 | Issue: | India 2014 |
| Article no.: | 10 | |
| Topic: | Digital Evolution India Style | |
| Author: | Ramakrishna Mashetty | |
| Title: | Chief Marketing Officer | |
| Organisation: | Magnaquest Technologies | |
| PDF size: | 379KB |
About author
Ramakrishna Mashetty is the Chief Marketing Officer at Magnaquest Technologies, a provider of CRM, BSS and OSS solutions for Pay TV, Broadband and Cloud Service Providers.
Earlier, Mr. Mashetty was Chief Technology Officer at Infronics Technologies. Mr. Mashetty has over 20 years of experience in communication and ERP technologies, including serving as Director of Technology at Hughes Network Systems. He has founded and was part of several early stage high-tech companies in USA and India.
Ramakrishna Mashetty holds a Master’s degree in Computer Science from University of Texas and an MBA from Duke University.
Article abstract
The Indian potential is evident, considering that it has 3rd highest number of Internet users worldwide, but the lowest Internet penetration in the developing world. The story of broadband shows how opportunities can appear for those who understand their customers. India’s giant telecom players were trying to push expensive corporate broadband services, while small operators, with simpler, more robust networks, where able to offer better services with higher bandwidth and quality to consumers. These competitive operators met the increasing competition from the big players with more flexible pricing and better customer management systems. Now, these small operators control 90% of the Hyderabad broadband market, a city of 7.5 million people.
Full Article
The Indian internet story is nothing less to a fairy tale for the Indian communications market. It is a perfect story of demand creation and supply evolution.
India has 3rd highest number of internet users in the world with 151 Million. However, India has one of least internet penetration rate in the developing economies, 12 %. This makes India the most interesting and competitive market for internet service providers, both international and local.
The late 90’s and first half of 00’s saw a boom in the local IT and ITES market. With the support of local governments and aggressive investments towards off shore operations management has led to creation of IT hubs like Bangalore, Hyderabad, Chennai, etc. As a result, a virtually nonexistent IT export market in the early 90’s bulged to the size of around US $75.8 Bn by 2013. This not just created more jobs but also created markets for ancillary services like internet broadband market.
During the years of rapid growth, the IT industry felt the compelling need for a strong internet backbone to successfully operate and deliver in the globally competitive environment. Services like BPO and KPO depended heavily on the backbone available as meeting the SLAs (Service Level Agreements) in these industries warrants a consistent and fast network. This was the perfect ground for operators like BSNL and VSNL to extend their communications offering to Broadband and their foray attracted the focus of private players. Extensive network and strong infrastructure backbone made it very easy for BSNL to offer its Broadband services to organizations across the country. By then, the Indian market was too big for one operator to address. It left gaps of needs that were not being addressed by the state owned telecom giant like flexible price packaging and flexible customer support, which created opportunity for nascent internet providers like Beam Telecom in Hyderabad. These aspects became critical when the internet service providers started addressing the retail markets.
Hyderabad is one of the most important industrial and IT hub has bulged in population of tech savvy professional who traded convenience for money. They increasingly consumed (quality) content and were ready to pay for quality internet to seamlessly access the same. This also encouraged the then government to launch online services for citizens’ convenience. All the above social changes and technology developments came together to create a whole new market for growing internets speeds and thus emerged a strong retail broadband user base. Local service providers started offering broadband services at reasonable cost but the access was inconsistent and support was still not great.
This lead to the consolidation phase of the services. Players, like Beam Telecom, have become the preferred players for the retail market. These small players had humble beginnings in Hyderabad, with a very small subscriber base. Not many in the market took them seriously, and no one saw them as a threat. However, the fate of these operators was put on rocketing growth path when their expansion phase coincided with the global trend of increasing broadband speeds. These operators were able to acquire large amounts of bandwidths and were able to give a consistent service quality. In a way, they delivered the quality without any regards to an SLA.
All this happened, while the existing market back then was dominated by the Cable based internet service providers. The inherent nature of cable network made it necessary for the ISPs to invest in Customer Premise Equipment to deliver the service. This became a marketing nightmare for the operators, who tried to push these expensive services into the market, while customers were very reluctant to pay hefty amounts for a relatively unknown broadband service, as it was back in 2005 – 06. Beam Telecom was the first company to break this stand-off by creating a new network topology using existing technologies but in a different manner. This made the network simple and robust. Customers, for the first time, were able to break free from the narrow band and experience the benefits of broadband.
At this time, small operators were still competing with internet giants, like BSNL in the Hyderabad market, who had huge bandwidth at their disposal. However, this did not deter them. Instead, they started offering even more flexible plans with fair usage policy. They offered higher bandwidth backed by the new methods of their robust networks. Every competitor had bandwidth, but nobody could monetize it like these small operators, not even their biggest competitors. As a result, these small operators today control 90% of the Hyderabad broadband market, leaving their competitors perplexed about what went wrong. It was hard for anybody to imagine that a company like Beam, established in 2006, could end up with three Million customers (combining all services) by 2013.
In short, Beam Telecom was successful because it had a clear understanding of customer needs and an objective to deliver superior subscriber experience. Having standard Hardware (like routers, switches, NAS etc.) in place, the additional ammunition required to realize their vision was a flexible, robust, convenient and future ready Subscription Management System (SMS) and CRM. These systems not only helped them deliver excellent Quality of Service but also enabled them to be nimble in reacting and adapting to changing market trends and introducing attractive proposition via its products/services. The SMS and CRM systems they deployed helped them to sense the subscriber needs well before they were stated. This made them into pioneers, able of introducing some break-through products and services.
Such players are not satisfied with their success of the past few years. Although Hyderabad is a very large city, with 75 Lakh (7.5 Million) population, most small operators are yet to reach out to all possible areas. Now, such operators are expanding into every nook and cranny of the city and expect to increase their subscriber base by at least two fold in the next few years.
As technologies evolve, there is a shift of focus from existing technologies to new ones, to address the ever growing demands of the customers. New technologies like LTE / 4G are fast changing the game, as customers today want to have internet on all their mobile devices, in contrast with the past, when a single internet connection would suffice. In addition, competition is forcing telecommunication companies to provide quality service at lower prices. Addressing their requirements will be a new challenge.
At the end of the day, what matters is what the subscribers say. What do you say?
