15% estimated increase in the 2009 revenues to DOT for the foreseeable future. These are billions of dollars every year and just to the DOT as licensing fees from operators.

There is positive earning that contributes to income tax that further enhances government’s take from communications industry. There is no begrudging these numbers, rather the fantastic positive effect of the communications industry to the nation’s coffers. Every minute people are calling out to someone, there is revenue to the government.

There are government enterprises such as BSNL, MTNL and other communications players that further add to the revenues, along with huge market valuations on the enterprises. As these public enterprises are well funded and well capitalized, their market valuations are equal to or better then a private enterprise. If there is a quick need for raising capital taking BSNL public will create a huge inflow of cash into the coffers.

For more than a year 3 G license auctions have been close to being held and they could happen in 2009. This will again add another 20,000 to 40,000 Crores to the government coffers. And added to the initial fees, the additional networks will only drive the user growth in areas where there is network congestion, and need for additional value added services. 3 G networks will certainly add a higher value per user which again adds to total revenues and to the DOT take on fees collected.

Adding all these thousands of Crores is an exercise that will delight the finance ministry as well as the government which is just finishing the elections, and start spending to meet those wonderful promises made to the public to get their votes. Budget deficits can be trimmed or eliminated so that real development programs can be funded rather then paying interest on past debts.

The government should focus on making telecom a priority and implement every possible policy that fosters the industry for faster growth. Spectrum allocation, M&A practices, new license auctions, adding the rest of India to the telecom footprint and separating the military network needs with civilian network needs; all of these should be handled expeditiously. Making telecom regulation and issues a national priority will help with a multitude of positive influences on the economy. India is a nation that focuses on IT exports as a big external source as a revenue generator, should focus on telecom as an internal revenue generator. If the industry is well managed and regulators focus on problem solving rather than fixing past issues, the opportunity is there for telecom industry helping the national owes with many areas including budget balancing, employment and communications.

Some nations have achieved 100% mobile penetration and 120% plus in telecom user base. India can do it with very little effort. Indians are very adaptive to the mobile and fixed networks, and if available we will be a billion users plus country.

The budget process focuses too much on software and IT exports, while telecom revenues are growing furiously. Telecom will and should compete for being the top revenue generator for the government. Faster growth in telecom will make it the biggest revenue generator for the government.

Telecom creating better employment opportunities is obvious. With each ten to fifteen million users added every month, thousands of jobs are also being added to support the growing user base. Construction of new infrastructure, sales and marketing, accounting, maintenance services, management and support services are all added every month with the increase in users and thus bringing educated workforce to contribute by paying personal income taxes. They also bank with credit and debit cards, buy products on installments and add to the circulation of more and more money every month; increasing the consumption and production of every industry in the country.

Telecom companies have solid management teams, and compete with each other with style, substance and services. The partnerships in all major private enterprises consist of who’s who from the global pool of investors and operators who enhance the already talented Indian management team. Each of these teams will never cease to rest in loading more users and attaining better profits for their investors; only way they can do it is being better at providing products and services that retain and grow their user base. At this moment they have a lot of room to grow and prosper in the Indian market.

Indian government should immediately seize the opportunity and focus on the telecom industry, and help it grow faster. Regulators and politicians can handle this segment with utmost care and sensibility to help faster growth and uninhibited competition. For sure the regulators and industry will argue that they are focused on telecom and making things easy for new competition, but not enough has been done to simplify the regulatory environment. There is continued ambiguity with fee structure, differences of opinion of spectrum management, entry and exit issues, competitive imbalances and poor regulatory management. The industry has prospered and contributed despite these continued and nagging issues.

In the just concluded elections, people were promised everything on earth for free, but no politician promised a free mobile or subsidized talk time to its constituents. If there was a freebie that would have attention of the people, it would have been a free mobile with lifetime service contracts. As all incoming calls are free in India, it would have been a great giveaway, but the election commission might have had a fit about such giveaway. The government could have been smart enough to give them away and have argued that they were keeping people undated of weather or something useful like commodity prices or something of that sort. Fun aside, the telecom business is a serious business with positive implications for the nation for a long time to come.

May 3rd 2009
Vasu Reddy
President
Optus Technologies, Inc.

Too Successful To Regulate?

Vasu Reddy from Chicago
vasureddy@aol.com

Every wireless communications company in India is big. By big meaning they have already paid huge upfront costs for license and infrastructure even before they get started. Each wireless player have to pay hundreds of millions to get a UAS license and then pay for the area licenses, along with infrastructure and people costs. There is no small mobile services company in India; each and every one all of them are big investments.

There is constant squabble about the impending changes to regulations in the communications markets, and constant delays in implementation of changes and advances. The much delayed 3 G license auctions is an example of squandering a wonderful opportunity to help relieve the congestion in the mobile airwaves, and allowing for much needed high end mobiles services. 3 G services would help bring in more low ARP users who need basic services into the mobile population, while allowing the migration of high ARP users to move to the 3 G network, allowing new users in the 2 G network.

The constant discussion on the fund to support the development of rural telecommunications is simply a huge fund collected but unused to really fund the expansion of telecommunications in rural India. Hefty goals to include all parts of India into the network is easily possible if the money already collected and on hand is used to do this.

Awarding 3 G licenses to only the government owned networks is simply the slowest way to bring the services to the market, as these government owned networks while well funded and well endowed with spectrum, are the least efficient of all networks. There is nothing wrong with the networks, simply the way they are managed makes them lethargic compared to networks where the government has no ownership.

Termination calls to each other has also courted controversy. What mobile operators pay each other has been constant since early part of this decade, and has been subjected to modification this year. If it goes up it hurts the new operators, and if it goes down the incumbents have a grouse about losing revenue.

The private networks (even the smallest operating network) are loading tens of millions of users every month. Every market survey indicates that the user base will double fairly quickly. So, the lack of market opportunity is not a barrier to entry. It is really the availability of spectrum and transparency in handling the licensing process. The success of the market continues to attract global investment into India’s mobile markets. The combination of Indian market opportunity and semi transparent policies continues to attract global investors to keep evaluating the interest into India.

Regulators must choose implementation of guidelines to improve the quality and affordability of the services to the entire market. While making sure that neither the size of the company or investment it makes should allow for onerous disadvantages to any other company that wishes to compete in the same space, the regulators must continuously monitor and implement policies that are constantly in favor of fair competition and people oriented. India despite its massive telecommunications market is still behind in monitoring and implementing its own set of guidelines.

Simplification of the current guidelines, tax structure and tariff plans may not be as easy as a discussion or a panel. The delays with new services, the disparity in the size of enterprises, the political and economic clout enjoyed, the disassociation of laws from one service to the other, the unimagined growth, the market clout of the enterprises, and a whole set of cultural and traditional influences that are unique to India; are all the factors that drive the implementation of policy. Having said that, it is not impossible to simply use fair and unbiased market standards for communications markets, and it is not impossible to take the great Indian telecommunications market to adopt policies that are fair and unbiased to all competitors.

The big players are already in great strength with users, valuation and balance sheets. The regulators should start distancing themselves from the influence of individual companies or technologies, and start showing independence in formulation of future guidelines that fit the future needs of the market. Law, taxation and regulations must continue to seek answers for the future needs, and stop relying on the past. Barriers to entry should be competitive and global rather then protectionist.

April 9th 2009
Vasu Reddy
President
Optus Technologies, Inc.

