Ideas for new mobile operators

I was going through Rajesh Jain’s blog post where he has penned downs some ideas that the new crop of mobile operators could use, both to differentiate themselves at launch, as well as establish themselves, and get a large number of subscribers. Rajesh has himself given some excellent suggestions like:

  1. Focus on Data-hungry customers with a flat Rs. 99 per month plan
  2. Use a more open and participative VAS platform to entice users
  3. Open the User Profile to Third-party services

I’ve been thinking myself on how the new crop of operators (the Swan Telecom, Unitech-Telenor, Shyam Systema etc.) would market themselves, and would they take a niche or undercut prices and go for the masses. Well, Shyam has already launched as MTS (Shyam has chosen to use its JV partner’s branding straight away, so as to clear the way for a possible sale in the future I believe), and chosen to go after the masses, giving out a truckload of minutes free for lifetime prepaid. Too see a list of telecom companies in India, refer to Wikipedia.

The way I would like to approach this is to see what the shortcomings of the market currently are, and how they can be fixed, and I would probably enumerate them as these:

  1. Undercut prices further for the bottom of the pyramid – I think the prices at the lower end of the spectrum can go down further, and that’s because even though we are lowest cost mobile services country in the world, the distribution infrastructure has been commoditized (buying and selling prepaid credits, separate tower companies, billing systems etc.), and the lowest rung of customers that are added today, would not be as heavy users and will not occupy as much spectrum per capita. Since, currently mobile companies are more or less valued based on the number of subscribers, there will be a mad rush to acquire customers, and undercutting is the simplest way to do it. [This is already the strategy that MTS is using]
  2. More value for the middle tier – I think some of the mobile operators are going to figure out “one size fits all” is not possible, and there are lots of opportunities in segmenting and targeting. I personally see very unique plans applicable for companies giving out phones to their sales people, incoming plans for companies, family plans, lover plans (which already exist), college plans, children’s plans, election plans (?) etc. with a good number of VAS services that are bundled in for that target segment. Of course, this would require better content and VAS services, and hence more rev share for VAS players.
  3. Fanatical Support for the top tier – I think one place where the current operators are lacking is servicing the top tier really well. These are the high value consumers that perhaps constitute well over 40% of the market. In some cases like Corporate Connections, they do get enhanced support, but the large swathe of India still has many high intensity users, from SMEs, businessmen, lawyers, dealmakers etc. and some of the new operators could target these and probably charge them an extra Rs. 200 per month for extensive support and personalized services. For instance, I have an Airtel connection and my GPRS just refuses to work when I am on roaming, and I have probably spent more than 40 hours trying to find a resolution but in vain. I wouldn’t mind paying some money to get this issue resolved.
  4. Better Roaming (Domestic & International) – One place where most operators are lacking is good support and costs for roaming, both National and International. They cost a lot, they are painful because you can’t figure out how much you are going to be charged, and if it stops working when on roaming, you are dead in the middle of the desert. I would foresee prices in this area going down quickly, because customers of point (3) are typically also heavy users of point (4). However, this would require an India wide network, and a long distance backbone before this can be attemped, and I think Tata Docomo is very well suited for this.
  5. 3G and all the frills – This will be another turf fight, but I think its extremely raw now, and difficult to figure out how its going to pan out.

With all the new entrants, the media will be big winners, since they are going to advertise like mad – good news for newspapers, outdoor companies, and TV channels.

What do you think? How is the entry of the new players going to play out and what would you like them to do?

The Crisis of Credit

A very good visualization and explanation of the Credit crisis. All this while, I was unable to figure out how mortgages were related to CDOs, but this does a fantastic job of explaining. Worth sharing …

Corporate Jets and Tin Cups

Found this piece in the Washington Post, quite hilarious since it talks about execs leading companies at the brink of bankruptcies and taking home over 20 mil in annual salaries. Preposterous. The big 3 of the Auto industry are going to Washington to beg for a lifeline (worth $20b) in a corporate jet spending millions of dollars per trip. And they insist that have have done all that could be done to rectify the problems with their companies. Cynical. And Hilarious! [link]

“There’s a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hands,” Rep. Gary L. Ackerman (D-N.Y.) advised the pampered executives at a hearing yesterday. “It’s almost like seeing a guy show up at the soup kitchen in high-hat and tuxedo. . . . I mean, couldn’t you all have downgraded to first class or jet-pooled or something to get here?”

The Big Three said nothing, which prompted Rep. Brad Sherman (D-Calif.) to rub it in. “I’m going to ask the three executives here to raise their hand if they flew here commercial,” he said. All still at the witness table. “Second,” he continued, “I’m going ask you to raise your hand if you’re planning to sell your jet . . . and fly back commercial.” More stillness. “Let the record show no hands went up,” Sherman grandstanded.

