Mega revenues through microservices

Microservices for Telecom

Telecom companies are under increasing pressure from all sides – growing data usage and requirement for unlimited, high speed data puts their revenues under pressure, the OTT onslaught puts their business model under pressure, increasing regulatory costs and the need to roll out the latest network means increased capital expenditure.

To ward off these challenges, cash rich MNOs across the globe have already embarked on acquisitions, mergers and changing of business models in order to increase their revenues. With a strategy to monetize content, Comcast bought over Universal studios, Verizon bought Yahoo and Reliance Jio is making a big bang with its complete suite of content based products – some home grown, some acquired through the years. However, here is a contrarian point of view – slightly dated (2011) which talks about how content\entertainment won’t be enough to make a significant difference to telecom companies’ revenues going forward.

There is no silver bullet to solve all the problems faced by CSPs. Multiple strategies need to be implemented to help telecom companies generate more revenues. The business model of telecom companies is bound to change which will in turn impact their business and application architecture. While change is inevitable, for most large organizations, gradual change is desirable vis a vis complete, complex transformations.

One of the strategies to increase revenues should be to leverage TMForum’s OpenAPIs by using the different products available in the market like Apigee, OCSG etc.
(http://www.oracle.com/us/products/middleware/identity-management/api-gateway/overview/index.html )

Network as a Service

One overarching strategy could be to use the network of a CSP and provide it to B2B customers as a service. As Dr. Lester Thomas, Chief Systems Architect, Vodafone Group, commented,

Network as a Service, Telecom Strategy
Network as a Service, Telecom Strategy

“One lesson from hyper-scale Internet companies is that APIs and platforms allow the creation of a standards-based ecosystem, while enabling innovation in the implementation. A critical advantage of platforms and APIs is that they provide an evolutionary path from the current telco operating model to the future Network-as-a-Service model.” With the maturing of SDN and NFV technologies it will soon be more easier to provide Network as a Service. Implementing technologies like blockchain to implement smart contracts might necessitate a huge change in the telecom industry. It is also important that telecom operators get together to break the device manufacturers’ hegemony of putting the cart before the horse. A redesigning of smartphones could possibly revolutionize the telecom industry. Redesigned communication devices, coupled with smart contracts and SDN might help change the telecom world forever.

IT as a Service

Telecom companies can also earn by providing their IT infrastructure as a service – primarily to MVNOs – though there could be better use cases too. Cloud billing, cloud CRM applications can help enable network agnostic prepaid\real time billing for service providers. Currently it is MVNEs which are filling this gap and providing for the requirements of quickly and easily enabling MVNOs on their or other MNO networks. If telecom companies’ IT departments could become more agile and efficient, they might be able to provide services to more MVNOs, thereby earning revenues for their company.

TMForum OpenAPIs

Leveraging certain functionality of the overall IT infrastructure by exposing APIs is also another method to increase revenues. TMForum has detailed out OpenAPIs which could be leveraged for the same.
Here are a few use cases:

Authentication and authorization services: User authentication and identity management services could be leveraged by operators to provide different types of services to customers. Detailed customer data and KYC information can become the moat which separates the telecom companies from competition.

TMForum Open APIs
TMForum Open APIs

Identity validation helped Telenor Pakistan in increasing their revenues from Microfinance Services. Identity Management services implemented by using the Aadhar card in India helped Reliance Jio onboard nearly $$100 million customers in less than 6 months
since launch. $$ The Govt. of India is asking smartphone manufacturers to manufacture devices with inbuilt biometric functions at cheaper costs.

Billing APIs: A lot of services provided through the telecom partners are billed directly to the customer by enabling billing APIs. WiFi access using Ozone in India, streaming services like iFlix and Yonder in South East Asia, Netflix, Spotify in the US and Europe etc.

Messaging APIs: Allowing different applications to use the messaging services of the service provider and send SMSes to their target audiences. This can be further expanded to include USSD based push and pull messaging too. Some WiFi service providers can use the location API and messaging APIs and send messages to a user to use their WiFi connection which in turn will be billed in his\her phone bill.

TMForum’s OpenAPI standard also lists out other APIs for functions such as Trouble Ticket, Customer Management, Product Catalog, Product Inventory, Product Ordering, Billing Management, Party Management, SLA Management, Usage Management and Performance Management.