Slumdog Telecom

Vasu Reddy from Chicago
vasureddy@aol.com

Using the “Slumdog” title in the Telecom story is not to just attract attention. It’s really a great title for the Telecom Industry in India, which has been a great story for 15 plus years now, and continues to get bigger and bigger in the Telecom success stories of the world.

Despite the extraordinary growth with the market (with over 400 million subscribers) there is continued debate amongst the network operators, policy makers, politicians and technologists. All the commotion is not all that bad with the Indian Telecom market and it for sure makes great reading. There are endless delays with new spectrum auctions, allocation of spectrum to the already approved operators, debates on value of the 3 G spectrum, more committees to decide on future, BSNL and MTNL continuing to get preferential deals, bickering amongst the CDMA and GSM operators, TRAI and DOT differences and whatever that can be remotely controversial is all on the table.

3 G story is rather cumbersome one to tell as it still continues to go back and forth with politicians and technocrats still wrangling with each other, with sidebars with incumbent network owners adding to the confusion. The initial fees will not matter in the long run if the networks load subscribers at the current rate, as the annual royalties will more then makeup for any initial fees that are being estimated. If we add at least three years of loss of interest, fees and other benefits that would have accrued by the country, and continued delays of releasing the 3 G spectrum will only be greater. The regulators should stop tinkering and get the auctions done as soon as possible to get the 3 G networks into production. The spectrum allocation must be done at close of auctions rather then a protracted delay as it has happened with 2 G networks. The long term rewards will outweigh any immediate shortfall in expected initial fees. Quick deployment expands the subscriber base by moving the premium subscribers into the new networks while allowing new subscribers who need basic services into the existing networks. Whatever the initial fees that is generated certainly supports the budgeting of defense network and allow some budget relief for programs earmarked for this new revenue. The greater impact to overall telecom revenues will be with increases the ILD and LLD traffic across the networks by adding smaller communities to the network.

While the world has gone through a peak period of valuations and now working through a recession and perhaps back into an upswing, the value of more people connected in India will help with the overall economic growth. India has been thriving even the worst years of global economic slowdown. New opportunities for expanded role of more Indians to add to the GDP growth of the country will keep this momentum in positive indices while the world will work its way back into overall positive growth.

The 30 paisa per minute termination of a call rate that is being debated between old and new network operators also should be dealt with quickly.
Incumbent’s verses new entrants should not be dealt as an adversarial situation, rather then combining the strengths to offer the best value for customers. The market should drive the pricing rather then regulation.

The early entrants have enjoyed the benefits of lower pricing on their license fees, albeit they also risked the uncertainty of the markets. But the unchanged policies which are older then 6 years and over 300 million users ago, should be dealt with the reality of today. People have recovered their initial outlay of capital and the new entrants have a bigger outlay today with lower revenue per user, and by trying to impose mechanics established many years ago in today’s environment may not be the most positive way for serving the current needs.

Rural education, mobile banking, video and voice transmission and many other areas of communications will become more prominent with higher speed wireless networks. More mobile value added service will be introduced with the new networks and will create more opportunity for developers.

It is time for all agencies and individuals to stop poking at the process and let the market define it self. There is a need to grow employments and new networks will bring in hordes of opportunities in engineering, sales, development, towers and a whole slew of new VAS development.

The Indian Telecom market is ready for continued success. Success despite the bureaucratic shenanigans and technology lobbying is simply a matter of fact. Just imagine the economic and intrinsic benefits when the subscriber count crosses 800 million in a couple of years? The benefits of well connected India with people communicating with the world will yield untold benefits to the overall economy of the country. Let the market have access to all available spectrum and let the users have the choice of technology. Let the users choose from a variety of choices of networks. Let everyone in India get connected and prosper.

March 7th 2009
Vasu Reddy
President
Optus Technologies, Inc.

Telecom Village Project

Vasu Reddy from Chicago
vasureddy@aol.com

Introspection is quite personal. While continuing to write regular perspective on Indian telecom, its governing agencies and its major players, the time has come to make a project on brining the benefits of telecom to a village.

My personal telecom project is to try and bring present day network to my own village in Andhra Pradesh. It is in Kadapa district near the town of Proddutur and known as Korrapadu. There are about 2,000 to 2,200 total homes in my village with about 6,000 people living there. The local education stops at 10th standard in the village. The high school has about 300 students, which is a number that is vastly improved number from may be 10 years ago. The school is well maintained and well organized. The village folks contribute to the school by being generous with donating to children who come first in school, and also to children who do well in various subjects. There are approximately 100 fixed lines connections in the village. There is no internet connection available yet.

It is a typical South Indian village with a small school, hospital, temple, a bus station and families who have lived there for several generations. It is surrounded with wonderful agricultural lands, and has reasonable irrigation facilities and in good monsoon doesn’t have problems with water. Over and above it has my people, and thus very special to me and my personal interest in my Telecom Village Project.

There is no grand new scheme being for my village. For a couple of years this has been taking shape, and once this initial step of publishing the plan is complete, recruiting the support of the school and the village will commence. We need to make sure that the villagers support the project, and the already educated and computer literate folks of the village will help building this project. No financial support will be sought from anyone in the village so the project will be embraced for what it intends to, rather then a burden to them.

A simple plan is to fund the following:

1. Computer Center – The high school is within a small little compound, and can accommodate a computer room. If not a new room will be built to house four to six computer stations, have a sitting area for reading or having a discussion group, and if needed convert the room into a training or viewing room. This room can be used in the evening for adult education programs, training people of enterprise or agricultural programs, women’s education and family planning.
2. Computers – Once the village and the high school approve of the plan for establishing the computer room, we will purchase new computers with latest speed and technology to become the property of the high school. Six machines will be networked together, and will have at least one large screen. They will be able to be on www, and also available for education programs and even entertainment.
As a part of the project we will request the high school to allow all students access to the computers on a scheduled basis. The plan is to have the already computer literate people of the village to volunteer for training the students and teachers and make them self sufficient to use the computers and internet.
3. Internet Connectivity – Next to the purchase of the computers is bringing internet connectivity into the village. The nearest town is about 7 miles away, and there is a cellular tower nearby the village. Whatever needs to be done, internet will be made available to the computer center. The hope is every student, teacher and anyone else in the village who wish to be on the internet will be able to for free, and make themselves a part of the www community. Many have mobile phones in the village, and it is very likely some will purchase their own internet connectivity once this plan takes shape.
4. Licensed Software – Everything installed in the computer center infrastructure and software will be legally acquired. Software for learning word, excel, photo shop, simple software and other interne tools, and any other training or learning material will be purchased or made available through donations. The kids need to start to learn the value of licensing from the beginning.
5. Local area network – There are computer trained youngsters in the village or from the village. They will be recruited to help volunteer to setup the local area network within the computer center.
6. Solar Lamp and Back-up Power – The village is in same situation as rest of the rural India and has its share of power outages. A quality solar lamp and a backup system that can sustain the use of computers if power fails will be part of the budget to make sure that there will be minimal or no interruption to the planned use of the computer center.

The biggest hurdle may be to get high quality and high speed internet on an uninterrupted basis into the village. If for whatever reason acquiring internet becomes a problem, we will probably build a cellular power to bring in wireless internet. There are quite a few villages around a 10 mile radius, and it might be great to get a tower around the village. This might even become a revenue generator to support all the ongoing costs of the project.

