Are operators headed for a deluge?

A country with more than a billion people. A country in which almost everyone is a chatter box and loves to talk, in fact almost everyone here has an opinion on almost everything that goes on under the sun. It is little surprise then, that everyone who could afford to bid for a license to participate in the country's burgeoning mobile story, did so, the result: people with prior telecom experience such as Idea, Swan (Reliance) and Loop (Essar) were granted license along with many surprising bidders such as Datacom (Videocon) and Unitech, a consumer electronics and a real estate company! Also, companies like Idea and Spice got additional licenses to operate in circles which they did not have a presence in so far.
But the question is, are all of them confident of making money or are they just chasing a mirage? Consider a few of the facts:
1) India has the lowest call rates in the world.
2) India has amongst the lowest ARPU in the world.
3) Much of the future growth will come from rural India, hence the ARPU would in all probability further go down.
Hence it is quite an uphill task to actually make these businesses profitable, given that the fixed costs will be the same for all operators, incumbent or otherwise. For the initial roll outs, though the method of roll out would slightly differ.
1) For the passive infrastructure, the new comers, such as Datacom and Unitech, the proportion of shared sites would be much more than owned sites, hence reining in CapEx to some extent. However, some strategic sites will be owned and maintained by the operators themselves, typically in congested locations where commissioning of additional towers is difficult.
For companies like Idea and Vodafone. there is a slight advantage going for them with the formation of Indus, which will enable them to roll out their infrastructure faster.

2) Active Infrastructure Sharing is not permitted as yet. Besides, sharing of spectrum has been ruled out, hence bidders, who were expecting to sell the acquired spectrum to operators have been dealt a blow, especially with the 3 year lock in clause enforced by the DoT. Hence the cost of active equipment would remain more or less the same for all operators.

3) Retail Outlets, Showrooms and promotional expenses together would prove to be a major cost centre. All operators would have to differentiate themselves in every area of operations ranging from service quality to marketing effectiveness.
Operators offering a nationwide service would have an inherent advantage as a sizeable chunk of revenues are derived from the roaming subscribers. Airtel scores top marks as far as this is concerned.

Some of the strategies that operators may adopt while entering the market could be
1) Bringing in foreign partners (there are unconfirmed rumors of Unitech tying up with Systema of Russia and reports of Etisalaad committing 6 billion dollars for the Indian market)
2) Tying up with Virtual Network Operators to enhance appeal and get partners with a stronger brand recognition. TTSL has already done it by getting in Virgin.
3) Getting in location based services and localized content to relate more to the local user.
4) A greater emphasis on value added services
The government intends to get in at least 10 - 11 operators per circle in another year’s time. The question is: How many of them would continue to survive in 3 years time (After the lock in period is over)? Or will they sell out to bigger players/ merge with players of their own size?? Your guess is as good as mine.