Telecom Companies as Platforms

Another method of increasing revenues is to act as a platform for willing partners and consumers. In their book, Platform Revolution, Geoffrey G. Parker, Marshall W. Van Alstyne and Sangeet Paul Choudary, define a platform as:

Ebay X Commerce Platform
Ebay X Commerce Platform

“a business based on enabling value-creating interactions between external producers and consumers. The platform provides an open, participative infrastructure for these interactions and sets governance conditions for them. The platform’s overarching purpose is to consummate matches among users and facilitate the exchange of goods, services or social currency, thereby enabling value creation for all participants.” Telecom companies are best positioned to become the defacto platform for many products as well as services since they already have a captive user base and simplified billing facilities. This can be anything from location based delivery services,  parking services, content hosting and billing services etc.

Best Operators are those who are the Best Partners

A simple way to look at platform as a service by telcos currently is to look at video and audio streaming services

Best Telecom Operators are those that can be the Best Telecom Partners
Best Operators are those who are Best Partners

like iFlix, Amazon Prime, Netflix etc. Telcos gain from partnering with these OTT providers by providing them access to their billing APIs apart from their marketing reach to customers and cloud data capabilities. The end user benefits due to easier and sometimes cheaper access to these services resulting in customer loyalty. The ability to partner easily with OTT providers is the only way that telcos can really hope to ride the wave of OTT success globally. This is exactly what Klaus Newen writes in his article on how to survive the OTT invasion – “In the near future the best operators are those who are the best partners

Exposing APIs, creating platforms and partnering with OTTs are the themes that should drive the telecom market in the near future. All these initiatives aren’t fundamentally disruptive but rather incremental in nature. And at the basis of all these initiatives is a single architectural pattern: microservices. Microservices can be implemented in different ways and we will try and understand the different design patterns which could help drive this change for telecom architectures.

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Redesigning Smartphones: Revolutionizing Telcos

In spite of being hugely successful, I believe that smartphones are one of the worst designed devices. Conceptualized as a device that we use to talk, its being used for everything else: from sending and receiving short messages to being used like a computer with a camera. While it has all these different functions, it most definitely isn’t easy to use. Difficult to read in the light, even more difficult to type with, difficult to carry – especially with their current sizes, unhealthy to carry along too nowadays – Chest pocket impacts the heart and trouser pocket the…….), difficult to take good photographs and even more difficult to listen to music without spoiling your ears with the headphones. And for every function that a smartphone suffices, there are similar devices which do it much better and at a lesser cost.

Design principles state that “Form follows Function”. However for the smartphone it seems that the exact opposite is true. A smartphone has a thousand different functions just because the manufacturers were able to provide all of these functions in its easy to lug around form.

The journey of mobile phones has been inextricably linked to the evolution of telcos. Through the years the success and failure of telcos has been attributed to mobile phones. There was a time back in the 90s when phones were given out along with plans. Now with the high cost of devices, it seems as if the plans are provided free along with the phones. The advent of the smartphone and the entire ecosystem around smartphones has made telcos and their networks redundant. All that a user wants is data to consume on their phones which are used more like computers and much lesser like phones anymore. A change in mobile phone design might end up heralding a change in telcos’ waning fortunes.

Google glass was a well intentioned attempt in that direction. A seemingly more successful attempt is being currently made through the Moto mods by Motorola. Moto mods are next generation Motorola phone accessories which transform the Motorola smartphone experience. This evolution is somehow similar to how most large software products started as monoliths and disintegrated into modules and then the modules turned to applications in their own right. A complete disintegration\rethinking of mobile phones and therefore the methodology to connect to the internet could actually herald the next big change in telecom. In fact, I am surprised how cash rich telcos are more interested in buying out companies providing peripheral functions such as content creators\distributors rather than some mobile device manufacturer.

Traditional telecom works with a model wherein the phone is the sole receiver of calls and data and the simcard acts as the authentication mechanism for the network to connect with the device. Now with technologies like blockchain (here and here) or Aadhar (Developer portal and API documentation) we can have user authentication done using PAP, CHAP or EAP and allow every device which can use RADIUS – AAA or Diameter to log on to the network without the explicit requirement of a simcard.

