The Telecom “Miracle”(2G/3G/4G Revolution)

From Apply, Apply – No ReplyTo

Haath Haath mein TelephoneBy

DR T.H. CHOWDARYDirector: Center for Telecom Management and Studies

Fellow: Tata Consultancy ServicesChairman: Pragna Bharati (intellect India )Former: Chairman & Managing Director

Videsh Sanchar Nigam Limited &Information Technology Advisor, Government of Andhra Pradesh

T: +91(40) 6667-1191(O) 2784-3121®F: +91 (40) 6667-1111

hanuman.chowdary@tcs.com

Talk @IIIT, Hyd: 28 Feb 2012

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PCI

AX TSP

Time

(a) Affordability

A PCI/ Tele-Service Price- PCI: Per Capita Income- TSP: Telephone Service Price- A: Affordability

Formula for Mass useBring down price to increase affordability

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Affordability of Telephone 1951 1994 2007 2010

Revenue /Line at current exchange parity

$125 $250 $125

Rev. as % of PCI

2.5 1 0.12 0.06

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Affordability PCI ------------------------

Tel. Svce.Price

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Technology brings down costs

• Wireless in the access to network• Optical fiber as the electronic highway• Communication satellites• Computers: sampling, digitising, packetising,

encoding, routing, compression, encryption

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Competition brings down prices

• Structure of industry changed• Regulator• Economics of scale & scope

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Multifunctional networks& devices

• Multi-band, multimode (TDMA, CDMA, OFDM…) multifunctional (phone, camera, radio, e-reader, computer, IPTV, Internet Access)

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Post office, Telephone, Broadcast studio, Soap Box, Auction House, Sound Recording, Movie theater, used car showroom, Insurance Office, Distributor ware house, studio for fashion designer, University Class Room…, Political Campaign, Medical Diagnostics, Mammoth Library

Internet -8th Wonder (1)

Internet – 8th Wonder (2)

• Encyclopedia ( Wikipedia); You Tube, Video service, Flicker photo repository, Huffington Post , blog compendium, world’s meeting House, chat, gossip, argue show off, flirt, court, Face book, Twitter, MySpace….social & anti-social networks

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Internet – 8th Wonder (3) Anybody can have his own website; his journal; linked to a

portal: Most powerful and pervasive medium for news, views,

commerce, purchases, conferences, payments, services (eg: e-sewa); public relations…..

Convergence of Voice, images, text, data (multi-media) Wireless access; always on,

i-mode, (9.6 kbps); 3G (384 kbps/2MBPS) 4G - 4MBPS both by DoCoMo of Japan; WiFi, WiMax….

Location-based services

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Internet – 8th Wonder (4)

Network of networks; Information stored in de-materialised, electronic/photonic form, converged platform, Info-space

Internet conceived & started in1969. WWW is just 20 years old; app. 500 million hosts 3,500 million users 1 Trillion pages of information 5 billion pages seen every day ( 10 pages/ Internet sub/ day) 3.5 bln E-mail addresses, growing 25% a year 14 bil [1400 crore] e-mails/day

Spectrum

• Electromagnetic radio propagation• Acoustic is mechanical, motion of matter ( air),

can’t travel in vaccum/space• Long, Medium & short waves for radio

broadcasting, – vhf, (< 100 MHZ) – uhf ( 800 to 1000 MHZ), – microwave (>1 GHZ)

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1G, 2G, 3G, 4G

• Generation(s) of technology• Increasing bit rate ( faster down-load or transport)• Intensive use of (freq) bandwidth ( like 2 lane, 4 lane, 8

lane….highways)• 1G was analogue cellular like AMPS, TACS,NMTS…• 2G Digital –upto 2 MBPS• 3G- 10s & 100s of MBPS• 4G – GB/Sec• WiFi & WiMAX are 3G• Broad-band – 64 KHZ, 256 KHZ, 2000KHZ about 10 mln

subs.S661_Feb2012THC_CTMS 12

Spectrum Allocation

• Different bands for different services (B’casting, civil aviation, maritime navigation, police, armed forces, telephony, satellite, coast-guard, amateurs…)

• Spectrum Band designation: L, S, K, KA, Ku……

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Treated as national resource and priced

• Bundled with licence, (Revenue share, licence fees)• Beauty contest• Auctions• Cost of spectrum enters prices to customers• 3G Netted = Rs. 67,000 cr• WiFi, WiMAX Rs. 31,000 cr• Proceeds utilised for subsidies Opium – addicting

Welfare like NREG, loan waiver- • None for R&D or Internet in Schools, Villages etc.

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Price of Spectrum (1)

2001 2007 2011+

Connections/ month

400K 8000K (20)

18,000 K(45)

Price for all-India Rs. 1650 cr Rs.33,000* Rs. 74,250 cr*

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* Linear projection + Jan 2012- 10 mln /m

Price of Spectrum (2)

• 3G got Rs. 67,000 cr • Unitech sold 40% stake @ Rs, 6,100• Full price: Rs. 15,000 cr• 17 Telcos (i/c BSNL & MTNL)• Not all got all state-wide licences• Equated licences app. 11• So price realisable from all telcos

= (11 X 15,000)= Rs. 1,65,000 crS661_Feb2012THC_CTMS 16

Telcos

(Airtel, Vodafone, RCom, TataTele, BSNL, Idea, Aircel, Uninor, S-Tel, Videocon, Shyan Loop, Systema, Dishnet Etisalat, Allianz Infra, MTNL)

• Linear projections are unrealistic• 122 licences cancelled• >Rs. 50,000 cr invested• Norway, Russia, UAE.. Would intervene• Indian corruption imperils FDI & economy

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Spectrum Sales

• Dislinking spectrum from service licences illogical – leads to market /trade in spectrum

• We don’t licence & tax sunlight used for solar energy; but price the energy

• We should charge/tax product of spectrum i.e service (revenue share, entry fee, service tax, USF levy)

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Solutions (?)

• Satyam –type or Nationalise (like Banks & Insurance) and or Merge with BSNL• Mergers & Acquisitions are a must; we don’t

need more than 4/5 Telcos• As 3G picks up, 2G will shrink• As teledensity increases, ARPU falls – down from Rs. 1000 to < Rs. 200 THC_CTMS S661_Feb2012 19

Telecom Revolution

• Gains: Haath mein telephone: 770 mln• Cellphones, 37 mln ( down from 48 mln in Y 2000)

land phones• Prices coming down• Prepaid-greatest business invention• App.Rs. 200,000 cr private investment came in• Losses: Death of R&D & Ind. Manufacture• Vulgar use of cell phones• Decline of post• Increased facilitation of crime

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Technology & Society

• Technology is neutral• Culture, Restraint, wisdom determine use –

bliss or bane• Enlightenment or Empowerment which

should be first.• E-waste (50 mln cellphones trashed/year +

PCs + TVs+ radios)

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Dhanyawad:Thank You

Any Questions?

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