Before I write my last column for 2009, I intend to not just fund this but also see this succeed, and make it a part of every child in my village to have access to a computer and the internet, along with the benefits of www. In the next 11 months this will be implemented with the support of my village and the blessing of the headmaster and teaching staff in the village.

Many other benefits and perhaps issues will for sure surface once we bring this project to light. Once we secure the blessings of the villagers, we will press on with the implementation.

There is no ideological initiative with this small project for Korrapadu. It is simply to make an effort to further implore the value of communications. There will be an immediate and everlasting value for the children by having access to computers and internet. When they go off to junior college they will have the tools to do research and learn quickly and more importantly without the burden of purchasing a lot of books, or travelling to the town to get to the library. There will be benefit to the adults in understanding the use of immediate and instant access to information; be it neither the weather or the news. Who knows they might watch a movie with their family on the computers and do something that they normally will not do with their entire families. It will be connected and informed, and that is the payback.


February 7th 2009
Vasu Reddy
President
Optus Technologies, Inc.

Imagining Value Addition from 3 G Networks

Vasu Reddy from Chicago
vasureddy@aol.com

It is anticipated that India will soon conduct 3 G auctions. Although the dates for these auctions have been moved, it is certain sooner or later they will happen. There is continued debate with the regulators on how many 3 G licenses should be auctioned, and how much should be the floor price and competition and other issues. It is very likely that these issues will be resolved and in some form or fashion the auctions will go on. When the auctions are successfully completed and new networks come to life, the users can look forward to added features and functionality with 3 G.

With the expectation of some great new ways to use these new networks, here are some predictions and services that can become real.

Video chat is probably one of the exciting features that can become a viable and inexpensive option with 3 G networks. It will be a great way to see folks while we chat, and perhaps a good value added feature to push on the new network. With the incoming calls into India expanding by the day, and if the cost of incoming traffic is free to the users in India, you can bet on the video use to grow exponentially.

Movies on the mobile can become a value added feature that perhaps will allow the bored commuters to subscribe and enjoy. Imagine the super rich of Mumbai or Delhi or any other major metro in India being driven around in the traffic. They sure would love to get news and entertainment on the go, and even perhaps a movie they would like to watch on demand.

The great Indian roads certainly can be more accessible with GPS and directions from the mobile. The complexity of new development and old time infrastructure makes life for new drivers very difficult due to the poorly marketed roads. Even experienced drivers have great difficulty with navigation. 3 G can certainly get voice activated directions as you go and make life simpler for drivers. It will be a great idea to have directions on the go in multiple languages.

Perhaps one of the favorite wishes is to get help with the kitchen. A live demonstration of cooking on the phone so your daughter in the far away land can watch you and follow in creating amazing dishes for friends. Several amazing things can happen by simply linking phone to a home computer for recipe management. Instead of calling mom in India everything you need help, 3 G can store and retrieve information on a need basis.

It may be possible to replace the use of Yahoo Messenger for showing off what the new baby is doing to folks in India. There will be no more hanging around the yahoo messenger and pointing the cam towards the action, as the 3 G phone can go where ever to show off. With the price per minute of telephony low enough, it will be a great way to start showing off the snow, beaches, people, parties and whatever we can to folks in India. Oh my God, the possibilities of sharing personal space is endless, provided we don’t go over board.

While making a wish list of things to do from a 3 G network, there are amazing ways to expand the business and support infrastructure to support the networks. Mapping, video, GPS, storage, voice and data retrieval, shopping, file storage and many such simple and economical solutions can be implemented to meet personal and professional needs of the users.

3 G should move the heavy duty users on to the new networks and free up the congestion of the existing GSM and CDMA networks. This has dual benefit as the new users in both networks will no longer experience the congestion that has become a way of life in crowded areas.

These networks will foster a new generation of developers who will cater to the value addition needed while creating more telecom jobs, more companies in mobile applications, and more internet to mobile connectivity. 3 G surely should bring new energy into the great Indian telecom market.

Whatever the price they will command in an auction, 3 G promises more users for the Indian mobile market. Here is to hoping that these auctions will bring a lot of money to the Indian Treasury and also great deal of value addition to the users. It will be another fantastic year for mobile markets in India, with great value in services with the highest quality.

January 14th 2009
Vasu Reddy
President
Optus Technologies, Inc.

Can Telecom Come To The Rescue?

Vasu Reddy from Chicago
vasureddy@aol.com

Communications users in India continue to grow at record pace with tens of millions of new users added every month. With hundreds of millions of people trying to reach them from within and outside of India, represent a potent force for personal and business uses. Each day the enormous outreach of this group of communicators is expanded, and will continue to expand. It’s December and with the holiday season coming upon us, it is time perhaps to look at what else can Telecom do to help the nation and its user base.

While looking at the benefits of communications and the valuations of these networks; enhancing both the shareholders and users, it is time for some social innovation that can be brought into helping with both user and national concerns. Each and every time we hear of advancements in communications or value addition, they typically cater to either a very niche segment of the market or trying to add numbers to the lower end of the market to the subscriber base. There is nothing wrong in building a bigger subscriber base which can someday attain 100% penetration of communications in the country, but the industry can introspect and start value adding to the needs of its subscriber base. India although democratic and capitalistic, is still a state with huge differentiation in classes of people. A lot can be done by some simple processes and value addition by the key players and operators to help with a multitude of things:

A Global Helpline: Many a death of Indian NRI, especially young Indians have been reported in the recent months outside of India. It is an unusual phenomenon that is new to the NRI community. Never before the frequency with which we hear of Indians killed by someone, possibly within their own family, or friends or some stranger, as we hear these days. Everyone is connected on the phone or Internet and the industry can think of a global helpline. There is no reason to believe that a well publicized and well organized helpline for Indians everywhere will stop any killing, but it certainly can bring forth the need for such service which might highlight the need for more protection. It can be a great value addition by simply highlighting the dangers and how one might protect self from possibility of an attack.

Accountability: The recent terror attacks on Mumbai clearly indicate that the terrorists used SIM cards that were obtained without proper verification. There are a number of instances including the Hyderabad bombings earlier this year where the terrorists used communications to destroy the fabric of India. With millions of users coming onboard every month there is no reason to cut corners in accounting for the users. Strictest policies should be put in place by 100% of the communications industry to account for every user. There should be no exceptions. The industry should actively cutoff subscribers who have not previously provided appropriate proof to purchase communications, and also implement measures to never add a subscriber without verifiable proof. The business of quick money making will lead to misuse, and the Indian telecom industry doesn’t need to make a quick buck in return for the destruction of its own people.

Help with Budget Balancing: India is democratic and fast growing country which still has a lot of its population who are not in the prosperity cycle. There is no need to just recount the evils of the politics, poverty, illiteracy or any other perils of our society nor must we continue to rehash the progress made with all the advancements in technology and communications. We simply should look at what can be done to extend the benefits of the country’s enormous growth to its entire population. A strong push to help with budget balancing will be a good idea. There is enough benefit to the shareholders of the expanding communications networks and those making a sustainable contribution to help balance the national budget will only make the country more adept to communications. While there is a strong lobby against any user based or revenue based fee structure, a voluntary team made-up of the largest stakeholders of the networks can caucus with the political leadership of India, and set an aggressive agenda that fosters a partnership to help eliminate the budget deficit. An imaginary scenario will be to have zero deficits to help fund development programs, which in turn enable more people to afford communications. The preaching is not just to the communications industry but to all high growth and highly profitable enterprise in India, where a select group of people control the scarce resources of the country. A cycle of development, enhancement, zero budget deficits and continued affordability will be to the best benefit of all concerned.

