It is refreshing to see the course of action that you have been taking to put India and Indian Economy back on track. Knowing that your time is precious, i would keep this short and to the point. I write this letter with a four pointer action plan as the road-map for the recovery of telecom sector in India. While i would avoid playing cliche, the background to all this is how telecom/ broadband penetration is directly associated with GDP acceleration and inclusive growth of the economy. Out of the very many reports that substantiate this fact, the IAMAI ICRIER report on Internet’s impact on the Indian economy suggests a $17B p.a boost to Indian economy basis broadband basis the fact that 10% increment in broadband penetration can increase GDP by 1.08%.It is believed that if the TRAI broadband roadmap 2012 targets are met, it would generate $87B to Indian economy within 2012-14 time-frame.
The policy paralysis from 2011-2014 coupled with disputes on spectrum and spectrum-pricing, retrospective taxes has arrested the growth of telecom sector – and now with a stable governance building up for next 5 years, it is expected that you would be instrumental in resolving not only the immediate issues but provide a long term vision of growth of this sector. With due respect sir, may i beg to put a few pointers to the long term needs and hence the roadmap of the industry.
The right horse and the right cart
1. While spectrum related regulations need a cobweb cleaning – it is important that the roapmap takes into account the right spectrum for telecommunications. By right spectrum, i would mean the 450 MHz and 700MHzDD bands to be put in pace. With 4G in place, if the right spectrum support is provided to the ISPs/ operators, it will give a huge boost to providing high speed broadband not only to urban centres but also to rural areas. The economic effects of putting the right spectrum and the right technology together in the long runs outweighs any immediate hassles that need to be undertaken for setting this prescription in place.
Dont put the cart before the horse
2. Growth and Governance would need to walk side by side. One cannot follow the other. While governance would need to make monies and admissibly so, retrospective actions, arbitration and taxes would need to be side stepped. A very just economic model for spectrum auctions could involve – Low CAPEX (auction rates) and higher OPEX (Revenue shares) with operators.
A few horses for inclusive development through broadband
3. A phased project scoping of telecommunication projects with critical KPIs – which could be based on social parameters, such as education, healthcare, community care powered by broadband could also be a very apt in driving inclusive and sustained growth – could also lead to interesting results. Such a project would need to be driven from the PMO in terms of a large scale integration with ministries, states and operators
The race winning horse cannot have too many jockeys
4. Last but not the least, there has to be one apex body on Telecom, suitably represented by Telcos, Telecom infra companies, other telecom eco-system players, ministries, consulting bodies and the officials. We would need to do away with too many such bodies (including the now dissolved EGOM) and too many voices and opinions (often contradicting) – and need one apex body for the industry.
I am sure, with your wisdom and perspective, many and most of these points would be in your agenda. While there are other priorities that you may right fully have, this four pointer could be a good starting point for cleaning up the Telecom muddle in the country.
(Views expressed in this blog are solely mine with no affinity or bias towards anyone)
If your believe that Broadband penetration is the messiah-like solution or the panacea to a lot of 3rd world nation issues and problems, there is good news and there is bad news. The good news is that you haven’t been thinking alone – the International Telecommunications Union has firm evidence of the positive impact of (higher) broadband penetration on the economic well being and growth of nations.
Expostulating the (positive) impact of broadband on economy of the state, the ITU states that-
First, broadband exhibits a higher contribution to economic growth in countries that have a higher adoption of the technology (this could be labelled the “critical mass” or “return to scale” theory”).
Second, broadband has a stronger productivity impact in sectors with high transaction costs, such as financial services, or high labour intensity, such as tourism and lodging.
Third, in less developed regions, as postulated in economic theory, broadband enables the adoption of more efficient business processes and leads to capital-labour substitution and, therefore loss of jobs (this could be labelled the “productivity shock theory”).
Fourth, the impact of broadband on small and medium enterprises takes longer to materialize due to the need to restructure the firms’ processes and labour organization in order to gain from adopting the technology (this is called “accumulation of intangible capital”).
Finally, the economic impact of broadband is higher when promotion of the technology is combined with stimulus of innovative businesses that are tied to new applications. In other words, the impact of broadband is neither automatic nor homogeneous across the economic system.