Posted by :: Ameet Phadke

A Brief History: The National Telecom Seminar

NATIONAL TELECOM SEMINAR
HISTORYEstablished in 1996, SITM is the first Business school in South Asia committed to develop world class Telecom Business leaders who can handle the ever-changing Technology and the Business Scenario effectively at all levels of the corporate ladder.Since its year of inception SITM has been organizing National Telecom Seminar. Each year with the finest minds of telecom industry, this seminar addresses various relevant issues and trends.With a history of nine successful seminars today Communiqué is a known brand in the telecom arena. The success story at a glance.
I National Telecom Seminar:
In 1997 SITM organized its first National Seminar on Telecom Management and the propelling factor was the recognition of need and means of constructing a common platform for the telecom.
II National Telecom Seminar:
The focus was on "Prevailing Telecom Scenario in India" and the Seminar covered various topics like funding of Telecom Projects, Future Trends in Telecom and IT, Networking Solutions, Intelligent Networking.
III National Telecom Seminar:
IIt addressed moot issues which drove the future of Indian Telecom and IT Sector like Cellular Industry in the next Millennium, IT Beyond year 2000, Software and Telecom march together.
IV National Telecom Seminar:
With the theme of "Infoway e- Nigma", it was a resilient effort to bring together the future professionals and present corporate players on a common platform to speculate on solutions for various impending issues concerning the Internet service providers. Mr. Amitabh Singhal, Secretary, ISPAI on 14th October 2000, inaugurated the two-day seminar. The Guest of Honor, Mr. Shyamal Ghosh, Chairman, Telecom Commission and Secretary, DoT, delivered the keynote address on the present telecom scenario in India.
V National Telecom Seminar:
Under the theme of "Beyond Bandwidth"the seminar presented a gamut of ideas, and was described by many as " aptly timed", the seminar was co-sponsored by TATA Power Broadband. It provided a broad platform to discuss the issues, rankling the telecom fraternity at large. Mr. Bhagwan D. Khurana, Group President Reliance Infocom Ltd inaugurated the seminar.
VI National Telecom Seminar:
"The Wireless Conclave", addressed the key issues concerning the Indian wireless telecommunication industry. The keynote address was by Mr. Prithipal Singh, CMD, BSNL. The seminar was co-sponsored by BSNL, IDEA cellular, Business India, TATA Net, Global Telesystems and Heliosoft.
VII National Telecom Seminar:
Communiqué 03 focused at "Path to Profitable Growth", and it aimed to address the key issues concerning revenue generation and optimization of resources in telecommunication industry. The Chief-Guest for the event was, Mr. Pradip Baijal, Chairman TRAI. The Guests of Honor were, Mr. Kishore Chaukar, MD Tata Industries and Mr. Kanwalinder Singh, CTO, Lucent Technologies.The seminar was organized in association with Tata Indicomm and was co-sponsored by SAP Global Telesystems Limited. Taj Blue Diamond was the hospitality sponsor and Business India was the official magazine.
VIII National Telecom Seminar:
Communiqué 04, discussed the various "Strategies and Opportunities in a Consolidating Telecom Market: Emergence of a New Landscape" which focused upon the rapid restructuring taking place in India's consolidating telecom environment and the strategies and opportunities arising out of it. The honorable Union Minister for Communications & IT, Dr. Shakeel Ahmad of state inaugurated it at Vishwabhawan. Some other eminent personalities present were Justice D.P.Wadhwa, Chairperson TDSAT,Mr. Firdose Vandrevala, Chairman TTSL, Mr. Shyamal Ghosh, Administrator USO Fund, Dr. D.P.S Seth, Member TRAI and Mr. Prakash Bajpai President, Reliance Infocomm.
IX National Telecom Seminar:
Communiqué 05 had the theme "Realizing New Avenues in a diverse Telecom Landscape"...Exploring New Paradigms which focused upon the new avenues for the Indian Telecom Industry like the relevance of 3G services in Urban India & proliferating telecom services in Rural India. The aim of the seminar was to understand the various issues related to these new opportunities that have presented themselves in an ever-competitive telecom environment. The panel discussion saw the topic of "Number Portability:The Cellular Conundrum" discussed by the who's who of the industry.In its continuous endeavor to offer more value to the telecom fraternity SITM introduced "SITM Forecast" in 2002, which is a sincere attempt by its student managers in predicting the future trend of the telecom sector by through study, and meticulously calculated values.With its commendable past record National Telecom Seminar- Communiqué is a quintessential conference for exchange of valuable information.

SITM: Symbiosis Institute of Telecom Management

Established in 1996, SITM is the first Business school in South Asia committed to develop world class telecom business leaders who can handle the ever-changing technology and the business scenario effectively at all levels of the corporate ladder.Symbiosis Institute of Telecom Management, Pune has been organizing the NATIONAL TELECOM SEMINAR for the past nine years. The idea behind this is to bring stalwarts of the industry on a neutral platform in order to come to a consensus on some of the contemporary issues confronting the industry. It also unveils the practical aspects, prevailing trends, and the expected route of the industry by providing a common platform for the students and the industry experts to interact.The seminar provides a platform where the experts from all verticals like cellular service providers, regulatory authorities, organizations like AUSPI, COAI, GSA, TEMA, equipment vendors, billing software vendors, telecom consultants, come together to discuss the current trends and emerging business opportunities in the telecom sector.