Curious case of Indian telecom: From superstar to basket-case
Earlier this week, Ofcom, the British communications regulator, announced the beginning of a consultative process to free up spectrum for the launch of “5G” telecom networks in the UK. Interestingly, the UK just completed its spectrum auctions for 4G services in February this year.
Though the “5G” nomenclature is still not official, we’re talking about networks that can transmit data at rates between 200 megabits per second (mbps) to 1 gigagbit per second (gbps). There aren’t simply theoretical figures, because news reports also suggest that there will be 5G trials in UK this year, with speeds of up to 200 mbps.
India conducted its 4G auction in 2010. How many people do you know today who are on a 4G network?
Stuck in the theatre of the absurd that is Indian telecom, where each day we see regulators and operators shadow-boxing with each other in newspapers and courts, its hard to remember how rosy things were just a few years back.
The toast of the global telecom world, India was seen as the “soney ki chidiya”. From profits to innovation to talk-time usage to investments, there was no metric we weren’t totally killing. And in less than 5 years we’re the laughing stock of the world.
Here are five areas where the current reality is in stark contrast to the future predicted in 2007:
Competition: “There is space for 10-odd telecom operators in India simply because of the large population. In that way, India is vastly different from most other countries that have four to five operators,” said the head of Ernst & Young’s telecom practice a few years back.
Instead today we have 3 credible and long-term competitors in most states – Airtel, Vodafone and Idea. Depending on the state, some of the supporting cast – state-owned and bleeding BSNL; debt-addicted and decaying Reliance Communications; ill-fated Tata DoCoMo which has just a year before either Tata of DoCoMo pulls the plug on it; Aircel; MTS, Uninor and Videocon – fight each other for the leftovers.
And as is to be expected, when competition comes down, prices tend to go up.
Convergence: Last week Dish Network, the second largest satellite TV provider in the US, bid $25.5 billion for wireless operator Sprint Nextel. Something like that, a DTH service provider bidding for a mobile operator, is probably outside the realm of even imagination in India. Because we are eons away from telecom convergence.
Dish’s bid for Sprint makes sense because it is aiming to put together a “Quadruple Play” of services for its customers combining fixed broadband, TV, telephony and high-speed wireless data.
In India our regulators take pride in deliberately thwarting any such integration. Which is why even “Triple Play” hasn’t yet become a reality, or cable TV companies are missing the wood for the trees by focusing on “digitization” alone instead of a converged quadruple play opportunity. Converged offerings make sense for the consumer who now has to deal with one firm that provides a seamless offering; businesses because they can’t plan for and build future-ready networks capable of doing anything and everything, instead of piecemeal ones; and the country, because we’re not wasting money replicating the same infrastructure across dozens of companies, all of who can never be profitable on a long-term basis.
Investments: “Have you ever heard of a country where operators shut down live (telecom) networks? It’s like building bridges, then blowing them up later. Nearly 95 percent of the people managing these networks are being given pink slips, while the equipment either sits in warehouses or is resold at 5-10 percent of their original value,” said Vsevolod Rozanov, the CEO and President of MTS India to me in December.
Very few operators, even leading ones, are investing any money into upgrading their networks beyond short-term requirements. For equipment makers too, India is nowhere close to the promising market it was a few years ago.
So while the world’s leading telecom operators try to upgrade their networks for the future, we’re woefully falling behind in India.
The “Post-voice” void: Just like in the computing space the world is moving to a “Post-PC” world filled with smartphones, tablets and wearable devices, the telecom world too is moving to a “Post-voice” world filled with Skype, Whatsapp, Twitter and Facebook.
Unfortunately our telecom operators are ill-equipped to make that transition. For one, regulations conveniently prevent them from offering some services, like VOIP, only till some cynical purpose is found for allowing that by the babus sitting in regulatory bodies.
The operators are also at fault. They practically killed India’s mobile VAS sector before it had a chance to thrive, by imposing usurious fees and charges of their independent partners and by sanctioning corrupt practices that fooled money out of consumer’s wallets.
As a result, any reasonably talented mobile app developer today would rather target a global platform like iOS or Android, instead of working with Indian operators. Consumers too, have lost trust in their operators because of a pattern of fraudulent behaviour in how they were “sold” VAS services.
Source : Forbes.