Disassociating the two basic functions of power(battery life) and connectivity(network authentication) of the mobile phone can be a win-win for everyone as the device manufacturers: get to expand their portfolio of products, the telcos: get to sell data and voice to more users and the end customer: gets better benefits and products to connect to the internet as compared to the old school mobile smartphone. The possibilities of such a scenario are endless.

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State of the Indian Telecom Market

So, Reliance Jio is finally here in India and is entirely living up to our expectations. Jio’s model focuses on creating a customer base with high ARPUs, a future proof 4G network and on transforming the telcos’ dumb pipes to earn money through content. Considering that they are entering the business now means that they managed to leapfrog over the traditional Indian operators still slugging out trying to repay the loans from the 3G auction in 2010. The much vaunted next-gen Jio network and its unique business model could end up transforming Indian telecom forever.

Jio’s smart pipes

In fact, Jio’s entry might end up transforming a lot of other businesses apart from traditional CSPs since like RIL, Jio also has leveraged backward integration with scale. RIL is already present in multiple businesses such as online retail, content production, news, magazines etc. RIL intends to leverage their current presence in the brick and mortar format through their app-ecosystem using Jio’s network. Through Jio, RIL can easily leverage economies of scale and earn fat profits through their app-ecosystem. This study says that Jio could potentially kill 30+ businesses in India. Jio, in essence has set the cat amongst pigeons.

Another opportunity for MVNO’s?

Alongside RIL Jio’s entry in the Indian market, another potential disruption has finally moved from the drawing boards to execution. This is the DoT’s order to allow the entry of MVNOs in the Indian telecom market. Earlier, Virgin mobile and Future group’s T24 had both tried and failed at retailing to Indian telecom subscribers. It was partly due to bad strategy and worse implementation. Now it seems that nearly 70 companies want to apply for MVNO license in India.

Quad Play

Over the years Indian telecom providers – market leader Airtel, followed by Reliance and Videocon have been expanding their offerings to quad play – though its a quad play model that promotes DTH in place of traditional IPTVs in the west. Now, with increasing data consumption and even more expected in the years to come, Indian players are making the slow and certain shift towards a complete quad play set up. Quad play though, comes with its own set of problems with subscribers preferring better service over simplified billing processes.

Future for Indian telcos

I think Indian telcos are pretty well poised to withstand the onslaught of Jio. Jio is the first player to actually open up value innovation using the blue ocean strategy described in my earlier posts. With the regulatory framework in place, we might actually see MVNOs trying to bring in their own value innovation in the market. This, coupled with the fact that airtime isn’t the only denomination that helps increase ARPUs could actually help spawn and sustain a number of MVNOs in the Indian market.

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Digitizing Indian Healthcare

So, I had a bad cold this week which necessitated a visit to the neighborhood doctor. The doctor was using a wonderful application for all his work and that led me thinking about how the Indian health services sector might transform in the future. Here are some musings from my fever addled brain:

The Potential

India is the world’s fastest growing economy and by most accounts it will continue to grow stronger in the future. India is also host to a huge workforce. Unlike China, and notwithstanding programs like “Make in India”, India it seems might grow based on the services it provides to countries across the globe. The Indian growth story in the first decade of this millennium was driven largely by the Indian IT industry. Today, India has the largest pool of skilled IT professionals in the world, helping run big businesses across the globe. The second decade of the millennium is arguably the decade of Indian pharma coming of age. Termed as the pharmacy of the developing world, Indian pharma companies have been expanding and growing at a breakneck speed in this decade. Sun Pharma and Lupin are two of the world’s top 10 generics manufacturers and 5 Indian pharma companies are among the world’s top 20 generics manufacturers. Indian IT and pharma companies have been incredibly successful due to a number of reasons: however cheap, high skilled manpower is the common factor in both these success stories.

India is also host to high skilled manpower in the health services sector, they also like to let people know about female chlamydia signs, for them sexual health is very important. With some of the best English speaking doctors in the world, India is slowly becoming a destination of choice for a lot of people for expensive medical treatments. Low manpower costs combined with low prices for drugs ensure that a lot of people are able to avail high quality medical services at cheap costs. And so, medical tourism has been touted as the next big growth area for India.

