“Some­times you get 2G, some­times you get 3G, and some­times you get no G”

With Face­book Free Ba­sics blocked in In­dia, Google and Mi­crosoft are step­ping in “The im­por­tant thing is to build prod­ucts that can work on patchy net­works”

Bloomberg Businessweek (Asia) - - CONTENTS - −Bruce Ein­horn, with Bhuma Shri­vas­tava

Google may be the world’s big­gest In­ter­net com­pany, but Ra­jan Anandan, the head of its In­dia op­er­a­tion, says he’s be­come just as fo­cused on what users are do­ing off­line. His team has led Google’s push into apps that can down­load data for later use with­out an ac­tive mo­bile con­nec­tion. One helps peo­ple nav­i­gate New Delhi pub­lic tran­sit; an­other lets users store YouTube videos for re­play; a third of­fers an off­line ver­sion of Google Maps. Th­ese ef­forts all have the same goal: mak­ing Google prod­ucts easy to use even with poor In­ter­net con­nec­tions.

About 375 mil­lion to 400 mil­lion peo­ple in In­dia are on­line, the world’s se­cond-largest In­ter­net pop­u­la­tion af­ter China. Many de­pend on mo­bile con­nec­tions that can only be gen­er­ously called spotty. In­di­ans who use smart­phones to go on­line have ac­cess to a wire­less net­work only about 56 per­cent of the time, es­ti­mates Eric­s­son, the Swedish mo­bile tech com­pany. The av­er­age con­nec­tion speed is 2.5 megabits per se­cond, ac­cord­ing to Aka­mai Tech­nolo­gies, a com­pany that makes tech­nol­ogy to speed de­liv­ery of Web con­tent. (The av­er­age speed in the U.S., which isn’t ex­actly best in class, is 12.7 Mbps, and in South Korea it’s 20.5 Mbps.) “Some­times you get 2G, some­times you get 3G, and some­times you get no G,” Anandan says. “The im­por­tant thing is to build prod­ucts that can work on patchy net­works.”

In Fe­bru­ary, the Tele­com Reg­u­la­tory Au­thor­ity of In­dia re­leased reg­u­la­tions ef­fec­tively ban­ning Face­book’s Free Ba­sics, a prod­uct avail­able in about three dozen coun­tries that of­fers free ac­cess to a stripped-down ver­sion of Face­book and a hand­ful of sites that pro­vide news, weather, nearby health-care op­tions, and other info. The govern­ment, along with open-In­ter­net ad­vo­cates, rea­soned that mak­ing Face­book syn­ony­mous with the on­line world for many new users would hurt com­peti­tors. There’s no short­age of soft­ware de­vel­op­ers in the coun­try, the

think­ing goes—what users need is a big­ger pipe.

Much big­ger. From 2014 to 2019, Cisco Sys­tems es­ti­mates, In­dia’s monthly mo­bile data traf­fic will swell 13-fold, to 1.1 bil­lion gi­ga­bytes, and by 2019 stream­ing video will ac­count for three-quar­ters of to­tal In­ter­net use, up from about half to­day. Netflix launched its In­dia ser­vice in Jan­uary.

Among the com­pa­nies propos­ing piece­meal so­lu­tions are Google,

Mi­crosoft, and Huawei Tech­nolo­gies, the Chi­nese maker of wire­less equip­ment. Google is in­stalling free Wi-Fi in 100 rail­way sta­tions through­out In­dia this year, be­gin­ning in Mum­bai. Mi­crosoft is test­ing whether un­used slices of the TV spec­trum can re­li­ably de­liver Wi-Fi in­stead. Huawei is work­ing with mo­bile oper­a­tors to im­prove the ef­fi­ciency of their ex­ist­ing net­works. Huawei says it’s been able to in­crease speeds for clients by as much as 30 per­cent, in part by re­plac­ing out­moded equip­ment.