So much so for the obvious – but then whats the bad news: Just that broadband by itself is not the end all prescription to everything – the effect of broadband is not homogeneous across all industry groups and broadband’s positives are possibly more applicable to industries classified as under Information, Communication and Entertainment. There would have to be some bridge building for industries, which are little off-centred from the direct broadband benefits – and again, these pose interesting bundle of opportunities to businesses and entrepreneurs.
China recently allocated TD LTE licenses to its carriers on the 2300MHz band. This is a significant event in the technology life cycle of LTE as TD LTE develops as mainstream standard and is set to massify on the global scale. The debate between TD and FD LTE has hovered around the lines of GSM versus CDMA and the emergence of one technology as the dominant standard. However, with technology and eco-system maturities, TD LTE emergence alongside FD LTE is now seen as a complementing effort and effect. This would create technology inter-operability between TD and FD LTE.
Why is the China LTE launch key to LTE eco-system world over?
China LTE implementation is all about scale – China Mobile for instance has deployed 200K BTSs for the LTE pilot covering 500 million people initially. That’s the size of the whole of Europe put together. The number of 4G base stations is expected to increase to 500K by the end of 2014. In addition, China Mobile is set to offer more than 200 different 4G-compatible handsets this year, including a handset priced at CNY 1,000 ($165) and a number of self-branded 4G devices. Apple’s iPhone portfolio has also recently been made available to China Mobile customers. Similarly, China Telecom plans to launch entry-level 4G smartphones at similar prices to its rival in the first half of the year before introducing mid-range and high-end models before year-end. By this time it expects to have 60,000 4G base stations. In contrast, China Unicom confirmed in December 2013 that although it has been issued a licence for TD-LTE (like its rivals), but it remains focused on running the majority of its 4G network via FDD-LTE – for which it is yet to receive a license. It is likely we will see a rather slower start to the 4G era for China Unicom.
With such large-scale rollouts underway, China Mobile and China Telecom will have the fastest initial 4G migration rates seen outside of South Korea, with close to 10% of their combined total connections migrating to 4G by the end of this year. According to new GSMA Intelligence, take-up of 4G-LTE in China will happen twice as fast as the earlier move to 3G HSPA networks. By contrast, it took twice as long for China Mobile and China Telecom to migrate their 2G customers (on GSM and CDMA2000 1x networks, respectively) on their 3G networks (TD-SCDMA and CDMA2000 EV-DO) following launch. For example, it took China Mobile 14 quarters to migrate 10% of its 2G connections base to 3G, but it will take approximately half that time to reach the same milestone in the move from 3G to 4G. Subscribers are estimated at 900 million 4G connections in the China by the end of 2020, up from around 100 million this year.
It is important to note that FDD and TDD LTE are two flavours of what is essentially the same standard, marking a different situation to when two technology standards (GSM/HSPA and CDMA) were competing for 2G and 3G hegemony. The availability of dual-mode FDD-TDD chipsets help mobile operators running either LTE variant to offer a wider choice of attractive 4G devices. Device manufacturers can therefore generate greater economies of scale given that dual-mode FDD-TDD chipsets remove the need to create multiple variants, serving to lower costs. Currently TD LTE accounts just over one in 40 LTE connections globally. However, China Mobile, China Telecom, Reliance Jio and Airtel could alter these TD LTE subscriber numbers by a wide margin. Even though there could be more instances of FD LTE launches by operators, number of subs on TD LTE networks could outweigh those on FD networks.
The fight between the OTT and the operator is all set for the operator to loose. As the Vibers of the world eat into voice revenue and the WhatsApps of the world eat into messaging pie, there is little that the operator can do in the short and medium term to turn the tides. The OTT operators as well have the classic monetization problem – Monetizing an OTT service is easier said than done.
But from the operator perspective, Rich Content suit of solutions is the key – that bridges media, messaging, voice and content – but building this up is a time consuming activity and will require operators to fundamentally redefine the business models for the telecom operators.
One way or the other – short term, medium term and long term- the operators will blled revenues before being able to re-capitulate on their suite of solutions.
Narrowing differences in the price bands of smartphones and feature phones, and consumer shift to larger screen devices is leading to massive increase in smartphone shipments in Indian context.
