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About the auction to rollout 3G services in India:

Cabinet secretary K M Chandrasekhar today indicated that all the outstanding issues pertaining to the 3G spectrum auction had been resolved, however, the auction would happen at a time when maximum revenue could be generated from it.

“I don’t think it really particularly matters if it happens this year or next year… they (DoT and the finance ministry) will take the decision based on how the revenue can be maximised,” cabinet secretary K M Chandrasekhar told reporters…

He said the issues that delayed the auction process in January had been resolved but refused to give any definite timeline for the auction. He also did not specify the issues.

I don’t think the secretary for a moment considered actual subscribers who, of course have been waiting for the best part of five years.

Update:
Delicious, dark irony. The same government that thinks nothing of losing several thousand crore rupees a year on subsidies that have been repeatedly shown to be ineffective thinks nothing of denying 3G services to its people until it can ‘maximize revenues’.

When it comes to the Internet in India, the low-hanging fruit has beeen picked, across sectors. Think Travel. Books. Jobs. Dating. Electronics. Money. In his post today, Rajesh Jain lists a few more: Search (dominated by Google), News (Rediff, NDTV, CNN-IBN), Email (Yahoo, Google, Microsoft, Rediff), Cricket (Cricinfo/ESPN), Video (YouTube/Google).

Online pioneers have lapped up the biggest brands and most popular goods: the largest cities, the biggest hotel chains, the most popular travel destinations, the widest marriageable demography, the most desirable gadgets, the most viral videos, the news everybody reads, the the matches everyone watches.

Now comes the hard part. The cities only a few want to travel to [1], the outliers for whom it isn’t easy finding a match [2] , books in regional languages, people with odd skills, niche but tremendously useful gadgets, highly technical videos. There’s a market for all those. In aggregate, they’re as large and lucrative as those that have already been monetized [3].

Then there’s an even larger market – for individual professional services. The mother of all yellow pages, with a location-based and rating-based component. One that connects me to the nearest puncture shop when my car has a flat on a stretch of highway (and takes Rs. 10 for that connection), directs me to the nearest ATM in any city, to the most reliable service center for my phone.

There is no technological barrier to setting up these businesses anymore (you really don’t need broadband for most of this – just plain Internet access, and in some cases, a cellphone). What makes this hard is convincing small businesses/individuals to sign on. Building trust and credibility. Selling to Jet Airways is much easier than to Pravin Puncturewalla on a random national highway. If you’re willing to tackle that, you have a successful business.

Finally, Rajesh has a compelling vision of the “now-new-near” web, which you should read. I think that “niche” is about as much the future as the others. I also think that “now” and “new” are synonymous for the vast majority of cases, so I propose that tomorrow’s web will be the “now-near-niche” web (built around the evolving Internet Operating System)

[1] RedBus.in is doing a spectacular job with that, by my estimates. Driving to work today I spotted a travel service that did a Hyderabad-Kolhapur (!) bus route. And hey presto, Redbus.in has that route listed.

[2] Secondshaadi barely scratches the surface, but hey, it’s a start.

[3] Yes, yes. It’s the same old tired Long Tail phenomenon. Let’s set aside discussions of how cool the phenomenon itself is and why it works, and explore how you can build businesses in India with it.

For all who go to town declaring that India has an entrepreneur-friendly, liberalized Telecom sector, here’s a dampener. TRAI’s recommendations on “ Review of Internet Services“, a report dated May 10th 2007, show just how much (or little) babus in the ministry understand the Internet. We’re light-years away from a truly liberal Telecom policy, because the DoT hasn’t even grasped the concept of creating a free, healthy market.

After having read through the report, I think I have a better understanding of what ails the DoT (and by extension, most ministries at the Center and the states). The Telecom ministry thinks it has to juggle different objectives which, in its view, are mutually incompatible. Therefore, to achieve all of these objectives, each stakeholder has to compromise to some degree. In reality, though, these objectives are _not_ incompatible, unnecessary compromised are made, and it results in a policy full of caveats, which ends up pleasing no one.

There are plenty of examples of these misplaced assumptions in the report. To demonstrate, here are a few sentences from the voluminous, bloated 126-page report, with my comments inline, in italics.

Under the “Scope of ISP license” section:

Web hosting by certain foreign companies within Indian domain who have significant market share in global market should form part of our developmental agenda and necessary policies to encourage such web hosting need to be evolved.

How in the world can “foreign companies” with “significant market share” hosting their data here going to help our “developmental agenda”?!

Strong views were expressed to permit IPTV under ambit of ISP license as it has potential to drive market, easy to provide using ISP backbone and can encourage Internet penetration .

So is this – “encouraging Internet penetration” – going to be the compass by which permission for other services will be granted in the future? What about TV on mobile phones? This is an extremely niche market, but does not in any way increase Internet penetration. Will this be allowed then?

Under the “Grey Market Operations” (?!) section:

Some entities located abroad are offering unauthorized Internet telephony services in our country for making calls to and from abroad on Public Switched Telephone Network (PSTN) and Public Land Mobile Network (PLMN) ….The licensing, legal and technological issues arising from such services need to be urgently addressed by DoT.