Emergency handling: The industry should deploy services in concert with all emergency and security agencies. Implementing definitive measures to prevent the misuse of communications is an absolute for national welfare. Coordination with the transportation, hospital systems, weather forecasting, air and rail systems and any government programs to communicate the good and bad to the users will make people better prepared in day to day living.


December 5th 2008
Vasu Reddy
President
Optus Technologies, Inc.

Technology Conundrum

Vasu Reddy from Chicago
vasureddy@aol.com

GSM
CDMA
TDMA
WiMAX
Dual Technologies
3 G
VoIP
Next Generation Networks

We can go on about the long list of technical or fancy terms that we continue to read about in reference to communications. Talking about the technology is a global feature that typically announces the latest and greatest with each major communications event. It is typical to claim that each such advancement is life changing. India has its share great lobbying groups for various mobile technology offerings, and they are merciless in promoting their own vested interests as the best available alterative to solve the ever growing need for spectrum.

India is blessed with explosive growth in the new subscribers each month. The country’s new subscribers each month equal to many small countries total subscribers, and with no slowing down in these projections the value of spectrum is increasingly evident.

No new mobile technology is being introduced specifically for the Indian market, rather the time tested and well deployed networks are being promoted in India. In reality there is no new advancement in mobile network technology that will radically alter the capacity or behavior of users. Each of the networks already deployed are well designed and well tested prior to their commercialization, and offer varying degrees of abilities to the providers and users. In some instances the advancement of technology is to facilitate more users on the same spectrum, while many of the new networks being promoted offer more services such as video, data and multimedia, outside of the traditional voice. Obviously the new services will require more bandwidth compared to the voice only services used by majority of the people who use mobile networks.

It is reasonable to emphasize the efficiencies of a technology in handling number of subscribers. Outside of this a subscriber is not preview to the technical parameters of the network. A user will look at quality, availability and price of the service in the particular area where he or she needs telephony. Only a small percentage of the overall subscribers are high-end data or video or multimedia users, and perhaps 90% of India’s users are voice only users. Without preview to the exact nature of the user base, it is quite obvious that simple feature like voice mail is not very prevalent with Indian mobile subscribers. Indian market has one of the highest busy and abandoned calls in the world as there is no voice mail, and a caller keeps calling until the subscriber responds. Even if a small portion of subscribers have the need for multimedia functionality, the networks are primarily dependent on high volume of users with voice communications as their primary need.

The telephony service is cheap, available and when needed, and thus the huge growth in numbers. To believe that technology is in the minds of 95% of Indian subscribers is simply an assumption which will remain an assumption. Pricing of service is the primary driver when the service becomes available in a market and the technology is not a decision driver.

The market value of the network is naturally driven by numbers; subscribers, revenue per user, profit per user, management, organization, availability and a multitude of variables that drive the valuation, along with the capacity of the network. In India the capacity probably is a great measure of future value of the network as the forecast for increase in subscribers is greater then the technical viability of current networks to handle the subscriber base. This is not a market or technical factor for India alone, but a global challenge for high growth markets. India with its own rules and regulations of licensing and managing spectrum sometimes self imposes these technology issues, which are irrelevant in the life cycle of a telephone network.

Manufacturers always will find new innovations to tackle the available resources verses forecasted users in every given technology. As spectrum is not a variable resource, the utility of spectrum is constantly bettered with technology life cycle, and users are seldom inconvenienced by the evolution of technology. Indian markets are not isolated in such transformation of networks, and there is no dearth in advancements. We already have technology available that will meet the needs of subscribers in the foreseeable future. Except with the vested interests there is no technology conflict. Technology will always be ahead of user needs.

The man with the mobile on the street is not looking for any more than quality service at inexpensive rates. The discussions on technology preferences and superior qualities are for the manufacturers and vested interests in different formats of the technology, and really is not an overwhelming factor in decision making for the consumer. The technocrats and the policy making bodies should find the most viable technology which offers most to the consumer, and let the rest to the market forces. There will always be something bigger, better and will be with more options.

November 3rd 2008
Vasu Reddy
President
Optus Technologies, Inc.

Perfect Telecom Market

Vasu Reddy from Chicago
vasureddy@aol.com

Unprecedented growth in users usually creates great opportunities for investors and customers. Be it a capitalistic society or a socialistic society, market forces typically take over in managing the imponderables with rapid growth in users and revenues and profits of any industry.

Last year, this year and future years hold great promise for the Indian telecommunications market, as the user base continue to grow at a pace that by most optimistic projections looks continuously attainable. Manufacturers, operators, suppliers, distributors and marketers are all beating their expectations and the users don’t seem to complain about what is being offered to them. Every inexpensive or most expensive offering seem to be lapped up in big numbers and customers hungry for more innovative products and services will keep the telecom market robust for years to come.

The latest developments with 3 G, VoIP and WiMax will deliver more products and services, along with bringing multitude of new users into the Indian telecom market. A 50% plus market penetration in the next few years from the close to 30% today is not a far reaching goal. Adding the rural landscape to the telecom network will certainly improve the ability of all of India with the rest of the world and bring economic opportunities along with the communications.

Indian Telecom market is almost perfect for consumers and investors. The market is delivering continued and rapid growth in services and growth in value of product offerings, while delivering growth with ROI for investors. The intermittent interruptions with the regulators interference seem to be just noise with the growth in the market. There is no question on the confusion that prevails with each new offering in Telecom market when it involves licensing and fee structure. There is also confusion with technology choice and which technology is robbing more from the government treasury. There is always tension between policy and implementation. There is no communications between various government departments. As usual in the Indian political landscape there is a debate on which one of them is right more correct for the country.

The backdrop of the super rich and already big telecommunications companies interfering and influencing the political and bureaucratic process is ever hanging on the Indian markets (including the telecom market). This is not an uncommon phenomenon in any other global market, but especially so in the Indian market as the government itself sides with the needs of its own political interests. We survive in a capital market with a system that is based on bias, influence and continued socialistic philosophies. Political parties can undercut major development simply to get vote blocks in the short term. Industry has the money and muscle to influence monopolistic business practices to ensure that the industry is curtailed and favors the very rich. The country seem to have innumerable vows of its own making and still the Indian telecom market seems to be a perfect place for growth while meeting the demands of the consumers.

It is almost perfect, while surviving the gaffs of policy and implementation. Bharti and Reliance losing out on the deals with MTN is not as surprising as both the companies have inherent limitations. Whatever the issues that have caused these big deals to make Indian telecom global, they were not insurmountable and should have been resolved, but were not. The worst part was one of them got derailed by a brother. The failures with making MTN deal will certainly be case studies for many years to come with what not to do with global telecom deal making.

DOT and TRAI and other ministries have constant been in the news for disagreement more than policy making. Instead of concentrating on quick delivery of spectrum to the market and making the new telecom services possible, years of delays have been caused by internal disagreements. Worst kind of planning is heaped on in organizing the next round of licensing. The incumbents certainly don’t want additional competition and also don’t like to pay up as they feel they have contributed to the growth but don’t like to admit that the current value of the franchises are much greater than what the government valued them. The incumbents certainly want to tax prospective new entrants with heavy burdens to discourage international majors to come into the market. Even the GSM and CDMA organizations fight, go to court and file law suits against anyone and everyone rather then seek consensus leading to the best practices in the market.