While, overall mobile phone shipments rose 18% to ~ 257 million units in 2013 from 218 million units in the 2012
The growth was powered by smartphones tearing down at 229% growth with a 44million CY 2013 shipment number
20% of these smartphones were the 5” phablet form factor
The 2nd half of the year saw a 60% groundswell in terms of smartphone shipment numbers
The roll of honour/market shares:
Overall mobile phone shipments reported at a minor deviation from IDC and reported at 247.2 million units as against 219 million in 2012
Smartphones contribution to 41.1 million units with 65.8% smartphones being 3G enabled
Overall contribution of smartphones to mobile phone volumes is 16.6%
What CMR also states is that 2013 is the foirst year when feature phone shipments shrunk by -.2% indicating the slow slide of the category – with growth being anchored by smartphones
The roll of honour/market shares
This was presented by me to Accenture on 31st January 2014 and defines the challenges in terms of technologies, standards, networks and the investments and costings underneath.
The pace of innovation is outstripping the RoI recovery cycles for Telcos worldwide and then again, there is no single standard and one unified eco-system. Betting and hedging on future is a difficult task for even the most seasoned Telcos.
Declassifying Inte’s future plans from the CEO’s CES key note address
Intel Chief Executive Officer Brian Krzanich will take the stage at the International Consumer Electronics Show with the message that the chipmaker will do what it takes to remain relevant as consumers switch to mobile devices for computing tasks.
Krzanich, who will make a keynote presentation at the trade show in Las Vegas, is set to feature a first public showing of some of the mobile and wearable technology from Intel’s New Devices division, led by former Apple executive Mike Bell. Krzanich could also emphasise how Intel has accelerated the pace at which it brings new products to market.
The world’s largest chipmaker, which dominates the market for semiconductors that run traditional computers, is seeking to branch out as consumers increasingly use smartphones and tablets that don’t contain Intel processors. With the personal-computer market forecast to decline for a third consecutive year and Intel failing to win significant market share in phones, Krzanich is working to ensure that the company doesn’t miss new opportunities such as wearable devices and other personal technology.
“PCs are slowing so you have to offset that with something else,” said Patrick Wang, an analyst at Evercore Partners in New York.
The Santa Clara, California-based company, which Krzanich took over in May, remains heavily dependent on servers and PCs. Intel has more than 80% of the market for PC processors and more than 95% share in server chips, according to researcher IDC. In November, the company forecast that sales will be about the same as the $52.6 billion it will report for 2013, below the $53.7 billion analysts were projecting.
Since becoming CEO, Krzanich, a former semiconductor factory manager, has taken steps to diversify Intel’s business. He has said Intel will focus on providing what the market wants in chips rather than following the company’s traditional method of designing and producing products aimed at determining the direction of technology. In addition, the company’s plants, which Intel says are the industry’s most advanced, may produce chips for rivals, he said.
“However the market moves, wherever the compute need is, we want our products to do it best,” Krzanich said at a meeting at the company’s headquarters. “We’d become insular. We’d become focused on what was our best product rather than where the market was moving.”
Listen to the Market
The 53-year-old also has said he’s speeding up the time it takes from design to production of new chips and concentrating efforts on lower-power products. Intel has a new processor called Quark, which it’s trying to get into everything from household appliances to industrial equipment.
Krzanich’s openness to producing chips for other companies and to listening to what his customers want is a departure from predecessor Paul Otellini, who had said smartphones and tablets wouldn’t replace PC, says Stacy Rasgon, an analyst at Sanford C Bernstein & Co. “They had their head in the sand,” said Rasgon. “Their push now is to make sure they don’t get blindsided again.”
The CEO, who like his five predecessors was an internal appointment, may need to go further to make what Intel produces central again. While wearable devices could become the next billion-unit market, according to Rasgon, Intel isn’t fast enough at rolling out new products.
Wang said Intel’s factories might be its best bet for getting into new markets. The company will spend $11 billion this year on plants and equipment to maintain its lead in transistor technology. Intel said it is more than a year ahead of competitors in the manufacturing of the fundamental component of all semiconductors.
To participate in the market for smartwatches, glasses and the internet of things, where Intel has no track record in designing chips that are better than alternatives, the company should open its factories to rivals such as Qualcomm, which are more likely to win, said Wang. But that’s a step further than Krzanich may be ready to take.