Some companies are also providing Software through their websites that enables the user to have free chat with anyone using the similar software anywhere in the world while logged on to the server of such service providers. Software can be downloaded free of charge from their website.

The Internet telephony call through such unregistered entities using PCs/IP access devices in India to landline or mobile phones abroad and vice versa result in a revenue loss to the government . Such calls can escape the eyes of law enforcement agencies also.

Here is a classic case of the DoT’s misplaced priorities. Is the objective of TRAI to “increase Internet penetration” and ensure that the Indian consumer gets the best and cheapest service, or is it to ensure that the Government – comprising the DoT, BSNL and MTNL – earn the maximum possible revenue? The DoT’s most glaring – even criminal – policy failure is to disallow such an interconnect. If the DoT has to stifle innovation and consumer benefit in favor of PSU revenues, we must then question the very reason for the existence of these PSUs. Indeed, in an article I wrote back in December 2005,

If the state is not running telecom companies for “social service”, or it put it more correctly, “social benefit”, then what are they running it for? If profit is the only motive, then the company should be privatized, fully, and right away. Think about it: If there is no “larger good” for running BSNL and MTNL, their motives are just like any other private company. Why, then, should they be at such a huge advantage compared to a private player?

By escaping regulatory levies such unlicensed foreign entities are able to provide cheaper services to lure the subscribers. The Authority is aware that large number of Indians are availing such services. Stopping access to such services is technically difficult. There is serious revenue implication for the government. DoT may address this development on priority. One of the possible options could be to ask such companies to register in India, seek permission from DoT and host their website in India.

Again, the ridiculous premise that “hosting their website in India” is going to guarantee compliance! Besides, why should “cheap services” have such negative connotations as to invite use of the term “lure the subscribers”? And yes, the issue of “serious revenue implication for the Government” raises its ugly head again.

Under the “Revamping and Restructuring of Internet Services” section:

It is extremely important to regularly analyse the business data of the operational ISPs to ensure that the licensed ISPs are contributing to the growth of Internet and engage in legitimate business.

What is “legitimate” and “illegitimate” business? What “business data” will help identify such legitimacy? Should ISPs contribute to the “growth of Internet”? What if an ISP grows in an area only by managing to convert users of competing ISPs to its services? It has been a resounding success, but has not resulted in a single extra subscriber. Is that legal or illegal?

The Authority therefore favours a uniform FDI cap /equity of 74% across all telecom licenses. ISPs who have more than 74% FDI cap /equity at present shall be required to bring down their FDI cap/ equity to 74% within two years.

What is the magic number of 74% supposed to signify? Why not 65%? Why not 84%? As long as the foreign entity has a controlling stake in a firm, any additional restrictions on its holding are meaningless. If 50% FDI is allowed, why not 100%? In fact, what is any restriction at all on FDI going to achieve in a field like telecom?

Annexure II – Recommendations of “stakeholders”:

Stakeholders also felt that the ISP licensing should only be linked with the vanilla bandwidth provisioning whereas all other services based on video & voice applications, www-hosted applications should be freed from licensing. It was also stressed upon that in a multi-tasking, multi-function, convergent nature of Internet; it would be illogical to consider regulating isolated applications.

Ah. Finally something which makes sense. But…

However, it does not appear possible to expand the scope of ISP license to cover all services as it will infringe on the rights granted to ILD/NLD/ Access Providers. Therefore, for the ISPs to move up the value chain, there is no option but to obtain one or more licenses as per the services planned to be offered by them.

There – senseless restrictions again. The same issues with interfacing with PSTN that we dealt with earlier.

Stakeholder commented that since Skype / Google type service providers are not licensed to provide such services in India without having facility for lawful interception, therefore, the vigilance and monitoring efforts are required to be beefed up, as these applications not only bypass the laws and regulations of the land, but also pose a threat to security. As such these services should be blocked.

I have nothing to comment on this, except that I would dearly like to know who this particular “stakeholder” is, and that I’d like to hear his views on how Google Talk poses a “threat to security”.

Finally, the US has the most liberal laws I’ve seen:

In US, ISPs do not require license or authorization. Instead, e-mail, data and Internet services are treated as “information services,” and ISPs are permitted to operate unfettered in a competitive and free market, subject only, with a few limited exceptions, to general business laws.

Ah, this is an entrepreneur-friendly policy. Here is a Government that believes in leaving anyone who wishes to offer services “operate unfettered”, and step back from the scene, as opposed to one that gets involved in grand-scale centralized planning to the extent of mandating the “target for broadband users in India” in a particular year!

Yahoo’s been quietly putting into place a set of very high-quality tools and services for mobile phones. From the time it launched Yahoo! Go last year, the company’s been working feverishly at plugging its diverse services (mail, search, instant messaging, news, photos, finance, entertainment) into the mobile platform (or the other way round).