For the first time in global trends in telecom, manufacturers are releasing products in Indian market before anywhere else. Some of the announcements from Nokia offering its sophisticated mobile in India prior to anywhere else demonstrate the clout of Indian telecom market.

No matter how many distractions with policy and incumbents, the market seems to be going in one direction, up. With some important adjustments to the policy we will have big telecoms join the incumbents and keep making the Indian network progressive. Next few months promise introduction of 3 G and VoIP networks, and more of our people into the talking sphere.

There is nothing stopping our country with its drive towards greater communications standards, and someday towards every Indian with availability of telecommunications services.

October 5th 2008
Vasu Reddy
President
Optus Technologies, Inc.

Going Green with Telecom

Vasu Reddy from Chicago
vasureddy@aol.com

The subject is not about green bucks (US Dollars) but the environment. With millions of mobile communications users being added each month to the Indian talk space, it is probably time to start to think of going GREEN now and prevent the undue effects of the toxic waste left behind by the equipment; mobile phones and ancillary devices will pose to the already fast depleting Indian resources and surroundings.

Laws
We don’t have any favorable set of laws that encourage active recycling of mobile materials across the world. Much of the waste is creating hazard in select locations in China and other parts of the world, destroying the environment. India can adopt favorable laws for encouraging a pollution free mobile industry before it gets to be one more dump the rivers and destroy them activity of Telecom waste. Favorable laws will also allow for early investors to look at funding such enterprises.

Innovations
Early awareness of the problems with Telecom waste should also encourage innovations with how to handle such waste. With millions of new phones, accessories and SIM cards along with the plastic wrapping flooding the Indian markets, it can be easily a money making profession for innovators to recycle and create Green Telecom environment.

Awareness
Nothing solves problems of the environment more than the awareness of why it is necessary. India is going through the nuclear debate. Mobile waste in the scale of hundreds of millions can be disastrous to already over populated and depleted natural resources of India. All operators and government agencies should begin encouraging clean disposal of the products for easy recycling.

Swap
The existing programs to swap old phones for new ones should be further advertised and encouraged. All phone users can be given an incentive to dispose of their old units and accessories at drop off locations or at a mobile store, and perhaps encouraged with a credit for minutes or new products. Swapping and clean disposal should be mandated, encouraged and rewarded so that the people can actually see the benefit of proper disposal.

Long Lasting
As the mobile use quite prevalent in India and people constantly speaking, the use of batteries is also quite normal. Devising long lasting batteries and proper recharge mechanisms can help with the mobile waste management. It will help save energy costs and also allow people to speak longer. Manufacturers should start investing more into longer lasting and cheaper batteries. Most of the phones sold in India are cheap and should not be made with cheap materials. Telecom operators should look at subsidizing the lower end phones for better quality and longer lasting units preventing the disposal to the minimum.

Inject the emotions of Save India
Nothing sells like human emotions in the world. We should inject the emotion of saving the precious natural resources of India into Green Telecom projects. As we would like to see our forests and rivers and natural wonders of India saved, it is also a wise ploy to make Green Telecom as an emotion into the Indian psyche. With the massive numbers involved in Telecom, emotional display of Indians to save India from this future waste disaster will be a welcome emotional involvement for the talkers and movers.

With 300 million mobiles and going to 600 million soon, this Green Telecom business can be well worth investment in. Venture capital, private equity, innovators, Reliance, Bharti, Tata and all others with deep pockets can definitely plan and benefit with funding this revolution now. India is a terrific place with all things we have now, our land, our mountains, our rivers, our forests and our people are unique and secular. Our country has already shown that investing in India communications has rewarded not only the investors but also the people who communicate, and communicate a lot. Its time to plan well in advance to go GREEN with Telecom waste and plan well to benefit from not adding Telecom as one of the polluters of our great nation as other industries have already done. India should GO GREEN with Telecom now and start adopting steps to keep taking progressive path to keep talking clean.

Communications Menu

Vasu Reddy from Chicago

vasureddy@aol.com

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.

Policy Innovations

Vasu Reddy from Chicago
vasureddy@aol.com

Effective politics have always used innovative schemes to attract voter blocks. Many such policies are short lived while effective in pleasing the appetite of the electorate. The subsidized rice scheme which provides a kilo of rice at two Rupees is a great one and has been used several times in the last 25 years. The great fan fare this attracts at election rallies is phenomenal, and perhaps brings votes to the party that subsidizes Rice at such low price. This is not a clever policy but a populist political scheme, which really doesn’t do justice to the budgets of any state.

Indians, especially Indians in the opposition parties decry of political opportunism whenever we hear of such schemes, but never really protest against it. The ruling party can pretty much establish policies that are popular and cost a lot of money to the treasury, most times money that is not budgeted. The Indian democracy is happy with fighting market forces. The latest issue with the uptick in oil prices is a great political rabble-rouser for opposition parties. No one is bothered that the price is following the demand and supply theory. Not a single indicator shows the consumption is lower because of the gas prices, but opposition parties make it an elections issue and blame the government for a market driven issue. Capitalism should never forget the demand and supply principals, but the opposition parties conveniently forget that the democracies with capital market will never be able to control the true forces of global economies.

Collecting maximum amount of money for making public any resources owned by the Indian people should be a normal practice, as it would be in any democracy and be of benefit all people of the country in general. India has been a free country for decades and should start practicing the true logic of being a democracy and a capitalistic society. Every democratic country on earth should do this, and India should start to lead the way to all others. India and its politicians should not be against globalization of Indian markets, rather embrace them. We should not forget the foray of Tata into many markets, along with many other Indian corporations foraying into to purchase of companies and assets outside of India. If a Vodaphone is willing to fork out a few billion for purchasing a piece mobile markets we should welcome it, rather then prohibit it. Be it in communications or in medicine or any other industry India should be aggressive in allowing and going after industrial globalization. Only when you sell is when you realize the true value of what market believes your true value is, and as the rest of the capitalistic world does, the Indians should also try and realize the potential of their true value. Most often then entrepreneurs who sell their businesses go back and invest in their next enterprise, and create more value for themselves and people around them.
The classic Indian business heroes are worshipped initially and when they start achieving valuations in markets that crowns them as leaders in their respective industries, they start becoming national figures with their businesses becoming big enough to employ tens of thousands of people, and their clout in Delhi big enough to favor their market position. Unlike any other capitalistic democracies, Indian success stories are fabled as India’s pre-British leaders, who forever are looked upon as legends. They certainly deserve the stature for path-breaking in their contributions to masses of Indians, who show reverence to leaders.

