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Updated: September 16, 2010 16:48 IST

Major challenges before telecom operators

D. Murali
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With the mobile phone becoming the greatest social leveller, it is no more a question of socialism or capitalism but only ‘mobilism,’ says a cheerful Debasis Chatterji, CEO, Netxcell Ltd, Hyderabad (http://bit.ly/F4TNetxcell).

He cites a UN study that in a typical developing economy every 10 per cent mobile penetration improves the GDP by 1.2 per cent. That’s a huge contribution, observes Debasis, during a recent interaction with Business Line.

“Simply speaking, we are becoming more effective in terms of utilising our time properly with the help of this wonder device. The mobile is directly contributing to our growth and development.” Which is why, he is anguished at the destruction by the extremists of cell phone towers along with schools and railway stations. “They want people to be uninformed. They don’t want growth,” frets Debasis. Our conversation continues over the email.

Excerpts from the interview.

On the Internet revolution.

In the West and in many advanced countries the Internet /broadband first came through the fixed line and then slowly became available through the mobile device. However, in India we have only 15 million fixed line Internet connections; providing physical infrastructure to every nook and corner of the country is a big challenge.

On the contrary, out of 600 million mobile subscribers, 100 million are already Net-connected in GSM and CDMA. With the release of sub-Rs 5,000 Internet-ready handsets coming in the future, and with the aggressive data pricing by operators, the possibility is tremendous.

On the major milestones in the mobile revolution.

The mobile revolution in India has started with two important landmarks. Calling party pays (CPP) was the first landmark to allow people to receive a phone call free of cost. It was a smart move to encourage mobile talk and to enhance revenue indirectly.

The second move in the same direction was the lifetime prepaid wherein one might not call up once the balance is over, but one can receive a call from anybody. And one is ‘live’ for others forever so that the other party pays for generating the call. Operators clearly understood the hurdles of owning a SIM card and this led to making the process of new subscriber acquisition simple and straight forward.

Distribution has been made as flat and decentralised as possible. Now, one can buy a SIM card from almost every roadside grocery or paanwallah (mom-and-pop store). They sell cigarette and SIM card with the same ease and interest. And the buyers also buy in the same way!

On the challenges for the operators.

1) Operators have paid a huge amount of money as licence fee for 3G. Their real challenge will be to monetise that sunk cost through services from the subscribers.

2) As per the experience of 3G in other developing countries such as China the base of new 3G subscribers will be about 10 to 20 per cent. Key issue is penetration.

3) An important issue in 3G services will be customer discovery, apart from service experience of 3G products. Meanwhile, auction has taken place for WiMax (4G). And once this is launched in about 2 years from now, customer will have a choice between 3G and 4G. The major challenge will be the pricing of each of these services vis-à-vis the customer experience in data usage.

4) Voice is almost commoditised in 2G; and severe competition among operators in terms of voice tariff is making their bottom line thinner. A few new operators are already incurring huge losses. This might force consolidation in the industry in the near future.

5) Cities and metros are already having close to 100 per cent tele-density. Therefore, operators are moving to semi-urban and rural areas where almost 100 per cent subscribers are in the prepaid segment with very low ARPU (sub-Rs 200 per month). The average prepaid top-up is usually below Rs 20 at a given point of time. This could be a big challenge for VAS uptake, as value-added services have to be priced at a very low level. To mitigate this, low-priced market operators are already sharing their infrastructure. However, to cover a much bigger geographical area the cost of infrastructure is still high. Moreover, in some disturbed areas, ultras are destroying these infrastructure facilities, impacting the telecom economics.

On the DND (do not disturb) issue.

Yes, we agree that bulk SMS and rampant tele-calling by telemarketers can be termed as an invasion of privacy. The so-called upper middle class metro/big city mobile subscribers are up in arms against these tele-callers. But the story is entirely different for the millions of semi-urban and rural subscribers.

For the last one-and-a-half years we have been adding 10 to 14 million new subscribers every month. We have found that 95 per cent of these subscribes are on the prepaid segment and the majority of them are from semi-urban and rural areas.

They are information hungry. Any phone call is music to their ears, especially when the call is in the vernacular. They don’t pay for any incoming call. They are nameless and faceless. They are deprived of basic information. But they don’t have knowledge, technical capability and accessibility to upload their name to any website, or to register their name in a call centre for a do-call registry.

Therefore, in case the do-call registry is put to action, they will not get any useful information. For example, commercial banks cannot call these upcountry mobile subscribers and inform them about loan melas conducted to offer cheap loans. Or, a fertiliser company cannot intimate them about, say, fertiliser availability.

Information is power to them. We believe we should not deprive them of their newfound information-gathering tool (please read cell phone).

On the IP work in the company.

Last year we filed a worldwide patent for Cell Broadcast Centre (CBC) solutions for contextual advertising under the WIPO route. CBC is a sort of location-based service which works around a specific cell tower.

Messages scroll in the phone without disturbing the subscriber. One can get cell-site (tower) specific messages. Our service delivers 190-character messages through and up to 1500 different channels. That means, in a specific operator’s network numerous location-based messages can be delivered.

Abroad, such service is widely used for disaster management. In India, too, there is a great future for location-based service. Operators can really push location-based relevant content at a particular point of time. A simple example could be the pushing of info about a discount sale of a branded garment which is covered under a specific cell tower near a shopping mall at a particular time (e.g. lunch break). Obviously, the service becomes more focused and personalised.

Our R&D efforts are directed towards understanding the data and voice usage pattern of the subscriber, the customer life cycle. Such as, how one discovers the service and how the service uptake is taking place. Here, complete integration of service delivery with full-blown analysis by data mining and business intelligence are required. And better if it can be done real time.

Operators are now on a customer acquisition path; and there it is a volume game. Once the market gets more and more saturated, it will go towards greater maturity and then subscribers may expect some sort of personalised service. And we are working towards that.

**

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