Reported from Economic Times Article under the topic: CEP Chips in with Intel everywhere
Gartner forecasts that Android is poised to surpass 1.1 billion users across all devices in 2014 even as Worldwide combined shipments of devices (PCs, tablets, ultramobiles and mobile phones) are projected to reach 2.5 billion units in 2014. This represents a 7.6% increase in volumes for connected devices from 2013. In terms of Android, the figures represent a 26% increase in volumes compared to 2013. 75% of the Android activations will happen in emerging markets – which by extension means that the Android story is not slowing down any time soon.
1. Smartphones will be the key to the new connected devices paradigm contributing 75% of the total volumes in connected devices. Smart phones will continue to grow but at a slower pace, with opportunities moving away from the top-end premium devices to mid-end basic products
2. PC’s will drop in volumes by 8% per year and will loose almost a fourth on volumes. The evolution to ultra slim and light form factors would be key to the existence of the laptop category – since laptop users find tablets to have limited usability
3. Tablets will be one of the highest growth categories over the next 3 years though tablets will gravitate to the 5”/6” phablet form factor with usage which is more akin to smartphones.
4. However, the interesting category to watch out for are Ultra Mobiles – essential form factors such as hybrids, clamshells, watches, consoles or Google Glass which has a significant growth potential through the next 3 years horizon.
On the popularity of Android as a platform, there is a volume versus value equation, with Android users also purchasing lower-cost devices compared to Apple users. Android holds the largest number of installed-base devices, with 1.9 billion in use in 2014, compared with 682 million iOS/Mac OS installed-base devices. In terms of OSs, Gartner predicts Windows to have the toughest fight from iOS in CY 2014, post which Windows would gain on iOS basis its growing presence in the smartphone segment.
End of Year 2012, the internet subs in India totaled 135 million and mobility subs were 864 million
2013 exit numbers would be 205+ million internet subs and 904+ million mobility subs
It is expected that the figures for Internet subs would pass 330 million by 2015
At the same time, Internet’s contribution from India’s GDP to grow from 1.6% in 2011 to 3.4% in 2015. India’s i-GDP (internet contribution to GDP) is expected to hit about $100 billion by 2015 – making it one of the most attractive investment locations and industries globally.
As a state, India is fully aware of the criticality of telecom sector not only in its contribution to the GDP – but also in its ability to transcend geographies as an enabler – and telecom as the portal to next generation services on wireless.
NTP provides the policy framework but the process based uncertainties exist – most of these around the spectrum pricing and tax disputes. The under-pinning policy regime and execution road map has to be clear.
In 2013, two important policy enablers have been the announcement and approval of the mergers and acquisitions policy and foreign equity participation of 100% in Telecom sector. Dominant players can now old up-to 50% telecom market shares.
However in the same breath, regulations such as airwaves acquired by a acquiring major would only be used for 2G services becomes extremely self limiting.
Telecom players were looking for market capitalization and consolidation. The operators have started to focus on subscriber quality and have done away with the lucrative dealer commissions and promotional minutes. After 2008, for the first time, India has witnessed a surge in voice tariff
While the industry hopes to hit the 1 billion subscription mark by 2014, it continues to be deeply constrained by the negative growth witnessed in 2012.While the industry hopes to hit the 1 billion subscription mark by 2014, it continues to be deeply constrained by the negative growth witnessed in 2012. The Indian Telecom Industry accounts for 13% subscriptions and 2.3% share of the global telecom revenue.
Low cost driving reach and affordability would be critical but a derivative of a favorable Tax regime. Telecom tower companies given slew of benefits (such as gap funding, external commercial borrowing, lower import duties, excise exemptions) with Infrastructure status is a major step forward in this direction.
I am not sure why MVNO is a dirty word for Indian Telecom – may be because Indian Telecom barons only see it wholesale voice and data resale. However, the more successful MVNOs world over(especially in Europe) offer far enhanced services to its customers.
Digital Literacy through Vernacular applications is a key enabler for spread of Internet.
Indian Telecom also need to get their act right in terms of spectrum, pricing and business cases. For instance, TDD LTE which has been provided the 2300/2500 MHz band, doesnot make any commercial sense. The network at those bands will be extremely local and patchy and thus a below par experience. There needs to be a clarity on the Digital Dividend 700MHz, which will not only help operator business cases but also enable wider coverages for broadband – which is so critical to the growth of the iGDP.