The past two decades have given added reverence with the late Mr. Dhirubhai Ambani creating an empire that is the most valuable enterprise in India today, and he had no roots like a Tata or a Birla. Looking up to Mr. Ambani even after his death is a natural inclination where a country full of dreams can dream of achieving what he did. It is a perfect example of a simple man achieving the capitalistic dream with hard work and attitude to achieve aspirations that are beyond a common man’s abilities. The well made movie “Guru” in 2007 although dramatizing his story, well reflects the journey of a determined man to achieve great successes. Many such stories outside of Reliance have become common place in India, and the evolution of Information Technology, Telecommunications, Medicine, Construction, Real Estate, Automotive and all ancillary and support services have made it possible. Much has changed since the advent of economic reforms started with Late Mr. Rajiv Gandhi’s tenure as Prime Minister, and especially when Mr. Narasimha Rao was the president with the current Prime Minister Mr. Man Mohan Singh was the Finance Minister and Mr. Chidambaram was the Commerce Minister. In fairness many of the senior bureaucrats today were young and upcoming bureaucrats at that time, and have continued to do good work on helping the country become an economic engine that has been growing rapidly through the past fifteen years or so.

Despite the growth and development, India suffers from protectionist mind frame especially from political opposition. Each of India’s big business successes come with global participation, technology, funding and expertise. When we are able to integrate the organizational and economic fundamentals of others into our culture and develop great value from the outsider’s influence, there is nothing wrong in trying to allow them to become a part of our enterprise. When an Indian company acquires a company outside of our own shores, what is wrong with us allowing them to integrate into our enterprise?

Global participation allows for maximizing the value for the enterprise and the individuals who own the enterprise. Shareholders benefit when they are allowed to sell their stakes to whosoever pays the maximum value. People invest to make money from their investment and would like to maximize their profits, and India and every other democratic nation should allow their people to obtain maximum value for their investment.
When enterprises seek measures to benefit only their interests the government should reject them, but when markets seek reforms to grow the government should support them. Taxation and tariffs should be minimal to allow enterprises to reinvest and grow more rapidly, and government should accept that it is demand and supply that makes markets what they are. There is not a single democratically elected government that has been successful in managing low inflation, high economic growth, with completely satisfied public opinion and manages to stay in power for as long as they would like to. There is no Utopia on earth and our country is far from being one.

Telecommunications is one area where there is ample room for government to become proactive. The upcoming 3 G auctions can yield great benefits for the treasury to cover much of the inflationary pressures on the government. Continued growth in subscriber base will deliver sustained and growing revenue for the government. Perhaps a partial public offering of BSNL will net a handsome reward for the government, while making the lethargic enterprise more competitive. Creative and proactive policy making is possible and is not against the interest of the public and markets, and it can deliver value, growth and employment. The government doesn’t even have to think of being creative if they simply use commonsense approach to policy making. Good policies sustain for long term and deliver sustained growth.

To have protectionist polices is good when protecting national treasures, or resources, and its people. Our innovation should be in value creation and not with restrictions to economic growth. Policies that favor wealth creation should be encouraged. Policies that foster true globalization should be encouraged. Definitely policies that sustain economic growth should be sustained.

The New India Company

Vasu Reddy from Chicago
vasureddy@aol.com

India’s national interest is in making Indian management and investment successful in the world and outside of its own well defined confines. There is no questioning on the Indian minds being some of the best in all fields of business and global affairs. The technology and information boom of the last decade has transformed services industries around the world with major contributions from Indian resources. Many IT services companies from India have not only become billion dollar profit makers but also become entrenched in every aspect of global technology development. Decades of excellence in medicine and science has always been the Indian forte, but last decade has seen Indian enterprise freely expanding and reaching markets that once were even difficult to visit.

The shareholders of these booming companies have continued to realize the benefits of betting on these now global companies early. Not underplaying today’s volatility of the Indian and global markets, it is nevertheless these IT pioneers have created dramatic and everlasting changes in the Indian economy and life styles, while also attaining the financial results over a decade that please any long term investor. These companies seem to make bold and long term moves to keep growing and entrenching into local markets around the globe. They have started not just to rely on Indian resources, but now actively integrating into global teams, thereby ensuring the acceptability in local conditions while maintaining the Indian component.

Also, the oldest brands in India are no longer being looked down. Tata acquiring Range Rover and Jaguar is a fine example of India’s enterprise is not just competent but is also best suited to tackle global issues and create value for its shareholder’s on a global basis. Any company that bring “Nano” to becoming a reality and also acquire the brands of Range Rover and Jaguar in the matter of months should have the stature of thinking globally. There have been many instances in Steel, Medicine, Manufacturing and Mining that have seen Indian enterprises successfully acquiring foreign entities. Not until recently these examples of once in a blue moon global participation has now become thing of reality for Indian enterprise. IT companies also have been quite aggressive in acquiring companies and resources globally, and auto manufacturers have been exemplary in bring not only brands to India in partnerships but have built long term relationships that have brought technology and abilities that have been making affordable cars while making driving an impossible task.

There is no looking back at this stage as Indian economy is able to withstand the downturns and inflation comparatively as well as other developed nations. The daily discussions on the value of the Rupee and price of gold in global standards are indicative of capital markets that prosper in democracies. Market forces are being driven independent of politics, although a touch of bureaucracy is still a model of functioning in India.

Bharti and Reliance going after a company such as MTN is a great example of the telecommunications companies of India coming of age. There are no absolute leaders in telecom, and whosoever has the money and the ability to convince the regulators of the world can become a part of the global telecom management. It will be wonderful for Indian entities becoming a part of the overall management of global markets in telecom. Te Indian success with bringing value to all customers with mobiles and communications can add to the still growing markets in developing nations and further drive the economies of these markets. There is no immediate end to value addition to the communications markets and many of them still are in their infancy with market penetration and services.

If there is a model of success in telecom that the Indian markets have derived in the last five years, and if it can be deployed in other nations, the value of such exercise can flow into other commercial and trade arrangements enhancing the ability of Indian enterprises to do business in countries where there is little or marginal trade today.

The participation in a global telecom market will also influence the Indian economy to start looking at external forces to drive further changes into its commercial, financial and banking practices that will eliminate any current impracticality of the emerging systems to be more competitive and proactive to deal with the global Indian company. While India continues to embrace systematic approaches to regulations, it still has enormous strides to make in policies and procedures for fully market driven business environment. The global Indian company can begin to eliminate negative market forces that may have curtailed the real possibilities of what the country’s true potential could be.

Emerging into a global company can be quick and managing globally should not be a great task, provided the Indian company believes and behaves as a global entity. The continued privilege of the large enterprises in India is not a part of the global culture, but each country has its own local giants. When you combine these diverse but likely benefactors the benefits can be immediate and enormous. About 20 years ago India was looked on as a third world (along with China and Brazil) country, and today it has made giant strides in growth in real and human capital.

If there is an opportunity to expand the Indian company it is now time. Many countries can use the learning of the Indian company from the past two decades, and build similar and local models for dramatic economic growth. Communications will help every individual and rapid growth in communications will lead to rapid economic growth.

The big Indian company should start aggressive and good deal making, while embracing the global markets. Size matters in being big, and seizing the opportunity to become global should be done now, and with great care and organization that will continue to foster the growth of the Indian company and the markets it embraces.

Will You Allow ME to be A BIG Telecom?

Vasu Reddy from Chicago
vasureddy@aol.com

In India things are not the same anymore. Everything in India seems to be big these days. Indian is synonymous with enormous pride and growth. Every industry segment in India is zooming in growth and valuations. So, if the Indian market allows me, I will be a big telecom.