Well, you could say, so has Google. Not quite. Yahoo has understood (much better than Google) that the mobile usage paradigm is different from the PC. That is, users access information differently on mobile devices, even if it is the same information that they access from the PC. Nowhere is this more evident than its recently-launched oneSearch service. (Read this article on searchenginejournal.com for more.) In fact, Yahoo’s been bold enough to present a comparison of its mobile implementation of services with Google’s. And even with the liberal marketing hype, the difference does show through. Finally, Yahoo!’s managed to get Motorola and Cingular on board to advertise their phones’ compatibility with Yahoo! Go (Y! did say a couple of years ago that it was essentially a media company that also did technology!) In comparison, all Google’s done is slap a mobile interface to its mail, search and RSS reader services. That simply won’t work. Again, I recommend you read the article I’ve linked to above for understanding how Yahoo! views mobile search differently.

However, regardless of how Google responds and who wins the battle for mobile content in the US, the stakes are tiny when compared to those halfway around the world. India and China (am I tired of hearing that near-hypenation or what!) keep adding mobile connections at a pace that leaves the US and Europe flabbergasted. India is already the fastest-growing mobile market, and has the lowest mobile tariffs in the world. These two economies are where the real action is, where the real bucks are to be made.They are also by far the most challenging markets – diverse, fragmented, cost-concious, notoriously low-tech, unswayed by hype, and where organized business is almost nonexistent (in India, a mere 8% of the workforce is in the “organized sector”). A mobile user in Bareilly, Utttar Pradesh, for instance, wouldn’t bother about Yahoo! Go – or even Yahoo! mobile web, since he’s/she’s using a black-and-white, text-display-only, Rs. 1500 ($34) mobile phone that can do barely more than send/receive calls and messages and sound alarms. But the same user is passionate about being “connected”, carries the mobile phone everywhere and uses text messaging heavily. And there are more users like him/her in Indian and China than there are people in North America and the EU combined. How do you build winning propositions for them? Something more than ringtones and wallpapers, ideas so disgustingly obsolete now?

Yahoo! India and Google’s India operations need to get into the average Indian mobile user’s mind to glean what his/her purchase intentions currently are, how these goods and services are advertised to him/her today, and how a mobile phone (an always-on, truly personal device) could both change his/her needs, and serve his/her current needs better. Results are likely to be different across Tier 1 and Tier 2/3 cities. Serving the former will be easy – this market is very much like the tried-tested-trusted US market. The latter is where the real volumes are, the real revenue is, but it’s going to take some big risky initiatives to tap into.

Just came across Basab Pradhan’s Blog via Sambhar Mafia. So he’s one of the rarer breed on the blogosphere today – the Indian CEO Blogger. Apart from Rajesh Jain, there are almost no Indian CEOs blogging. First, Basab’s got a few good articles straightaway – one that wonders why Navi Mumbai’s rise has to be the result of Mumbai’s meltdown, or an intersting one about why passengers hurry to disembark from a plane at Bangalore airport, but not at Delhi airpor t!

Back to the question I raised – why we don’t have Indian CEOs blogging – and don’t even get started on “American CEOs don’t blog either” – there’s nothing that says our CEOs ought not to blog if their American counterparts don’t. But why would Management blog? An CEO – that is, top management – blogging, can be a very effective form of market differentiation. Apart from conveying to everyone where the company’s headed and why, a CEO blogging gives the impression of a very open organization – and that can be a very powerful tactic. Indians perceive India Inc. with awe, but also with a certain degree of detachment, almost like a form of “us and them”. Who wouldn’t want to know the real Naresh Goyal, the real Sunil Mittal, what Nandan Nilekani’s thinking these days? Jerry Rao of mPhasis writes fairly regularly in the Indian Express – rarely about the IT industry, mainly on policy matters and reform. That, in my opinion, gives both Jerry and mPhasis a human face. If Jerry were to start blogging about matters in his industry as well, it would work tremendously in his, his company’s and his customers’ favour. Imagine Naresh Goyal writing about global aviation, business trends and his vision for India’s future, and Vijay Mallya on the Indian alcohol/airline market, Government policies, how the industry is subverting the Government’s ban on alcohol on TV via smart advertising, about serial entrepreneurship…

There’s a huge audience for these blogs, certainly. There are far more Indian bloggers than I ever could have imagined – the Indian blogosphere is a healthy and vibrant community. Most of them have good content too, so they’re definitely right-thinking, rational people. Besides, businesses of most companies today aren’t limited to India. If a company’s products and services have a global market, it follows that readership for Mr. CEO’s blog will be global too.

By the way, a few American tech company do have a blogging “face”. For instance, Microsoft has (like him or hate him) Robert Scoble, Yahoo has Jeremy Zawodny and Russell Beattie, IBM has Ed Brill for its Lotus product line, Novell has Nat Friedman , Miguel de Icaza, Sun has Jonathan Schwartz – that’s helped each of these organizations build up a community following. But here’s the opportunity for us to race ahead and build a vibrant online thought community with perspectives from our corporate leaders!