|Topic:||Applied for an Indian cellular license lately?|
|Organisation:||The Red Snapper, (M) Sdn Bhd|
Braham Singh is the CEO of The Red Snapper, (M) Sdn Bhd, an Asian wireless broadband company with Malaysian Government equity participation and operations in Malaysia and India. Mr Singh, a technologist and a writer, has a twenty-year career in telecommunications. Mr Singh came to Red Snapper from PCCW where he founded BtNAccess, their international carrier business. Re-named PCCW Global, today the company is an established global carrier. Prior to PCCW, Mr Singh held senior vice-president level management positions in Teleglobe and Sprint International. Braham Singh regularly writes technical articles for the press as well as the Internet. He has just completed his first novel Emperor which has also been adapted for a feature length movie. Both the book and film are slated for a year-end release.
India’s offer of cellular licences last year drew a great many applications. The chance of anyone developing a viable business, however, is slim. Very large operators own at least 92 per cent of the existing voice subscribers. Much of the market’s growth will be in data, but the big operators already have the 3G licenses. The only competitive strategy would be 4G (LTE/WiMAX) but most of the newcomers are asking for 2G licenses, so newcomers will be hard pressed to compete.
The August 2007 TRAI (Telecom Regulatory Authority of India) document that incited a riot of applications for cellular licenses also cautioned against precisely such a lemming-like approach for those who cared to read. Visible to blinkered eyes however was nothing but the recommendation against capping the number of service providers. One would expect more astuteness from those who are not an incumbent’s proxy or in queue to sell-off acquired spectrum to one. What they should have noticed is the mention in paragraph 4.2 under tedious meanderings on convergence that revenue ratios have gradually tilted in favour of value added services particularly for non-voice services. That is a heads-up for the wise if ever there was one. More ‘in your face’ is the very first graph encountered in Chapter 2 on the marquee topic of Entry Limit in Access Service Provision. Graph 1 shows nosediving ARPUs mitigated by a phenomenal increase in subscribers. This was followed by a pie-chart with more bad news – 92 per cent of the subscribers are owned by big businesses you would not want to take on even on a good day. It gets worse when one tries learning about the remaining eight per cent. Annex III of TRAI’s compendious document shows that eight per cent in the hands of companies grandfathered by luminaries already owning the 92 per cent, the exceptions being Spice (Modi Group) and Aircel (owned by the Malaysian company Maxis). There is no cakewalk here for anyone plotting to grab some market share, however meagre. For the newcomer planning to take on Aircel’s legendary Ananda Krishnan the sound advice would be to walk away. The difference between risk and suicide is timing. Sunil Mittal took a risk with cellular voice in 1998. Doing the same today is suicide. If there is succour for the wannabe it lies in that little statistic from Chapter 4 suggesting the only way to toggle ARPU out of its nosedive is through data services. The bad news is – Mr Mittal knows it and has 3G all planned out. The good news is that 3G is somewhat of a disappointment when it comes to high speeds for data. The bad news is that Mr Mittal knows that too and plans to use 3G to offer whatever data services are possible at those speeds and, also, use the 3G spectrum for voice services from which he – not the newcomer – will continue to make money. The above process of elimination suggests while there’s a possible way out through data services, it cannot be over WCDMA/cellular type air interface. While that does leave Orthogonal Frequency-Division Multiple Access (OFDMA) type air interfaces (WiMAX, LTE) as viable options, non-cellular wireless broadband is nowhere on the radar screen for the vast majority of new applicants as evident from the spectrum they requested. Overwhelmingly, and almost without exception, the requests were for 2G spectrum showing mindsets very comfortable in a rut leading over the cliff. These newcomers don’t really matter anyway. The rush for cellular licenses is just a blip in the grand scheme of things, which is about data, packets, and all that makes up the mobile Internet – the kind of stuff cellular technologies can’t deliver. The players who can make the Indian mobile Internet happen, but won’t, are the names on our cellular pie chart. To learn why they won’t, let us look to what is going down in America where Gary Forsee, Chairman and CEO of Sprint-Nextel, resigned last month, allowing a big ‘I told you so’ moment for the cellular establishment to enjoy. Mr Forsee broke with the cellular establishment by betting US$3.5 billion on the mobile Internet. Ostensibly, his reasons were impeccable. Capital and operating costs associated with WiMAX-enabled mobile Internet are ten times cheaper than a comparable cellular/3G/HSDPA/CDMA-EVDO network, and access is almost ten times faster. Sprint has data from their Washington DC and Chicago pilots to prove it. While these advantages are irrefutable, the fact is the cost savings take time before morphing into black ink, and high-speed access is a differentiator only if the service is