For com­pa­nies that of­fer stream­ing video, that prob­a­bly won’t be enough. Yet some providers are find­ing ways to cope. Vu­clip, a Sil­i­con Val­ley sub­sidiary of Hong Kong tele­com com­pany PCCW, de­liv­ers videos to 9 mil­lion cus­tomers in emerg­ing mar­kets, more than half of whom are in In­dia, where net­works may of­fi­cially be 3G but in re­al­ity “vary all over the place,” says Chief Ex­ec­u­tive Of­fi­cer Nick­hil Jakat­dar. “It’s like it de­pends on

the phases of the moon.” Be­cause un­re­li­able net­works can eas­ily lead to long buffer­ing de­lays, Vu­clip’s sys­tem au­to­mat­i­cally ad­justs the res­o­lu­tion of its video stream to match the con­di­tions of the net­work so there are no in­ter­rup­tions. In one three-minute video, Jakat­dar says, Vu­clip may change the qual­ity about a dozen times. The goal, he says, is to “pro­vide a buf­fer-free ex­pe­ri­ence for the con­sumer.”

Other com­pa­nies are us­ing sim­i­lar strate­gies. Star In­dia, part of Rupert Mur­doch’s 21st Cen­tury Fox, launched a video stream­ing ser­vice called Hot­star last year that the com­pany says is de­signed to play “on mo­bile net­works with in­con­sis­tent through­put.” Sony, Warner Bros., and Sin­ga­pore Telecom­mu­ni­ca­tions

last June rolled out HOOQ, an­other video ser­vice, with an off­line mode and a band­width in­di­ca­tor that tells users how good the con­nec­tion is. In Novem­ber the In­dian arm of Nor­we­gian mo­bile op­er­a­tor Te­lenor in­tro­duced a stream­ing ser­vice that makes it easy for users to down­load con­tent dur­ing off-peak hours and watch it later with­out Net con­nec­tions.

To re­duce de­lays, some com­pa­nies are turn­ing to data cen­ter oper­a­tors such as New York-based GPX

Global Sys­tems. GPX will ex­pand its Mum­bai cen­ter to help cus­tomers in­clud­ing Ama­zon Web Ser­vices con­nect with In­dian con­sumers lo­cally rather than via servers in lo­ca­tions such as Sin­ga­pore. “The pace has picked up be­cause cus­tomers are now de­mand­ing a bet­ter ex­pe­ri­ence,” says Manoj Paul, pres­i­dent and chief op­er­at­ing of­fi­cer of GPX in In­dia. By us­ing lo­cally based servers, he says, “the pipe is big­ger and cheaper.”

One ques­tion is whether In­dia’s govern­ment will al­low the traf­fic to flow.

CloudFlare, a data cen­ter op­er­a­tor based in San Fran­cisco, avoided In­dia for years be­cause of wor­ries about govern­ment poli­cies to­ward for­eign com­pa­nies. “We heard hor­ror sto­ries,” says CEO Matthew Prince. “For a very long time we saw a huge amount of cus­tomer de­mand, but we were spooked a lit­tle bit by the reg­u­la­tory risk.” The pro-busi­ness rhetoric of Prime Min­is­ter Naren­dra Modi, who took of­fice in mid2014, en­cour­aged CloudFlare to put those wor­ries aside. Over the past seven months the com­pany has opened three data cen­ters in the coun­try. Prince says In­dia’s re­jec­tion of Free Ba­sics has in­tro­duced new un­cer­tainty for for­eign com­pa­nies. “A lot of peo­ple are try­ing to fig­ure out what will play out given what hap­pened to Face­book,” he says.

So far, the govern­ment isn’t pro­vid­ing much re­as­sur­ance. Al­though it’s al­lowed Google and Mi­crosoft to pro­ceed with some tri­als, Telecom­mu­ni­ca­tions Depart­ment spokesman N.N. Kaul says the reg­u­la­tor isn’t ready to say whether it will ap­prove their plans to ex­pand In­ter­net ac­cess in the coun­try­side. “Let the tech­nol­ogy be ready for adop­tion by the coun­try,” he says. “Then we’ll de­cide.”

The bot­tom line In­dia’s mo­bile data traf­fic may grow 13-fold by 2019, so for­eign tech gi­ants are learn­ing to live with reg­u­la­tory un­cer­tainty.

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