Rethinking the Indian Telecom Sector

I have been observing the Telecom/Internet Infastructure in India both as a former vendor to service providers and also as a customer. I am of the firm opinion that in its current state, the sector will not grow and also shall hinder the progress of the rest of the country by not fulfilling its role as a connectivity provider.

I feel it is time to break the sector proactively and nudge it to bring in disruptive innovation.

Run-down Telecom Infrastructure

The Indian telecom sector is bridled with so many inefficiencies. The telecom companies have no incentives to create innovative offerings, let alone raise their quality of services.

Entangled sector
Entangled sector

Part of the problem might lie in the fact that creating infrastructure for a pan-India telecom service from the ground up is a huge task. Maintaining whatever infrastructure that has been created is even more of a nightmare.

Every telecom company in every circle needs to dig ditches across cities, towns and villages. Along highways, waterways, railways but mostly in the air on tree tops, roof-tops and even on electricity poles. The CapEx sunk on this infrastructure goes waste many a times, due to the whims and fancies of individual local bodies who decide to fix a road, dig a tunnel or just embark upon some ‘developmental’ work. The fuel costs that goes into powering the diesel generators, inverters for the base stations and repeaters easily consume most of the OpEx.

With the infrastructure in such a mess, no wonder consumers are short-changed or presented with a lack of alternatives.

There are other issues that contribute to the mess too. The state-owned telecom companies serve more as India’s equivalent of a Social Security program rather than efficient and innovative Service Providers. Even ignoring probable corruption, the very nature of their slow and staid operations does a huge disservice to the young and dynamic nation.

Suggestions for a viable and efficient sector

Now, after a thorough panning of the existing situation, here are some suggestions for fixing the sector.

Photograph by Ken Banks
Efficient Infrastructure

Break the state-owned operators into two parts initially – one, to pool all their infrastructure assets, the second to hold all their operations including subscriptions, plans, etc. The operations part could be further broken into smaller units – a la Baby Bells.

The infrastructure, including highly valuable land, buildings, country wide fiber, last mile copper, etc should be vested with a new company probably called – The National Communications Infrastructure Company. All the private operators should also be asked to hand over their infrastructure assets for a corresponding stake in the new company. This company to be run by professional management drawn from the government, private businesses, academics should be the sole custodian of creating, maintaining and innovating country wide communications infrastructure.

From no MVNOs to only MVNOs

A Mobile Virtual Network Operator (MVNO) builds consumer services on top of leased infrastructure – both last mile and upstream. Currently, India has no MVNOs by design.

The Infrastructure Company should be able to lease out the infrastructure to all the existing players under a compulsory mandate. All existing telecom operators should transition to become MVNOs.

With the costs of capital coming down, there could be new special purpose MVNOs who provides only B2B services, M2M services (very relevant in the context of 100 Smart Cities/IoT),

P2P services. With decreased responsibilities, and increased focus, the new Infrastructure Company as well as the new MVNos are bound to innovate and create valuable products and services for their users. The consumers benefit from a decent competition and reliable services.

The society at large is benefitted by a decrease in the number of road-cutters. Mother earth will be happy because of reduced pollution.


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Apple should buy Amazon. Here’s why!

Well, not the whole, but their entire technology division – including cloud and hardware.

‘Apple is a great hardware company, but are clueless when it comes to software’ – is an opinion that is shared across the industry and has almost become a cliché. This may not be really true as they were the ones who figured out how to adapt Unix for desktop usage.

However, when it comes to building data-driven products and services, their capabilities seem to be woefully inadequate. Even their cloud engineering prowessseem to be still lacking.

OTOH, Amazon is almost a monopoly when it comes to IaaS and PaaS. Also, their technologies are now deemed standard, with rival efforts like OpenStack copying their API, heuristics, etc. But, Amazon seems to be hitting quite a few blockers when it comes to consumer hardware. Though Kindle is by far their most popular hardware, the other devices haven’t captured consumers imagination like it has for Apple’s products. Amazon’s efforts at replicating Google’s services like Play, Store, etc have been pathetic with very few takers.

Amazon’s cloud services are the first choice for developers and start-ups when it comes to the cloud/backend services. Apple’s iOS platform is the first choice for developers when it comes to building apps and MacOS is increasingly the personal OS of choice for both developers and casual users.

