Tuesday, September 30, 2008

What is this New World of Communications?

A few people asked me, what is this all about? I could have written out a 500 word piece to explain it, but then... in this new world, why not use a video to share my thoughts on what is changing in the world of communications. In about seven minutes, you can go through a presentation that I have made on this topic at various fora, including at IIM Ahmedabad last week.

Agree? Dissent? Speak up or write in...

(Images credits here)

Friday, September 26, 2008

Better than being there!

Telecom is mostly associated with consumer services that one can either touch or experience: attractive mobile phones, content services and applications, calling cards, etc. On the other hand, most enterprise services do not lend themselves to any personal experiences. When was the last time you saw your IPLC or touched a managed hosting service? The power of communications services and their impact on businesses have to be often described through boring powerpoint slides or worse, complex network diagrams.

But now, things will change because we have the Aha! service that businesses are adopting rapidly across the world. Telepresence is dramatically changing how executives are communicating and collaboration, in a highly interactive manner, across geographies and time-zones. It is the killer app for business communication services.

What is Telepresence?

Telepresence is a next-generation conferencing technology that uses high definition video transported on fat pipes. This is still jargon. Let us simplify further.

Imagine a conference room with a dozen participants. They can talk to each other, engage in detailed discussions and arguments, or go through a Powerpoint presentation. All face to face, eye to eye. That’s pretty normal in any conference room, right? Now, what if half of the participants were ten thousand miles away. And yet, it was as if they were in the same room. That’s Telepresence. Better than being there!

(see video below)

Telepresence comes with voice activated microphones, surround sound audio systems, 54” LCD panels and high definition cameras that can capture eye-ball movement. Each of the TP rooms is designed as a half-table so that a full conference room environment can be created. A typical room can seat 6, although other smaller and bigger variants are available. In such a configuration, four rooms can be conferenced at a time, therefore enabling upto 24 participants in a meeting. Data / presentation sharing across all the rooms is available, thereby supporting document sharing and collaboration. Underlying all these are high-bandwidth (10-30Mbps) leased lines or preferably, an MPLS VPN.

The promise of Telepresence is to substitute travel that is normally considered essential for serious meetings or engagements that cannot be done over phone or even traditional video conferencing.

Does this really work? We have heard similar claims from Video Conferencing earlier!

I can confirm, from personal experience that Telepresence is hugely effective. There is sufficient evidence, anecdotal as well as research, that one can surely avoid travel – international and domestic – once TP is available. Cisco, one of the major providers of Telepresence technology as well as a major user for internal purposes, has statistics to prove that travel cost savings alone can justify the investment in TP.

But Telepresence is beyond just travel cost savings. Other benefits include:

Greater Collaboration: As businesses become more distributed and reliant on partners across multiple locations, success depends on the ability to create greater real-time collaboration mechanisms across the extended organization. Today, as a manager, I have to supervise teams that will not be all Mumbai based. I also have to work closely with colleagues, partners and customers around the world. Isn’t it far more convenient and effective to walk over to the Telepresence room for a face to face meeting than depend on an audio conference or worse still, get onto a plane and travel 18 hours!

Cisco has estimated that its benefits from improved collaboration (more & faster sales, and employee productivity) were almost FIVE times (5X) the savings from travel avoidance!

Employee Friendly: We live in highly stressful environments; economic crises, security concerns and reduced time for personal and family activities are putting enormous strain on the minds of executives. Telepresence, by avoiding travel and improving productivity, can play a major role in reducing these stress levels. This is invaluable.

Environmentally Friendly: Avoiding travel not only reduces corporate costs but also reduces related carbon emissions. There are ways to measure this value, but at this time suffice to say, this is our small bit towards preserving the Earth for our children.

This is all fine, but it’s probably prohibitively expensive – only for the Big companies…

It is true that Teleprsence requires relatively large upfront investments – $300,000 or over Rs 1.2 crore per room; at the same time, Wainhouse research shows that the cost of Telepresence is similar to that of video-conferencing on a per hour used basis. This is primarily because Telepresence gets used much more, almost 5-8 hours a day, compared to video-conferencing that is used 1-2 hours at most.

But more interestingly, it is now possible for all businesses to use the power of Telepresence. In a model that is unique to Telepresence (but not to other telecom services), Tata Communications has launched public Telepresence rooms where businesses or individuals can use the facilities on an hourly basis. For a reasonable rate, usually lower than the corresponding cost of travel, small and large businesses alike can experience the extended benefits of this technology and service. The public rooms are available in five Indian metros and in London and Boston. The company plans to extend this public room network to at least 100 locations by the end of next year.