The Problems

Like most things in India, the healthcare sector has always been unorganized and full of rampant corruption. This has lead to multiple problems in the Indian medical sector.

  • Lack of enough low cost, skilled manpower

It doesn’t have what it should have – in abundance. India doesn’t have enough doctors to serve its own population. As per WHO reports, India has around 0.7 doctors for 1000 people. Similarly we need many more skilled nurses than the ones we have. And in spite of this it seems we do send a large number of nurses to GCC countries. Combined with the unorganized nature of healthcare in India, this leads to inefficiencies in the sector with doctors charging fees to regulate either their demand or their incomes. Also, the current cost of becoming a doctor in India is so high that it leads to malpractices by medical practitioners.

  • Lack of regulations\implementation of regulations in hospital and patient management

Health services in India are provided largely by private hospitals with the state run hospitals not able to fulfill the standards of profitability expected from them to enable them to grow. This too has led to a lot of malpractices in the sector. The infrastructure and hygiene levels of most Indian hospitals also leave a lot to be desired. Indian pharmaceuticals are also complicit in coercing doctors to recommend expensive drugs for their own benefits.

  • Lack of regulations regarding medical tourism

Everything from on boarding a potential patient to serving him and providing them drugs during convalescence could be regulated. Unfortunately, nothing is regulated and there is every chance of foreigners landing in India and getting duped by their agents promising them medical care.

The Road Ahead

Now, to what prompted me to write this post. The doctor I went to was using practo.com for noting down my details and also the details of the drugs he prescribed to me. I knew Practo as the website to look for while searching for doctor reviews on the internet. But it seems that they are now slowly taking over the entire public healthcare space. With adequate funding and the right intents, Practo can bring about an overhaul in Indian health services.

Practo Business Model
                              

Practo currently looks at the value chain from patients to doctors and vice versa. The appification\websitization of the value chain from insurance providers to patients to doctors to pharmacies to pharma companies and back to insurance providers might weed out a lot of players from the highly unorganized India health services market. Everything from unregistered doctors, unregistered pharmacies, pharmaceutical manufacturers and even incompetent nursing staff will either be weeded out or transformed to a more organized setup. The creation of an organized health services ecosystem will benefit all players in the long run.

This, combined with the fact that the Indian govt is looking to improve the quality and quantity of medical education in India augurs well for the health services industry.

So, the twin engines of training better healthcare service providers and creating a more organized healthcare infrastructure will help strengthen Indian healthcare systems as well as insurance companies. Hopefully, with future Indian governments putting the right regulations in place, India might end up becoming a major medical tourism hub.

So, to put my money where my mouth is, here are some stocks I believe should be followed and we should wait to see if they are able to rise to their potential: Apollo Hospitals, Narayana Hrudaya, Indrapr.Medical, Health.Global, Fortis Health., Tejnaksh Health., Indo-Global.

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Ranting about MVNO – Again

Telecom, in general is a heavily regulated sector – this is especially true with regards to India. Large sized mergers and acquisitions, profit making and growth have all happened largely due to policy based triggers. But, now it seems that the sudden convergence of different factors could bring in a large influx of MVNO players in the market. Traditionally MVNOs have functioned by

  • Providing lesser prices in a monopoly, oligopoly market. They thus have acted as a deterrent against monopolizing the market to the well established players. In fact, in some of the developed EU markets, MVNOs command as much as 40% of the total market share. Graphic below:
MVNO Market Share: Developed Markets
MVNO Market Share: Developed Markets – Courtesy Pyramid
  • Leveraging their own, well established retail reach to push mobile products in the market.
  • The general MVNO business model requires higher margins, higher funding and greater capex.
MVNO Business Model
MVNO Business Model – Pyramid Research

The recent changes in the ecosystem suggest though that 1. Lots of new players joining the CSP bandwagon

2. Increasing revenues of CSPs operating as Quadra Play operators – providing Landline Telephony, Internet, Pay Television and Mobile.

  • Quadra Play could help CSPs provide more customized plans for customers.
  • Quadra Play will also help increase customer retention.

3. Increasing revenues through data and evolving of technologies to ensure sustainable last mile bandwidth

  • This makes the base optical fiber networks laid down by the different CSPs extremely important and MVNOs with their asset light models could leverage the same.

