In the news: Bharti Airtel to setup telecom innovation fund

Bharti Airtel, India's leading telco has announced of the setting up of a telecom innovation fund worth Rs.200 crores to seed telecom startups. This is a smart move by the telco viewed with the new telecom developments - 3G rollout, coming of MVNOs and entry of foreign telcos. Bharti Airtel can leverage its licenses, infrastructure assets and pan-India coverage to provide a good platform for telecom startups in turn augmenting its own revenues both organically and inorganically. This first ever telecom innovation fund would be watched closely and its success can spawn other such funds too.

What are the factors that has given this positive spin to telecom entrepreneurship? Here are at least two. Apple with its 3G iphone has left some interesting functinality out and its Appmart platform has encouraged a new industry around it. Nokia's takeover of Symbian has made the OS opensource in effect driving lots of app contenders to develop software and content for its platform. Google though late with its Android platform would not be far behind with its release and would also interest independent software developers to develop for the platform. Telecom startups can make use of such information to target their share of user's wallet

Indian 3G spectrum auction process begins Monday

     Image Courtesy : bioteams.com

The process of allocating 3G spectrum to telcos is to kickstart on Monday with the pre-bid conference to select the overseer of the e-auctions for the 3G spectrum for both GSM and CDMA services. 3G spectrum winners will be known by early October. The auctions are expected to raise U.S.$ 10 billion or more of revenue for the government which would make the telecom department one the the biggest profit centers for the government.

Now what is to be seen keenly is how the telcos - both domestic and foreign take to the e-auction. There have been misgivings about competing in the 2G space from foreign bidders. The DOT had changed the rules so that foreign telcos could merge or buy stake in local players on entering the Indian market and this ought to assuage their feelings.

One more aspect to be watched is the final cost of the 3G spectrum and its effect on the 3G rollout. A high floor price would push the final prices so high that bidders would use up their revenue on the licenses and would have to wait for deploying the network infrastructure - the next step for telcos. This has happened in EU markets most notably in UK. In spite of the delay in launch of 3G services, 3G penetration had picked up fairly well. In the Indian scenario such a thing though wished by telcos might not be so easy. This would need very competitive end-user tariffs and very impressive differentiated services. This would call for huge spends upfront before a good monetization trend sets in. Setting an optimum floor price would hence be the challenge for the telecom ministry.

The challenge for TRAI would be to oversee proper timely rollout of 3G services in all circles with undue delays by the telcos. TRAI would also have to keenly look at how and what kind of recommendations are to made on the MVNO policy. This would also be critical as many foreign players might prefer to enter the market as MVNOs in order to avoid high license fees. TRAI's recommendations would some day tell on the rate of penetration of 3G services in India.

The challenge for the telcos would be about offereing high quality differentiated services and  make enough money to reinvest in their new new 3G networks. In this respect the telcos would also need to fix attractive tariffs that would work for them too. Another aspect telcos would be focussing on is MVP - mobile number portability - which might necessitate a rethink of telcos' strategies about retaining and growing subscriber bases.

The challenge for the user is to embrace 3G technology without falling for hype and demand high quality services from the telcos by rewarding the best offering and not to look at price alone.

Cheap(er) SMS - Why we need it

Cheap SMS is a possible thing for telcos. I mean cheaper SMS than the current rates. Current rates of national SMS are at Rs.1 per SMS. Considering that there are 160 characters in an SMS this works out to 7490 SMS per 1 MB. At Rs.1 per SMS this would be Rs.7490 per MB of SMS. At Rs.0.5 per SMS this would be Rs.3745 per MB of SMS.

160	characters per SMS
140	bytes per SMS
7490	SMS per 1 MB
7490	Rs. for 1 MB of SMS at Rs.1 per SMS
3745	Rs. for 1 MB of SMS at Rs.0.5 per SMS

Now compare this with voice calls.

13.2	kbps for a voice call
33	bytes per frame of 20ms
1650	bytes per 1 sec of voice call
99000	bytes per 1 minute of national long distance call
10.6	national long distance calls per 1 MB
10.6	Rs. per 1 MB of national long distance calls at Rs.1 per call

The price of SMS is found to be 350 to 700 times costlier than voice calls. Why this is so? If we go back in memory, mobile calls were also ruling very high. There were times when an outgoing call costed Rs.16 and an incoming call Rs.8. Across the markets this was the general trend when telecom watchdog bodies brought about directives and enabled legislation to reduce the tariffs of mobile calls. For doing this the watchdog bodies called mobile telephony a "basic service" and asked the governments to reduce their various charges towards the basic service and also pressured the telcos to reduce their tariff. SMS, as opposed the basic service of mobile telephony, is called a "value added service" (VAS) and the efforts of the watchdog bodies were not so strong for value added services. Though SMS prices have come down, they have not matched the voice service and we continue to pay very high prices for small pieces of the bandwidth offered by SMS.