given time to make a difference. In Sprint’s case, panic set in even before the Washington DC/Baltimore and Chicago pilots were fully deployed. Rejecting the WiMAX story after a short honeymoon, Wall Street perceived it as investment in yet another network while the company struggled to merge the existing Sprint and Nextel footprints. Gary Forsee’s fate should disabuse any CEO within the Indian cellular establishment from emulating a similar multi-radio scenario. That Mr Forsee’s strategy was correct if allowed to play out is neither here nor there. The love affair between the cellular world and WiMAX may have ended before it began. Here is what every Indian cellular operator is thinking. WiMAX mobility means Mobile Internet. This means unfettered access to mailboxes, content, games and voice/video telephony. Which in turn means no GPRS, no Blackberry and no regulated downloads of ring tones, music, video clips, etc. WiMAX requires the cellular operator to think like an ISP and he is not there yet – not as long as the walled garden remains intact. Sensing disquiet, equipment manufacturers calm operators by charting an alternative path from 3G/HSPDA to HSPUA and then to HSPA with something called LTE at the end of this gold brick road. Once again, politics trumps all. Rather than fret which air interface rules, the operator needs to better understand the pros and cons of bringing down his walled garden. Successful strategies are rarely successful a second time around. Though looking at the continuing clamour for 2G licenses, one would never know. Deploying circuit switched technologies and TDM air interfaces in a data world to compete against fully amortized networks is not the smartest strategy in the world and yet there’s no shortage of contenders vying for a shot at proving they too can lose money. If ARPU growth is driven by data, then the customer is telling us he/she needs speed and he/she needs unfettered access to the Internet. Everything happening on the supply side suggests no one is listening. At some point down the HSPDA/HPPUA/HSPA/LTE path he’ll make himself heard and the paradigm will change. The big myth around 3G is the failure of video telephony to take off. Yet the two biggest recent phenomena on the Internet – webcams and YouTube – are video driven. Webcams are a natural fit to the handset. One suspects the same application that failed from inside the GPRS/3G walled garden will succeed over mobile Internet. Sprint realized early on that the WiMAX-enabled mobile Internet service would need to function from outside the cellular mindset. The WiMAX operations were accordingly not just branded differently (XOHM), but also treated as a separate entity than looked more like an ISP than a cellular operator. Note that this ISP was launching a mobile Internet service that competes head on with Sprint’s existing CDMA-EVDO offering. Such farsighted madness is not likely to happen in India any time soon. Recalcitrant or not, cellular operators will adjust to operating in a multi-radio environment. The relatively homogeneous world under Pax-GSM (the GSM ‘peace’) is a thing of the past. Today different air interfaces share the same geographic footprint. This means multi-radio handsets are here to stay. There is serious work going on under the auspices of IEEE802.21 to standardize a handover solution between different networks including 3G, WiFi, WiMAX and fixed line. Within four years from today, the following scenarios envisaged by the Intel Developer Forum could prevail in Mumbai streets. You are almost ready for what could be the most important meeting of the year. Your personal communicator is in your hand as you take a cab to join your colleagues at a neighbourhood coffee shop before leaving for the airport. Your communicator is a GSM cell phone with multiple radios for GPS (Global Positioning System) location awareness, WiFi WLAN hotspots and WiMAX wireless broadband. As you approach the coffee shop, your communicator’s smart roaming capability detects a hotspot and wakes up the WLAN radio. While meeting with your colleagues, you begin to download a last-minute addition to your presentation using the coffee shop’s WLAN. Looking at your watch, you suddenly realize you are running late. As you hurry out of the coffee shop to grab a cab to the airport and the WLAN connectivity goes down, your communicator hands your connection off to the WiMAX network to maintain the ongoing download operation, while you make a couple of quick calls over the GSM cellular network. On the way to the airport, your communicator recognizes a low-battery condition, and shifts over to a lower-power GPRS (General Packet Radio Service) connection and shuts down the WiMAX connection to save power. At the airport, you plug your communicator into a power jack and the communicator wakes up the WLAN radio once more after detecting a hotspot to complete your download. It behooves cellular licenses to accept an inevitable end to cellular isolation. Interconnects to the PSTN and roaming between cellular networks is just not good enough. They are slated to become part of a multi-radio fabric with users moving freely across networks, their wanderings enabled though handheld devices containing up to four radios that interface with different network operators at different data rates ranging from 9.6 kilobits Kbps for cellular service, to 11 Mbps for the WiFi WLAN and up to 40 Mbps for WiMAX broadband.