While I have been recommending MVNOs since some time now, it seems that TRAI also seems to be moving on the MVNO policy for India which wasn’t in place yet. Here is a link to the McKinsey report which focuses on what drives MVNO success.

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Pan India Mobile Number Portability

So, I shifted to Mumbai from Pune. No, I am not a sadist, I am not depressed either. I sincerely believe Mumbai offers better opportunities for career growth – especially so within my organization.

While Mumbai is a part of Maharashtra, and a rather important one at that, Mumbai and MnG – Maharashtra and Goa are considered different circles within the Indian telecom industry. What this means is that I need to get a new local SIM and a new phone number to ensure that I am not charged roaming rates when I make calls from Mumbai through my MnG SIM connection. I am loath to change my old SIM card and phone number as it is one phone number that connects me to many of my friends and online accounts and banks and what not. So, I was hoping and wishing for Pan India Mobile Number Portability.

Mobile Number Portability

Mobile Number Portability is in existence since January 2011 in India and it ensures that any user of one CSP – Communications Services Provider can easily shift to another CSP  without the need to change his mobile number. The only limitation to this is that the user cannot shift from one circle to another circle. The TRAI and DoT have been working on introducing Pan India Mobile Number Portability very soon. What this would mean is that I will be able to change my circle without changing my phone number. Based on the National Telecom Policy 2012, One Nation – Full Number Portability, the DoT sought recommendations from TRAI for Pan India MNP.

The basic business process framework for MNP was laid out by TRAI in 2009 and Pan India MNP will only make changes as required in the same. This is how the basic MNP process looks in BPMN 2.0 notations:

Telecom Mobile Number Portability BPMN
Telecom Mobile Number Portability BPMN

 Pan India MNP

There were three approaches considered for Pan India MNP:

  1. Recipient CSP forwards the porting request to MNPSP of same zone
  2. Recipient CSP forwards porting request to MNPSP of other zone to which Donor CSP belongs
  3. Recipient CSP forwards the porting request to the MNPSP of the zone to which original number range holder belongs

The last approach was considered to be the most expedient of the three approaches studied by the focus group of TRAI. In this approach, the Recipient Operator submits the porting request to the MNPSP in whose zone the Number Range network belongs. Even after a subscriber moves to other MNP zone, all his subsequent porting requests (whether for intra-Circle porting or Inter-Circle porting) will continue to be processed by the MNPSP where his number originally belongs.

So, when will the Pan India MNP finally come in to being. Friends working with Indian CSPs say that the initial rollout was planned around April 2014, but it seems currently that things are in a limbo and I will have to pay some more roaming charges to MnG circle it seems.

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Starting A MVNO in India

The 3G auctions threw up quite a few different MNOs in India crowding the already overcrowded space. A lot of consolidation has happened since and the larger MNOs have consolidated their grip over the Indian Telecom scene.

A look at the numbers reveal that most of these companies have a market share of anywhere between 0 to 6 percent with Aircel having the highest market share of 6%. Ideally any new company now joining the fray as a MVNO/Telecom Operator in India, will be one that targets a market share of anywhere around the 10% mark.

The 3G auctions have bled the major MNO players and they are in need of alternate cash flows.

Under the circumstances, I believe that the time is ripe for some MVNOs to make an entry in to the Indian Telecom sector. They have not been able to increase their ARPUs or even monetize their newly rolled out 3G and now 4G LTE networks.

Requirements for starting a MVNO in India

Indian Company having a networth of Rs. 10 crore for Metro / Category A, Rs. 5 crore for Category B and Rs. 3 crore for Category C service area, paid up capital of 10% of prescribed networth and satisfying Annual Report 2008-09 141 licence conditions such as FDI,substantial equity etc., eligible to apply for MVNO licence.

MVNO to get parented to an MNO in a service area. The license service area of MVNO to be same as that of parent MNO. Arrangement/agreement between MNO and MVNO to be driven by market forces. No limit on number of MVNOs attached to an MNO.Agreement with MNO to be submitted before issue of license to MVNO. MNO to pay the spectrum charges for utilisation of spectrum by MVNO.