Why cannot SMS prices be lower? The keyword here is value added services. If SMS can be reclassified as a basic service, telcos would be forced to reduce the SMS tariffs inline with voice services. SMS can well be classified as a basic service as users have started to use the service for basic needs like finding the best prices for their produce to getting storm warnings. There can also be texting providers similar to long distance providers to open up the market. You can already purchase bulk SMS from a variety of sources. However, a service like SMS should also have eat-as-much-as-you-can flat rate tariffs like web tariffs. This would be the ideal situation for the market.

In the cusp of 2G and 3G services now, it is time we had better SMS at cheaper rates. With 3G there will be many opportunities for pursuing new value added services. SMS can be kept basic.

SMS way to cheaper food

Italians can get to know where to get their favorite pasta, a few lira less thanks to the Italian government's plan to start an SMS service that would do just that - it would tell where cheap food is available (textually.org post). This scheme has apparently come to the table for helping people meet their needs during the current inflationary climate.

If this move succeeds well, people will not only be informed of food sources, but food businesses might also take it up as a channel to increase their revenues by offering competitive prices. I would really like to follow this experiment to see how technology aids populist measures. Such radical measures are relevant to developing countries with increasing wireless penetration like India.

In the Indian context, ITC has a successful program called echoupal aimed at rural agriculturists which helps them get the best price for their produce. I have also known of the use of mobile phones by fishermen from Kerala to get a price arbitrage for their catch. The readers of this post are welcome to share any initiatives that wed technology to people measures.

Mobile marketing with mobile TV

There is no money in mobile advertising. At least not enough to fulfill the promise of reaching millions of subscribers. Advertisers have so far not been convinced about the medium. Mobile phones until now have had small screens, poor video playback not to mention streaming - factors inhibiting big advertisers who want to tell this story about that product. In an impression-creating industry mobile handsets are seen as non-immersive medium.

There have been a few innovations in mobile advertising like using 2D bar codes and QR codes to make a physical world connect ( through the phone camera), but these have so far not stood up to the advertiser's requirements. The problem with such approaches is that they involve the user to initiate the engagement before getting any meaningful information.

Again hopes are now raised about mobile TV fulfilling the needs of advertisers. Before making any progress on mobile advertising, handset makers would have to seriously think about increasing the screen sizes of mobile phones and improve multimedia capabilities. Apple's iPhone is surely a step in this direction and other handset makers are expected to follow this design cue of better images, better streaming and better audio. Even without size, BlackBerrys have had good viewing aesthetics and the new BlackBerry Bold is a step in this direction. Nokia's E Series have it right but the N Series are not there yet.

Mobile TV providers would need to innovate frameworks for mobile ads like idle screen content through advertiser-bought bandwidth. Advertisers may be thought to be paying for their bandwidth, but however what advertiser-bought bandwidth essentially means is that advertisers would buy bandwidth for streaming content that is not dependent upon user initiation. Without such frameworks there would not be any incentive for the user to get engaged with the advertiser. Handset makers and telcos should think of starting programs aimed at mobile advertising.

Related reading:
Frank Dickson on Call-to-action advertising in RCRWireless
P.S.: Mobile advertising might actually pick up because advertisers would relate to the "TV" in mobile TV :-)

Camera + phone curbs

Indian parliamentarians are reportedly studying the need for putting curbs on camera phone use. Mobile phone makers are the largest digital camera makers owing to the enormous popularity of camera phones. Phone cameras have come some way since the grainy VGA cameras in the initial models and it is now possible to get digicam-esque specs on mobile phones. Nokia's top end N Series models the N96, N95 8GB come with 5 MP cameras with good video recording specs to boot. Sony Ericsson's high-end camera phones incorporate the renowned CyberShot technology to give digicam-like quality. Added with powerful new tools like Qik and ShoZu make it very easy for publishing these images. It typically takes a touch of a button to get your images published online. Such unprecedented ability to capture and share images has changed the way we communicate and group. It has obviously brought its set of problems too with its scams and scandals.

Privacy advocates would want legislation to be brought in to check the usage of camera phones in public. Some of the targeted areas are schools, universities and public offices. Handset vendors and telcos are wary that any punitive legislation could harm their margins as youth form the bulk of mobile phone users. They will no doubt be presenting their case to the legislators requesting a lenient regime. Some institutions particularly educational ones have curbs in place to  restrict or  altogether ban mobile phones in campus. In the corporate offices, barring some BPOs, camera phones are universally allowed. The lawmakers are expected to take a view on usage of mobile phones in public offices too, as it is perceived there is high potential of misuse here.