(Cisco-Tata Communications video launching Public Telepresence rooms)

Years ago, while watching Star Trek, I was always impressed by the transporter that would let Captain Kirk be wherever he wanted, in a matter of seconds. Today, Telepresence can provide us a similar experience. Beam me up, Telepresence!

(Updated on Oct 15 -- with the launch of public rooms in UK and USA)

(Source: Telepresence vs. Videoconferencing, Wainhouse Research, Jan 2008)

Monday, September 22, 2008

India@75: What can India Inc. achieve in 15 years?

Vision has been defined by some as the setting of bold and audacious goals. Prof. Prahlad has indeed set India some challenging goals for 2022, one amongst them being ‘30 of Fortune 100 from India’. Given that today not a single Indian company makes it to the list and only 6 feature in the top 500, it is indeed an audacious goal. At the same, it is not unachievable. Five of the top 20 global companies in 2008, by market capitalization, are already from emerging markets. Fifteen years to 2022 is a long and adequate time in today’s world for Indian companies to break into the Fortune 100. 

One of the major reasons cited for Indian companies not being large enough compared to global peers is the relatively small size of the Indian market (the US pet food market size is as big asIndia’s entire FMCG industry, etc.). The trick, however, will lie in identifying opportunities that can leverage our inherent strengths and the rapid economic growth that we are experiencing. By 2022, India would be the third largest economy and will contribute nearly a billion strong workforce to the world. The market should provide adequate (volume) scale to create globally leading business models. Even today, the Indian mobile market is next only to the Chinese, in terms of size, and is growing faster than any other market worldwide. An additional challenge inIndia is to consolidate what are typically highly fragmented and unorganized markets. Leadership, in the true sense, in the home market is essential to achieve the scale that the Indian market can provide. Simultaneously, we also have to be prepared to access and compete in international markets if we truly want to achieve global leadership. 

The key task for Indian firms is to leverage the power of the billion in creating globally competitive businesses. In order to eventually become globally leading, we need to first focus on benchmarking ourselves to the best in the world, on service level, cost and productivity measures. This is important for Indian companies so as to even remain competitive in the domestic Indian market which is seeing the entry of several international players. Tata Steel became the world’s lowest cost steel manufacturer several years before it commenced its global ambitions. 

Being globally competitive will not be sufficient to achieve leadership. Successful firms lead through innovation, backed by open organization structures & culture and significant investments in research. We lag on both counts, more so on the latter. We have relied far too long on licensing technologies, reverse engineering and services models; now is the turn for us to create products, technologies and business models that will be replicated elsewhere. If over 80% of global incremental mobile adds are expected in emerging markets, who better to lead the implementation of profitable, low cost mobile business models than Indian operators? Why cannot India, a broadband starved country, drive the adoption and lead the growth of WiMax and other wireless broadband technologies? Thus, Indian companies are better advised to seek and succeed in opportunities in other growing, emerging markets rather than rush to the large but static markets of the developed world. 

The next few years will be at the same time challenging and full of opportunities. Several markets, including USA and UK, are reeling from economic slowdown and financial crises. Consequently, most MNCs are seeking to grow into India (and other emerging markets) making these markets more competitive. We have to defend our domestic turf, not by creating entry barriers but by taking on global players head-on. At the same time, weak global markets are throwing up interesting acquisition opportunities at attractive valuations, opening up new markets in USA and Europe. This will enable our companies to also enter and take the fight to the global markets. Indian companies will have to master this block (at home) and tackle (abroad) strategy to win in the emerging world order. 

So, can we get to 30 of Fortune 100 by 2022? My bets are in favour of us succeeding. BCG’s New Global Challengers report has already identified 20 Indian companies that have the potential to challenge and change the world. We have to just find ten more.

(A version of this article appeared in the Outlook Business June1-14, 2008 issue.)

Fix the Fixed Lines

(This was written about two years ago, but the suggestions are still valid and need to be implemented.)

I have not had a fixed line at home for several years now; my wife and I have four mobile phones between us and never felt the need for a fixed line at home. I thought, like many predict, that fixed lines would soon die. But just today, I applied for a fixed line at home. Not a fixed wireless, mind you, but the copper line that is uncharitably referred to as the plain old telephone service (POTS). 

Why did I need to take such a "retrograde" step? There were several reasons:

1. The quality of the wireless network is erratic. I am unable to depend on my mobile phone for long phone conversations, particularly official conference calls. With flexi-work and international calls at late hours, the need for a reliable phone line at home has become a must. 