Entry fees for MVNOs – 10% of MNOs subject to a maximum of Rs. 5 crore and minimum of Rs.1 Crore for Metro/ Category ‘A’,Rs. 3 crore- 50 lakhs for Category ‘B’ and Rs. 1 crore- 25 Lakhs for Category ‘C’ service areas. Annual licence fees same as that of MNO of the service area. Allocation of Numbers, Number portability, Interconnection with other service providers and Roaming to provided by parent MNO.

Also one can use cloud computing in telco billing to provide solutions cheaper, faster and more easily.

The summary of recommendations are as below:

  • MVNO to be introduced as a distinct service provider with its own licensing and regulatory framework
  • MVNO to be issued a license under Indian Telegraph Act
  • Any Indian Company having a networth of Rs. 10 crore for Metro / Category A, Rs. 5 crore for Category B and Rs. 3 crore for Category C service area, paid up capital of 10% of prescribed networth and satisfying Annual Report 2008-09 141 licence conditions such as FDI, substantial equity etc., eligible to apply for MVNO licence.
  • MVNO free to choose its business model (Full or Intermediate or Thin).
    Typically, a Thin MVNO would offer services in its own brand without any infrastructure and a Full MVNO could set up its own HLR, VLR, IN switches, MSC etc., but not the Radio Access Network (RAN).
  • MVNO to get parented to an MNO in a service area.
  • The license service area of MVNO to be same as that of parent MNO.
  • A r r a n g eme n t / a g r e eme n t between MNO and MVNO to be driven by market forces.
  • No limit on number of MVNOs attached to an MNO.
  • Agreement with MNO to be submitted before issue of license to MVNO.
  • MNO to pay the spectrum charges for utilisation of spectrum by MVNO.
  • Entry fees for MVNOs – 10% of MNOs subject to a maximum of Rs. 5 crore and minimum of Rs. 1 Crore for Metro/ Category ‘A’,
    Rs. 3 crore- 50 lakhs for Category ‘B’ and Rs. 1 crore- 25 Lakhs for Category ‘C’ service areas.
  • Annual licence fees same as that of MNO of the service area.
  • Allocation of Numbers, Number portability, Interconnection with other service providers and Roaming to provided by parent
    MNO.
  • Subscribers to be protected for failure of agreement between MNO and MVNO or MVNO quitting service.
  • No Roll out Obligations for MVNO.
  • FDI limit – 74% same as MNO
  • Bank Guarantee: FBG – equivalent to two quarters license fees; PBG – 5% of MNO.
  • Restrictions on Mergers and acquisition on similar lines as MNOs.
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OSS/BSS against crime

Just read this news and thought of spreading the word about how Telecom OSS/BSS technology can also be put to use for police investigations. The Bangalore police recently caught an Infosys employee and indicted him for murdering his wife. 


The story goes like this:
Husband claims that he received a call from his wife while he was away jogging asking him to come home as three men had arrived at the house looking for him. He came, didn’t find the door open and so came back with a new key to his house only to find wife dead.

The Bangalore police checked the HLR – Home Location Register and looked at the call records between the husband and his wife. They found that the time at which husband claimed, wife called him, the husband and the wife’s cell phones were in the same location – in the same tower area. The tower serving their house where wife was supposed to be was a different one. 

Confronted with these facts, husband confessed.
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"Do No Evil" says the Devil

Google – Verizon Deal

The big news this week in the Telecom market is about the Google-Verizon deal that supposedly threatens Net Neutrality. Google CEO Eric Schmidt explained Google and Verizon’s position on Net Neutrality, saying

“I want to make sure that everybody understands what we mean about it. What we mean is that if you have one data type, like video, you don’t discriminate against one person’s video in favor of another. It’s OK to discriminate across different types…There is general agreement with Verizon and Google on this issue. The issues of wireless versus wireline get very messy…and that’s really a Federal Communications Commission issue, not a Google issue.”

The FCC it is believed is working on formalizing regulations for the deal and will come up with the same soon. The statement from the FCC chairman was encouraging as he said,

 “Any outcome, any deal that doesn’t preserve the freedom and openness of the Internet for consumers and entrepreneurs will be unacceptable”

The Obama government and the FCC are pushing for net neutrality, but a recent ruling by the courts in the Comcast – FCC case suggests that the judiciary might not agree to this. Lots of stories about the deals are doing the rounds and like many others I would like to believe that Google, which has created its huge fortune based on Net Neutrality will not undermine it yet.