Elsewhere, California has banned texting while driving, an Australian school has allowed using mobile phones, internet and what not during exams. Japanese so picturesquely called it a handy phone, it'll be quite handy for the Australian students.

FCC to decide on the white space debate

In the coming weeks Federal Communications Commission (FCC) is expected to decide on the usage of white space spectrum that could change wireless communication in the U.S. in the years to come. Well, what is is white space spectrum ? White space spectrum are the unlicensed radio waves that are left unused by (analog) TV broadcasters. These frequencies typically lie between licensed frequencies and are used to reduced interference between channels. Currently these radio frequencies are not used for anything other than the said purpose.

There are companies like Google, Microsoft, Motorola, Intel and Dell that want white space spectrum to be allowed for mobile device usage arguing that white space spectrum would provide a cheap means of covering the entire U.S. with wireless broadband. They have an economic case about their cause of getting enhanced wireless case to everybody as well as an economic interest in boosting their revenues.

There are the television broadcasters who are equally opposed to having white space devices saying that the move would affect their quality of service. They reason that the wireless devices utilizing white space would interfere with the channels as the devices don't know yet about interfering channels. This is an old debate that may well be decided one way these coming weeks. That the TV broadcasts are wholly going to be digital soon would tip the balance in favor of the proponents but the opponents might be able to stall the move at least until the FCC deadline of the move to digital TV.

Microsoft, Google, Motorola and others have formed the wirelessinnovationalliance.org to promote the white spaces devices idea. NAB - the broadcasters' group presents the other view with interferencezones.com. There are a many recent developments like the geo-location database developed my Motorola which promises to solve the technical problems of mobile devices operating in the white space, but however the broadcasters do not want anything to do with it. This is going to be one hardfought debate for both sides and the outcome might be momentous for wireless access.

Calling cards are coming...

TRAI the Indian regulatory body has set in motion(ET report) the changes necessary for users to make long distance calls using calling cards. International travellers would be well aware of the indispensable calling cards which offer an optimal solution while on tour. The TRAI move is aimed at allowing users to choose their NLD (also called STD, NSD) providers by buying long distance calling packages through calling cards.

There are quite a few entities which have long-distance backbone like RailTel, PowerGrid Corp and GAIL. Currently their networks are not being used for public long distance calling since they cannot access the local loop to reach the end user. With the TRAI recommendation, telcos would have to upgrade their networks to provide interconnect with the long distance providers - potentially the RailTels and the PowerGrid Corps. Even some private players like Sify would be able to rollout effective long distance packages if this recommendation gets implemented.

Long distance call rates are going down the world over and TRAI move would suggest that they are keen to see India also following the trend. Coming to incumbent telcos, this move is seen to further erode their revenue stream as their have provide the interconnect facility as well as lower their tariffs to compete with long-distance-only operators. Some prudent deals between telcos and new long-distance players might benefit everybody.

P.S.: would highlight user issues on calling cards in a later post...

Entry of foreign telcos

If reports are to be believed the government is very keen on addressing the apprehensions of 3G spectrum bidders who had shown lukewarm interest in the 3G spectrum auction process initially. As per the policy change planned the foreign telcos that win a bid for the 3G spectrum can buy or merge with local players who have 2G spectrum. Whether they have to pay more for it or not, the door will be open for entering into 2G services as well. In the existing framework, winning foreign 3G bidders would have to wait for 3 years before they can get into 2G services which will have them at a disadvantage over local telcos who would have their 2G spectrum added with the 3G spectrum they would be allocated after the auction. This planned move is found to be advantageous to such players as AT&T who have been waiting for long to taste the 3G pie in India. This is also seen to be an opportunity for Indian non-telco majors to get into the scene through tieups with foreign players. Though we don't know at present how such entities will have a piece of the 2G spectrum very essential for a having a level field, we know of wishes of Mahindra and Videocon to
enter the Indian telco scene. It will be interesting to follow the spectrum sweepstakes...

Soul searching for Symbian

A nice editorial feature on AAS on what makes most impressions. If it is a phone the impressions are with an iPhone and not an N95 8GB. Steve, here deliberates on the impression factors like screen size, brightness, vivid colors, form factor. Added with a new way of interacting with gadgets it makes the package irresistible. Symbian phone makers - Nokias and Samsungs should weigh in these factors too even though their numbers are healthy.

A lot of phones out there could do a lot more than the iPhone, but for an iPhone user these might be the features that she does not bother about. Even some of the power users, would have realized the shortcomings of iPhone later and bore with it. That is the effect of impression-based sell.

The economics of handset development is skewed towards incremental development where the life of a base model gets extended with minimal changes to the basic interfacing for umpteen models and that's what happens when you have successful model like the Nokia N Series. A close study will show that even without touch, the Symbian interface needs a makeover to create that cool impression with ordinary folks.