2. Mobile call rates are still higher than that of fixed lines. Whether that reflects relative costs or not, it is surely true that calling from a wireline, particularly at high usage levels, is cheaper. My employer might be footing the bill, but still, why should I pay more when I call from a fixed / pre-determined location (home or office).

3. My mobile phone provides service to me as an individual, it can be shared only when I am at home. So if there is someone at home who needs to make a call when I am not home, say my parents or my child or a domestic help, the fixed line is a shared communication service. This is true even at the work-place where everyone does not necessarily have a mobile phone.

4. Finally, I must admit that I just like the convenience of using the fixed phone - the big black box which nowadays can pack in a lot of intelligence. While I need my mobile to be slim and light to fit into my shirt pocket, the form factor is not convenient for long conversations, particularly when you are in a fixed location. In spite of hands-free devices and bluetooth, voice clarity is still suspect on most mobile phones, even the high-end ones.

Just so you do not misunderstand, I am not saying that mobiles are in general inferior to fixed lines; just that in certain contexts, the POTS delivers greater value than a wireless service.

If there is, as demonstrated above, a reasonable case for the continuation of the fixed line at home, why is it that only about 15% of Indian homes have a fixed phone? It cannot be because of affordability: twice as many homes have cable TV at home, paying almost the same charge, every month. Further, data shows that the average # of mobile phones per home (in homes that have a mobile phone) is less than 1.5; given that household size in India is 4 to 5, there is clearly a gap in telecom coverage.  Lack of competition in the fixed services space and the fixation of policy makers on wireless growth has completely choked the growth of wireline.

Let me correct that to lack of effective competition. There are a few access providers rolling out wireline networks - cherry-picking the enterprise locations and high-end homes. But more interestingly, some ISPs have also rolled out various forms of wireline (cable, fiber, copper) networks. However, none of them get any encouragement to continue their roll-out. There are no clear policies for RoW permissions - every municipality, authority and building society charges its pound of flesh for allowing network creation. Having created the network, with a very high capex per sub (usually Rs 15,000 to 25,000 per subscriber), the ISP can only offer Internet and limited Internet Telephony services. They do not have the opportunity to offer basic services like voice, which even today contribute a large portion of telcos' revenues globally. Obviously an ISP cannot hope to compete with the incumbent , while addressing just a fraction of the customer revenue but with the full (or more) capex.

What needs to be done
* Allow ISPs to migrate to new category of access license: Unified Access License - without spectrum, for a nominal entry fee. On terms similar to UASL, allow ISPs to offer access services, including full Internet Telephony.

* Encourage competition in fixed line services by mandating local loop unbundling - perhaps starting with all non-metros.

* Legislate free RoW for all access licensees (recovering just the actual re-instatement charges) and mandate sharing of existing ducts - on cost recovery basis - by all licensed operators.


Creating a National Broadband Access Network

(This was written nearly two years ago; the suggestions remain valid and still need to be implemented.)
Singapore is considered a highly developed country and is used as a relevant benchmark for India, at least in the telecom sector. The Singapore Government has initiated an interesting and rather ambitious program to make the city nation the leading knowledge hub in the world. The masterplan called iN2015 (Intelligent Nation 2015), is a ten year blue-print to harness the power of infocomm for the nation (www.in2015.sg). One of the major initiatives within iN2015 is to build a Next Generation National Broadband Network (NBN). Just look at some of NBN's parameters: reach to 95% of all postal addresses, 100 Mbps capacity at each home / office on day 1 to be scaled upto 1Gbps in a few years' time! 

The most interesting thing about NBN is that it is being driven by the regulator / licensor, Infocomm Development Authority (IDA) as a public-private partnership. The model is simple. The IDA intends to license an operator to create a high speed access network as an equal access, wholesale infrastructure. All service providers would be able to lease this access network and offer innovative content and applications to their target segments. Considering the targeted bandwidth, only a fiber based solution (FTTX) would be feasible. A global search for the appropriate partner(s) in this initiative is underway, expected to be completed by the middle of 2007. 

In stark contrast, we have no such plan for the future, in fact, not even a discussion to arrive at such a plan. By defining Broadband at 256Kbps, we have already set our sights low. By treating Broadband Wireless as the panacea, we have converted a short-term bridging technology into our long term goal. By letting everyone do their own thing, we have ensured that the investments that are required to create a robust, national infrastructure are sub-optimally duplicated by several players.

India is a much "tougher" country than Singapore from a broadband perspective; the sheer geographical size of India that is required to be "broadbanded" is many, many times that of Singapore. More the reason why we need to plan today, if we want to be anywhere comparable in ten years' time. 

What needs to be done

* Accept that true broadband will require a fiber-based infrastructure, even in the last mile.