Here is what will allow me to be a BIG Telecom:

We have the second largest telecommunications subscriber base in the world. We have enormous opportunities in mobile, land line, rural and other forms of communications services. We may be the most attractive investment destination in the world for telecommunications markets. We have been slowly erasing the sins of over taxing and removing the taxation barriers for the operators for faster growth with investment and attractive pricing. We have the ability to allow more competition and become a natural capital market where both users of the services and providers of services can get the best of each other. We can continue to grow both subscribers and services at the same rate until we can’t invent any new services to help people communicate with each other and also satisfy the fads of communications.

The rule makers should have been just TRAI and DOT. For some reason the already big telecom communications companies in India seem to also have become rule makers, especially when it comes to arguing against any new competition in the mobile operations. Just in the last decade these folks were start-ups with capital from many a foreign companies and they used every resource they could to start their own businesses. They certainly lobbied hard for concessions and spectrum. They did work hard to go start-up to mega company status in no time, and all their success which is well deserved is based on their ability to manage their businesses well and attract subscribers with affordable and value based offerings.

While the DOT and TRAI don’t seem to see eye to eye with each other on the allocation of spectrum and pricing the spectrum, the already established players arguing for no new competition is a farce. Indian market should never allow such highhandedness especially by companies that became big in less then a decade of operations.

One of the biggest arguments with 3 G licensing through open auctions and open bidding for anyone with ability to bid and comply with law is that they will have less advantage over the incumbents in investments. That is the biggest nonsense if there was an argument. Once again the incumbents must be reminded that they were new ten years ago, and the success of the Indian Mobile market show that there is no need for any sympathy to new players. There is plenty of venture and private capital available along with vendor and other company financing to fund what it takes to build networks at the same speed as the incumbents. Why would any competitor cry about another’s returns and where does any rules making body have experience in money and investment management?

Allow me to participate in the growth of India. Don’t let me be stifled by the so called invested parties as their market valuations reflect their worth, and don’t just allow them to continue to become so big that they can dictate terms to users and the rule makers. Let rule makers make the rules and not worry about the ability of new companies to build networks as quickly as the already working ones. They probably will build faster and have better services then the incumbents, and perhaps force incumbents into better coverage and services, along with better pricing.

Let the government of India benefit from open auctions. If allowed through transparent and fair bidding or e-auctions there will be a huge value on the spectrum, and will benefit the government. The new players will be better prepared and better planned to handle their rollout as prescribed by the rules of the license.

If the DOT, TRAI and incumbents allow me to participate there is no reason for me to fail in the telecommunications growth in India. They just must allow me and it is very likely along with me there will be several new giant telecommunications companies that will be created along with already existing ones. Let us have rule makers make rules and not start worrying about ROI. Let us grow while allowing everyone to take their own risks and benefits, and not stifle competition. Me here is the entire world who already have no piece of the action in Indian Telecom, and if India allows me I will also take the risks and become a BIG TELECOM.


May 5th 2008
Vasu Reddy

Can Indian Telecom Foster Cottage Industry?

Vasu Reddy from Chicago
vasureddy@aol.com

Indian enterprise and cottage industry go hand in hand through the ages and successfully thrive along with the growing industries with huge workforces. The communications revolution of the mid-nineties through the mind boggling subscriber growth through 2007 and early 2008 should offer opportunities for India’s cottage industry to get involved in the opportunity to develop jobs and create wealth for small business person in all areas of India. The Indian cottage industry is quite enterprising and some great examples include:

· While the Mumbai workers run off to their offices and markets, the food delivery system makes sure they are served home cooked and almost hot food at their desks and on time. It is the coordination and planning that still baffles many a strategists who may never plan it as well as it is done in Mumbai.

· Farmers with very small tracts of land still are a large source of food for the Indian population. Farming in India is a cottage industry. It is exemplary that a very small piece of land can be put to use with such dedication by generations of families that live off of the land, and do it year after year.

· Weavers all across India produce materials that drape every form and shape and are famous across the world for its fine quality and beautiful work. From very simple white cotton to the most exquisite silk, all come from all over India’s weavers and for generations have had maintained their quality and beauty.

Telecom coverage is spreading into the rural areas in many parts of India, and all major carriers have announced their next round of expansion and coverage plans for rural India. The opportunity to create small businesses across the country that mirrors the enterprising cottage industries will certainly benefit a large segment of new entrepreneurs in rural India. The success stories of Micro financing in India and Bangladesh are common and similar ideas can be implemented with support from the major Telecommunications companies. There are great examples of such stories in Tamilnadu with enterprises using Kiosk owners to span into other small industries.

Indian Telecom is planning to build 1000s of towers to expand coverage to places where there is none today. Although an old idea, here is something that can be done to accomplish multiple objectives for rural India.

Each village or congregations of people require fresh water and a small tank will ably help with the supply of fresh water. Why not build a public and private enterprise relationship to create a water tank for every community with a small pumping station. On the top of the water tank install the antenna and also co-host the base equipment with the pumping station. They share power, housing and safety needed for the equipment. The financing of the water station can be through cooperative bank, which can collect for the rent through the company using the tower, and multiple companies can house small antennas to share the infrastructure. If the pumping station and water tank are built with proper specifications to house multiple companies, it will better serve the needs of coverage and also help pay for the infrastructure.

Telecom companies have recently announced that they will be building towers together with competition to save money. Investing in rural development projects, while building towers is not a bad plan for general economic development.

Further each village with a thousand homes or more has a school and can be used as a village computer center. As the telecom towers can bring in band width to each school as they are typically close to water tanks, they can be used for educational purposes, and thereby connecting them to the rest of the world. There are many state and global programs that help rural schools with libraries and computers and even the telecom giants continue to sponsor the educational programs, which further enhance the opportunity matrix for the parents of these village children.

The educational centers can start to promote their local products through the Internet. Local businessmen or co-operatives can create their own opportunities by using the internet, and also state and local governments can promote local products through the available communications means.

The Indian Telecom companies evolved very quickly compared to the global telecom companies. Be it with planning, deployment, technology and use of resources these new economic giants have been quite well structured, well managed and well planned. These excellent management attributes clearly reflect in their market valuations. Planning rural networks and economic development hand in hand is not going to be an enormous task for these very smartly managed companies. If effectively included into the telecom planning the vast Indian rural population ca not only just communicate but can become a model for economic development by simply utilizing the centuries old cottage industry and farming. Several such small initiatives to develop cooperative programs and bringing them to the global markets is already happening, and by planning rural development, promotion of local industry and communications together will be a great model for future India. People can work from where they are and not move to towns and cities that are already polluted and over populated. People can be wit their own folks and not worry of being strangers in really strange places. Children and adults can work together throughout the year and be more self-sufficient. Overall the new opportunities for commerce, education and development will lead to an India that is developing across its span, and not just in pockets.

Many alternatives are available to pass on the Telecom growth to small industry to replace the loss of export oriented jobs and farming jobs. In fact the workers of a village or rural areas who solely depend on farming have less than half a year’s work and by making simple cottage industry options available, they can work fulltime. When people participate in enterprise they not only put time to good use, but also start to get educated in money and employment matters, and will begin to translate their learning to educate their children and further develop future generation of growth all around them.

Some 20 years ago very few people in USA worked from home. They all drove or took public transportation to work, and did this for many decades. With the developments in communications and internet, now work at home is just as normal as it is going to work. We can only imagine what can be done by connecting the rural India to the world; the opportunities are unfathomable.