What is Net Neutrality?

Net Neutrality means that any packet of data passing over the internet has the same right to bandwidth as any other. This ensures that every website and every “Type of Data” on the internet has the same right to bandwidth.  

Possible Implications of the Google-Verizon Deal

Dynamic charging introduced by Mobile Service Providers helps to improve bandwidth utilization and manage traffic. It has been generally observed that ISPs introduce some or the other form of discrimination to incentivize customers to surf some sites more than others. But till now, there have been few instances of the same getting reflected in business deals between ISPs and websites.
Google and Verizon, it seems have proposed a tiered system that helps discrimination based not on websites, but datatypes according to the statement by Google CEO. This implies that Verizon might want to create a system wherein videos are streamed faster as compared to data. This in turn will most definitely encourage higher video based traffic, resulting in better revenues for Verizon adding up to what it will receive from Google. And as far as Google is concerned, it will have a larger number of customers on Youtube due to faster speeds. It also seems that the deal will affect WiFi and mobile surfers surfing the internet on Verizon’s 3.9 G LTE enabled network. Details though are scarce. 
Such a move has long been warranted, with the huge explosion in internet traffic and the seemingly insatiable demand for higher bandwidths. It might just come to a point when ISPs will allow consumers to access their pick of websites at the fastest speed and the rest much slower. The consumers benefit and so do the ISPs because of their deals with the websites in protecting for protecting the websites’ clientele.
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Making a case for MVNOs in India

Background : Indian Telecom

The 3G auctions and the subsequent churn have created a few more operators in the already crowded Indian telecom space. This though, augurs well for everyone concerned. The new operators, especially the ones with pan Indian ambitions like Aircel, Uninor, Videocon, Spice and Virgin mobile are focusing on getting as much market share as possible by using:
  • Innovative OSS/BSS systems
  • Unique Marketing Strategies
  • Banking on Number Portability
A look at the numbers* reveal that most of these companies have a market share of anywhere between 0 to 6 percent with Aircel having the highest market share of 6%. Ideally any new company now joining the fray as a MVNO/Telecom Operator in India, will be one that targets a market share of anywhere around the 5% mark.

Long Tail

According to the Wikipedia:
“The Long Tail or long tail refers to the statistical property that a larger share of population rests within the tail of a probability distribution than observed under a ‘normal’ or Gaussian distribution.”
Amazon and Netflix are cited as prime examples of the Long Tail principle. The Long Tail principle helps businesses realize a significant profit by selling many hard to find items at a high margin.

Blue Ocean Strategy

Blue Ocean Strategy is a strategy which helps an organization achieve high growth by creating a new demand in an uncontested market space. Blue Ocean is all about “Value Innovation”. Value Innovation is the alignment of innovation with utility, price and cost principles. This in turn helps create uncontested market space which makes the competition irrelevant.

Requirements for starting a MVNO in India

Indian Company having a networth of Rs. 10 crore for Metro / Category A, Rs. 5 crore for Category B and Rs.3 crore for Category C service area, paid up capital of 10% of prescribed networth and satisfying 141 licence conditions such as FDI,substantial equity etc. is eligible to apply for MVNO licence. MVNO must get parented to an MNO in a service area. The license service area of MVNO will have to be the same as that of parent MNO. Arrangement/agreement between MNO and MVNO to be driven by market forces. No limit on number of MVNOs attached to an MNO. A MVNO will have to submit the agreement with MNO before issue of license to MVNO. MNO will be responsible for paying the spectrum charges for utilisation of spectrum by MVNO.
Rajesh at Emergic provides a more accurate figure and states that the total cost of a new MVNO is “Rs 80 crore for a national MVNO licence”, adding that “My estimate is that this will require an investment of about Rs 200+ crore, and has the potential to deliver a topline of about Rs 2,000+ crore in 3 years for the market leader.

Consolidating my understanding of the current scenario, I believe that the Data/VAS based MVNO targetting a niche consumer base can definitely generate a large amount of income. Just as the blackberry is gaining in popularity as it provides a niche data service, there is an opportunity for the service provider to serve the “Long Tail” and yet bring in the profits.


* Numbers from Mohit Agarwal’s article at Telecomcircle.
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