* Develop a plan to create a National Broadband Access Network; select an operator / consortium to roll-out the network in phases, over the next 5 years. The NBAN operator should be a pure wholesaler (similar to IP-2 license) and cannot directly be a service provider. The NBAN operator must get automatic and free right of way across the country, and could be selected on the basis of lowest subsidy required for a target tariff.

* Release spectrum in 2.5GHz and 3.5GHz bands immediately for WiMax roll-out during 2007 - this will enable basic broadband services to be introduced in a ubiquitous manner.

What Ails Broadband in India?

(This was originally written two years ago; nothing much has actually changed since then!)

1000,000,000 people
700,000,000  young people
600,000,000 literate people
180,000,000 telecom subscribers
100,000,000 with higher education
60,000,000 cable pay TV homes
40,000,000 Internet users

... and just about 2,000,000 broadband subscribers. Broadband, which by the way is defined in India at <=256Kbps: just about enough speed to let you experience the new, emerging Internet. The Indian Govt. has declared 2007 as the year of broadband, and a target of 9mn subs has been set for the year.

Just so you know, China has about 75 million broadband subscribers -- 60% of its Internet subscribers have broadband.

Why is a nation such as ours, IT superpower and aspiring global superpower, so poor when it comes to broadband penetration?

1. Very Poor Fixed Line Infrastructure
Most countries that have a high broadband penetration have (a) high wireline penetration, and / or  (b) robust cable infrastructure. Simply speaking, if you do not have the basic infrastructure, you cannot provide a superior service such as broadband. Unfortunately for us, neither of these two conditions exist in India.

There are about 40-odd million fixed lines, of which only about 30% - about 10mn - are capable of providing broadband. In recent years, there has been almost no investment in increasing and/or improving the quality of fixed line infrastructure. The country has added 140mn wireless subscribers in the last 5 years, as against just 5mn wireline subs. While  lack of focus on wireleine by the incumbents, BSNL and MTNL is an important factor, the blame must really be borned by the regulatory and policy regime which has not created an environment to encourage competition (and thereby, investment) in fixed line infrastructure / services in the country. The TRAI had recommended  unbundling of the local loop as a step towards limited competition, but as has now almost become a norm, the TRAI recommendations were not accepted by the DoT.
Less said the better about cable infrastructure. It is a highly fragile and completely unregulated cobweb of many thousands of independent networks. It will take an investment of at least Rs 200 billion to upgrade the cable last mile to make it 2-way and broadband capable. Nobody, it appears, is willing to take that challenge up. 

2. No Encouragement to Competition
It is well-recognized that the mobile revolution in India has been driven primarily by competition: 6-7 operators across the country. Private operators were licensed years before the incumbents were allowed to enter the mobile market; several steps have been taken towards creating a level playing field for all the licensed mobile operators. On the other hand, in broadband, there is absolutely no policy measure to encourage private operators to enter and compete; this in spite of the fact that none of them have any last mile infrastructure to speak of, and therefore, require considerable support in the initial years.

The incumbents that are riding on public-funded fixed line infrastructure have - in almost a predatory manner - dropped tariffs so much that India has, at the same time, the lowest broadband ARPU and the poorest broadband penetration in the world! Wireless broadband (read WiMax) is generally expected to become the competitive alternative - but there has simply been no urgency in creating the policy environment to encourage wireless. TRAI has finally issued its recommendations - suggesting that WiMax be implemented in the 3.3 - 3.6 GHz bands while the rest of the world is moving towards 2.5GHz. There is no clarity when these recommendations will be accepted and subsequently, implemented. One can guess that it will be late 2007 before any real competitive action will begin in broadband. Meanwhile, BSNL's juggernaut will continue - they have now announced 2Mbps speeds (up 4 times from 512 Kbps) for the same tariff.

Can something be done to salvage the situation?
Unfortunately, in the short term, I see no option for the customers and private operators. During 2007, the incumbents will strengthen their dominance in the broadband market (for whatever it is worth); private operators will half-heartedly roll out parallel copper / cable networks and will be plagued with quality issues. Everyone, including BSNL, will experiment with WiMax, and perhaps by the end of the year, commence full-fledged network roll-out.

The Broadband market will have to wait till 2008 for true competition, high quality and innovative services - available in all major towns and cities. But the rest of the world will not stay still. Will the gap between India and other markets such as US and Singapore widen? I am afraid, yes.

What a depressing thought to end 2006 with. Let us change that. My next post, hopefully before this year ends, will have some suggestions on medium and long terms measures on what can be done during 2007 to ensure that we catch up with the rest of the world before the end of this decade.