Mo­bile, Not Seden­tary

The Economic Times - - The Edit Page - San­jay Kapoor

Over the last few years, lead­ing tele­com ser­vice providers have ap­peared to be com­pletely com­modi­tised. Their net­works have spelt cus­tomer dis­dain, their com­mu­ni­ca­tion has been un­dif­fer­en­ti­ated, and their or­gan­i­sa­tional ca­pa­bil­i­ties ap­pear som­no­lent.

Shang­hai has less than 500 cus­tomers per tower. Delhi, on the other hand, sup­ports 5,500-6,000 cus­tomers per tower. China Mo­bile has100% tow­ers con­nected with fi­bre. For In­dia’s lead­ing op­er­a­tors, it would be less than 20%. In Delhi, the num­ber of cus­tomers are 20 times higher per MHz per tower than in China. This prob­lem is ex­ac­er­bated by In­dia’s low­est spec­trumper-sq km: re­sult­ing in our in­ter­net speed be­ing among the low­est glob­ally.

The govern­ment’s spec­trum pric­ing, shar­ing and trad­ing poli­cies have had lit­tle im­pact on in­dus­try con­sol­i­da­tion and cus­tomer ex­pe­ri­ence. The fact that 80% of voice was con­sumed out­door and 80% of data gets con­sumed in­doors war­rants a trans­for­ma­tional in­vest­ment and de­sign ef­fort to de­velop a world-class ex­pe­ri­ence for data.

The an­nual cap­i­tal ex­pen­di­ture in China was $63 bil­lion, the US $69 bil­lion, South Korea $26.7 bil­lion and In­dia about $10 bil­lion. Most data ser­vice providers in the de­vel­op­ing world are sup­ply, not de­mand, fo­cused. But In­dian ser­vice providers have been merely cap­i­tal ex­pen­di­ture-led while cater­ing to data.

With RIL Jio’s much-awaited launch, it has been un­nerv­ing to see in­cre­men­tal­ism from large in­cum­bents. RIL’s bet on 4G LTE when its ecosys­tem was not fully ripe has gained cred­i­bil­ity. The likes of China Mo­bile have added 265 mil­lion 4G cus­tomers with an ‘early-mover ad­van­tage’, sur­pass­ing its 3G base of about 195 mil­lion.

Sud­denly, the 3G bets ap­pear weaker both tech­no­log­i­cally and ex­pe­ri­en­tially. Glob­ally, video is the big­gest guz­zler of data and its form fac­tor change to HD and 4K is a mul­ti­plier on data con­sump­tion. Cur­rently, In­dian net­works strug­gle to pro­vide a sig­nif­i­cant video ex­pe­ri­ence for data users. The de­vice ecosys­tem for 4G LTE, with price points touch­ing .₹ 4,000 and avail­abil­ity of hun­dreds of mod­els across bands, is bound to grow faster than en­vis­aged.

Air­tel seems to be the first one to un­shackle the sta­tus quo and dis­tance it­self from Voda­fone and Idea on the data sup­ply ca­pac­ity. First, Video­con’s spec­trum (1,800 MHz in six cir­cles) and then Air­cel’s (2,300 MHz in eight cir­cles) are a clear sig­nal to for­tify and con­sol­i­date its po­si­tion in 4G play and, to some ex­tent, hedge its 3G bets.

In an in­dus­try fo­cused on sup­ply, as de­mand could be a thou­sand times and spec­trum is fi­nite, mar­ket-share pro­tec­tion gets driven by the sup­ply ca­pac­ity a ser­vice provider for­ti­fies.

Now that the mar­ket struc­ture trans­for­ma­tion from per­fect com­pe­ti­tion to oli­gop­oly seems in­evitable, the min­i­mal­is­tic ap­proach of Voda­fone and Idea to­wards data cre­ates a para­dox. This con­sol­i­da­tion is pushed by RIL’s over­hang rather than pol­icy trig­gers. How­ever, even in a three-four play­ers’ mar­kets, the top two make money and the rest strug­gle.

RIL is ex­pected to com­mer­cially en­ter the In­dia data mar­ket to­wards the later part of this year with a new 4G data net­work that in­cludes the power of 800 MHz cov­er­age spec­trum. With an in­te­grated data ecosys­tem play in­volv­ing de­vices, con­tent, ser­vices, stor­age and an­a­lyt­ics, RIL seems to be build­ing a dif­fer­en­ti­ated play.

RIL’s ad­van­tage is that it has a very low ex­ist­ing bench­mark on cus­tomer ex­pe­ri­ence to breach. But its chal­lenge is that we have yet to wit­ness a suc­cess­ful de­liv­ery of such a com­plex in­te­grated data play, even in­ter­na­tion­ally.

Also, no mat­ter how strong an in­fras­truc­ture one de­ploys, the on-ground op­ti­mi­sa­tion of net­works lead­ing to a dif­fer­en­ti­ated cus­tomer ex­pe­ri­ence has a trial-and-er­ror com­po­nent in­volv­ing consumer feed­back and time.

Also, cus­tomer ex­pe­ri­ence on data is not a lin­ear de­liv­ery of net­work but a col­lec­tive out­put of its pe­riph­er­als in­clud­ing billing, IT sys­tems, etc. Most im­por­tantly, the big­gest users and evan­ge­lists of data are the young data na­tives. To get any brand to res­onate to this tar­get group may not be an overnight ex­er­cise.

RIL’s en­try into the In­dian data and in­ter­net mar­ket has for­mi­da­ble ex­pec­ta­tions from all stake­hold­ers, lead­ing the largest in­cum­bent to break away from its ri­vals and mak­ing them ap­pear ten­ta­tive. The In­dian mar­ket is fi­nally des­tined to be a four-player game where the new en­trant will gain at the cost of in­cum­bents, at least in the short run.

How­ever, data is all about a non-lin­ear world where the the­ory of win­ner­takes-it-all does not ap­ply. It is cus­tomer ex­pe­ri­ence, as op­posed to price, that will de­ter­mine the win­ner.

Data is about in­door ex­pe­ri­ence. While it may feel good to have 4G on moun­tains and in the wilder­ness, let’s get go­ing — on pub­lic de­mand — to make it work in cities and in build­ings first.

The writer is for­mer CEO, Bharti Air­tel

4G? No, thanks. Find­ing god is eas­ier

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