Technical synergies aside, Amazon has been having quite a lot of problemsincreasing their profit margins. While most of their costs are attributed to the investments being sunk into developing new products, their retail operations seem to be making quite some money.

As on date, Apple(AAPL)’s market cap is around USD 640B and had cash reserves of about USD 160B last summer. In comparison, the entirety of Amazon (AMZN)’s market cap is around USD 142B. Though nobody knows the valuation of their technology business, some estimates say it might be around USD 50B by 2015. So Apple can easily afford to buy Amazon’s technology division and still have cash to burn.

Jeff Bezos could use some other muse. Not that he is short of them already!

“Edge” Crowd Funding Fail – Brilliant market hack by Ubuntu

Product marketing is a very tricky activity. Especially for a product that is based on free and open source software. Ubuntu Edge is a great idea that might eventually get sold.

But, in my opinion Mark Shuttleworth did a brilliant move by gauging potential market response for the idea. By asking people to put money where their mouth is, he not only got a market survey done but also got free press, a potential customer community and a significant thought leadership! All these for almost no expenditure.

Compare this to Microsoft’s big fail trying to sell their Surface RT, Ubuntu indeed did a brilliant market hack!

On how companies lose it to their founders’ ego!

OnLive and OnMobile are entirely different companies in different domains, different geographical spreads, different sizes. But they have quite a few similarities as well. While the  “On” in their names is an obvious similarity, the stories of their misfortunes also strike an unfortunate likeliness.

OnMobile was founded by Arvind Rao who led it to tremendous heights as its CEO, before falling to his own success. OnLive was led by Steve Perlman who had quite an awesome pedigree before he founded the company. OnLive has been having its share of bad times of late.

More about OnMobile here, and about OnLive here.

Whither Social? Whither Cloud?

The last few days have seen quite a few events that give rise to skepticism about the Cloud and the Social Websites.

  1.  Linkedn says display of tweets in user’s profile no longer possible due to a limitation imposed by Twitter -
  2. The supposedly all pervasive and ubiquitous AWS cloud got punctured taking down Netflix, Pinterest, Instagram and many other services down with it.
  3. Facebook in an attempt to push its email usage screwed up their implementation and in the process got its users annoyed and frustrated.

Now, these social networks and services do not work in isolation like the Yahoo, Aols of the yesteryears. There are a lot of startups, companies, other services who have based their critical infrastructure on these services whether paid or unpaid.

The lesson that is obvious from these repeatedly occurring natural or forced disruptions  is that their users need to maintain a certain amount of healthy skepticism and also should keep looking beyond these services.

Scott Adams on Venture Capital and the Neo Rich

Scott Adams’ satirical take on the new rich kids becoming venture capitalists.

I came up with the Ego Theory of Venture Capital while reading through a list of startups that recently got funded. Maybe it’s just me, but I didn’t see anything in the bunch that looked like a potential winner. Ego has to be behind much of the funding because economics wouldn’t explain such weak investments, even under a venture capital model. Historically, a venture investor hoped to succeed 10% of the time. Now I’m seeing startups that seem, at least to my non-expert eyes – to have something like a 1% chance of success.

The punch!

Now we have this absurd situation in which society is complaining that the rich have too much money at the same time the rich are begging the poor to take their money. The only condition the wealthy put on the transfer of money is that the poor need to put together some PowerPoint presentations that use the words “social” and “cloud.” Is that too much to ask?

Finally …

If you think the rich have too much money, stop complaining and do something about it: Start your own Internet company and go get some venture capital funding.

SkypeOut – MicrosoftIn

A joke that’s making the rounds of the Internet goes like “Microsoft buys Skype for $8.5 Billion. Nobody told them you can download it for free.” 🙂

Though rhetorical, it hits the point right on its head. It is a matter of common knowledge that the current owners of Skype were very edgy and wanted to sell it off to anybody who could pay up its latest market valuation (around USD 3 Billion). Various analysis of the buyout have explained that Microsoft is looking at the value that Skype shall add when integrated with Outlook, Sharepoint, Office and their other enterprise collaboration tools.
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Raising Credit for Startups through Banks – CGTMSE

Bootstrapping a startup can be an arduous task. Especially raising capital while growing can be a daunting goal to achieve. The most popular approach seems to be approaching Angel Investors for cash in lieu of stocks or a partnership in the startup. Though less risky and usually reliable, this approach also has its own pitfalls like determining how much ownership to cede?, involve the investors in management roles? etc.
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