Putting to use the enormous abilities of the communications, implementing simple and affordable plans for rural development, including small cottage industry into the main stream development of the nation, basic education, supporting the localized industry and sharing the benefits of global knowledge; should be easily to implement. Simply start implementing small plans with every new tower that is required by the Telecom expansion, and my India will be a wonderland.

Can Value Addition Be Reality In Indian Telecom Market?

Vasu Reddy from Chicago
vasureddy@aol.com
On March 2, 2008 Virgin announced its entry into the ballooning Indian mobile market via value added services targeting youth segment with a franchise agreement with Tata Teleservices. Virgin provides value added services in various mobile markets around the world. Virgin doesn’t actually hold any wireless licenses. It simply brands its services in partnership with mobile operators as value added. It is quite a common practice across the globe to buy bulk airtime, add new features and resell with custom branding.
On March 4, 2008 the DOT asked for clarifications from Tata Teleservices on this agreement and asked to stop any services under the arrangement with Virgin until the agreements are reviewed and in accordance with the license issued by the DOT.
The COAI also has been asking for clarity on this agreement and has written multiple letters to the DOT, and has clearly articulated that the Virgin-Tata value added services agreement was illegal under the current license agreement. By the time the review and approval or disapproval of this agreement for value added services is completed, there will be many arguments about the wording of the license agreement and multiple interpretations of the same. When Mr. Tata went public about the deal with Virgin on the value added services there was global coverage of Virgin’s entry into the Indian market, and just 2 days after the announcements it became contentious.
The two major contentions against the deal are:
1. Is Virgin branding the mobile services under Tata name and marketing them to customers as per prescribed guidelines in the license agreement.
2. Virgin in its own way has made presentations that did not mention Tata name in promotions, and thereby ignored or simply was arrogant in assuming there will be no objections to the promotional strategies in entering into the highly competitive and extraordinarily difficult Indian market
In the already contentious Indian market where GSM and CDMA operators are at odds, the demand for new spectrum is greater than what is conceivable, every major industrial house interested in a piece of the market and all above and beyond the demand form the growing subscriber base, it will be impossible to practice dynamics of an open market where market rules will be interpreted to serve the best interests of the consumer.
Both Tata and Virgin will make every effort to point out that this value added services through Tata Teleservices is a legal arrangement that is allowed by the license and the others will make sure that the agreement and the license are at odds, while the DOT will scrutinize this and eventually provide their take on it. There is no guessing what will transpire at the end, but it does show that the Indian market is contentious, which is a fact since the beginning of privatization and it continues to be and will be, and both Virgin and Tata were not as smart in presenting the value added services in such a way the agreement would comply to the letter of the law. The law is by rule ambiguous and will cause continuous ambiguity with interpretation.
In any case, this latest instance of providing services in the Indian mobile market is challenging. It will certainly help to framing the industry rules and regulations to fit every conceivable value addition and what is, or make value addition a preference of the operator.
If the Indian Telecom market has to look at value addition seriously, the technology challenges are minimal whereas the legal implications become onerous.

In reality many services are simple:

· A wireless operator can use a combination of technologies to expand services.
· An ISP can essentially provide conference facilities to all its broadband users.
· A village within a cellular tower can become a WIFI point.
· An individual mobile user in a village can start a small mobile enterprise to serve to the village folks in meeting their in-coming or out-going call needs.
· An Internet café can become a conference point for both Voice and Video.

These are some of the many instances in the mobile world which can be simply replicated to the growing needs of network and coverage. The existing strict guidelines may not allow for such massive changes in operations with our licenses today.

Simplification of existing guidelines and developing better revenue management will be prudent. In both spectrum auctions and revenue sharing, it is essential to make the market a level playing field for all aspirants, big and small while the ultimate benefit of progressive revisions to the telecom operating guidelines will be to both the GOI and the consumer.

The first place to start is the already propagated for auctions for scarce spectrum, and it has the highest value revenue for GOI and DOT, and also attracting serious bidders who have deep pockets for paying for both the spectrum and infrastructure. It is absolutely necessary to get serious about spectrum allocations as there are many global operators willing to invest long term and would like to participate in the Indian market. It is fallacy to believe that the new operators will be more susceptible to longer periods on ROI. When the number portability is adapted across the networks the user will simply go to where the value for his money is and will never be tied to an old or new operator. Presuming that the newer technologies and value additions will be common place, the more choice the better the consumer. Only the fittest of the operators who provide value and quality will get the subscribers. All the global markets have demonstrated this formula, and the old operators in India should be vigilant to this dynamic of the mobile market. Open the licensing process for honest bids and let the players spend freely on both the acquisition of spectrum and building the network.

Revenue sharing between the operators and GOI can be implemented through a simplified tax structure without much debate if it is across the board for all communications services. The current taxes and revenue sharing models were put in place for operations implemented in 1990s and did provide adequate return for the GOI while parting with a monopoly and valuable spectrum. In today’s environment they are outdated and contentious. Now that the market has been maturing (may be less than 50% of what it can eventually be) and continues to grow beyond anyone’s reasonable expectations, it can be a wise idea to have a blanket Universal Communications Tax on all purchases made a communications user. It can be one fee for all use of communications, and every time a purchase is made by an individual, groups, business or any type of person or entity, charge a fixed percentage of the sale that is collected at the point of sale and paid to the GOI. That should eliminate the imbalances of fees collected on each type of service and eliminate the bias that exists. Regular phone service, Value added services, new innovations, VOIP, broadband, mobile, satellite, WIFI, WIMAX and everything else will be taxed at the same rate and GOI gets exactly same percentage of the sale on all communications use.

Simple mathematics can be applicable for licensing, auction and uniform percentage of the sales as GOI revenue. When someone bids and acquires spectrum or a license, they will have no value by just holding it. The spectrum or license has to be operated at the highest sales that it can generate, essentially requiring infrastructure to promote sales, and with sales revenue for GOI.

By Simplifying licensing process and revenue management it will further allow for more innovative partnerships and investment into the communications industry. The positive changes will not hurt the incumbents as they already have a great deal of value with their spectrum and installed user base. The newer entrants will have a level playing field with uniform rules and clarity with operating guidelines. Both the old and new operators will benefit from a single type of revenue sharing or tax on the sales, and GOI with a lot more revenue because of the innovations with additional revenue sources.

India is unique in its own corporate structure. It has started to selectively shed the monopolies and licensed industries (“for sure not completely done”). India already has created new heavyweights in Telecom who don’t have roots or dynasties. It was possible because of the quick transformation on Telecom industry from a monopoly to a competitive market. Even today majority of the Telecom services belong to big names in the Industry, with some consolidation already completed. Foreign players such as Vodaphone have already priced the Indian market to global standards, and Hutchinson’s exit from India is not surprising. But the Indian grown Telecom Majors are a model of wealth creation in rapid time which probably was not seen in any market forecasts. The market values derived by the Telecom companies are from Indian consumer’s adaptation to utility of communications, and clearly reflects the possibilities of such vast growth in value creation. By simplifying the rules of engagement it will only encourage more of such value creation, along with innovation, technology and value addition.

If Tata and Virgin, both global brands and formidable global corporations are having difficulty with the regulations to operate value added services, it is inconceivable for a smaller player to operate in the same environment. It is however possible to simplify the guidelines and generate more revenues for GOI, while making sure the consumers get value, quality and choice. We just have to pick the best practices available in the global market to make value addition a reality in the Indian Telecom market.