[Thanks to Lokesh for the link - via his Gtalk Status]

Disrupting the newspaper industry by massive research

Came across this interesting case study on IK@W about how newspapers in India are competing cutthroat with each other on acquiring customers and how the Dainik Bhaskar group managed to make DNA one of the most widely read paper in Mumbai, by extensive market research. What’s fascinating about their research is that they don’t outsource the work to an agency such as IMRB, rather prefer to do everything in house, and at a magnitude of 600,000 households in some cases. That is almost 6% of the population of a metro city in India. [link]

The Bhaskar Group has had a different approach. It tries to learn what the market wants, and instead of outsourcing this task to a market research agency, it does this largely in-house. For example, when Dainik Bhaskar made its Rajasthan entry in 1996 with its Jaipur edition, it surveyed 200,000 potential readers. Before launching DNA in Mumbai, it went one better; some 600,000 people were surveyed in the first round. “For us, this is much more than market research; it is a way of involving the reader,” says Girish. Adds Pawan: “We have always looked at what our consumers want. We have always looked at things that are latent rather than what they already know. This has been our primary differentiator in our approach to content. We look at how we can surprise our reader rather than just please him.”

The Dainik survey is an awesome experience. They build their own teams of part-timers from scratch. For instance, in Ahmedabad [for the Divya Bhaskar launch], they used 1,050 surveyors, 64 supervisors, 16 zonal managers and four divisional managers. Dainik surveyed 1,200,000 households — possibly the single biggest consumer contact program in history. And they met each household twice.

Fascinating stuff, this. Must’ve been a logistical nightmare — Kudos to them!

[Another interesting read: How to dismantle a billion dollar industry ... as a hobby!]

Why is FDI out of US more profitable than FDI into the US?

Mihir Desai of Harvard Business School says that portfolio investments into the US have been far more profitable than direct FDI investments. Inbound FDI into the US has averaged a return of 4.3% while outbound FDI from the US into other countries is about 12.1%. At the same time Wall Street went up more than any other markets in the world. Why is it so? Mainly because US companies traditionally invest in more controlled markets and have the advantage of getting cheaper cash and a better product and marketing portfolio (as a result of the controlled markets), while at the same time MNCs investing into the US have no such advantage of low-hanging fruit. [original article]

Why is it so difficult to make money as a direct investor in the
United States? Indeed, much of the rhetoric on investing environments
argues that the major destinations for U.S. outbound FDI—the developed
markets of Europe and Japan and the emerging markets of China and
India—are filled with capital controls and ownership restrictions. How
can the United States as a destination end up being so much less
attractive despite the relative absence of this usual litany of
investment obstacles?

Part of the answer may lie precisely in how these obstacles tilt the
playing field between local firms and multinational firms. In a series
of papers, [HBS associate professor] C. Fritz Foley, [University of
Michigan professor] James R. Hines Jr., and I have shown that distorted
environments are precisely where multinational firms have an advantage
relative to local firms. In countries with weak capital markets and
burdensome regulatory regimes, multinational firms can use their
internal capital and product markets to access global resources while
local firms can’t. In effect, these distorted environments burden local
firms, create opportunities for institutional arbitrage for
multinational firms, and can lead to a successful set of foreign
activities for multinational firms.

The United States, in contrast, creates few such opportunities for
low-hanging fruit for foreign multinational firms relative to local
firms. As such, the conditions that may underpin the profitable
experience of U.S. firms as they expand abroad are not there for
foreign firms investing in the United States. More generally, the
presence of highly competitive local firms in the United States
undercuts efforts by foreign multinationals that don’t have truly
differentiated capabilities. Simply replicating strategies that were
successful at home is likely to be insufficient in the United States.

The World is Round Again!

Came across an interesting article while browsing the net for Tata-JLo (!) deal yesterday. Pankaj Ghemawat, a chaired professor at Harvard Business School disagrees with Tom Friedman that globalization has reached its peak but instead believes that a lot of trade, immigration as well as “bits” travel only within national boundaries, and there is still a long way to go before we can knock down the walls we have built over centuries.

The findings fly in the face of Friedman’s famous work. Take flows of people. Much as we would like to believe that this figure would be astronomically high, it is not. Says Ghemawat, “If you look at the stock of first-generation immigrants divided by the total population of the world, it is barely 2.9%.”

In fact, he claims that in some metrics, we are just about reaching the 19th century level of globalization:

“On the people’s side, the current ratio of immigrants to world population is slightly lower than in 1910. On the FDI side, we have probably reached new heights, but it wasn’t until the 1990s that we got back to the FDI-to-GDP ratio that the world was seeing in 1901,” says Ghemawat.

I can imagine this happening because of the FDI from Britain, France, and Spain into their colonies (which had been quite impoverished by then by monies being sent back as profits). A lot of flow today is in the reverse, the Tata-JLo deal being a case in point. It would be interesting to see detailed numbers, or perhaps they are present in the book.

In fact, at some point, I thought the claim that there is actually increasing localization of products which goes against globalization was being made. For instance, Coke and Wal-Mart and McDonalds have to take local tastes into account. I wonder if this would count as a case of more globalization or less globalization. I guess parts of it can be argued either way.

Link to the original article.

How does the Elephant March without Trampling Others?

The quality of good cinema is that its leaves you thinking. If that is the yardstick, documentaries would almost always be classified as good cinema, because the very reason they are made is to leave the viewer pensive. Sometimes, films like An Inconvenient Truth, or Michael Moore’s many movies, become popular, are seen by the multitude, and manage to affect society. However, sadly, in the vast majority of cases, documentaries hardly get to be seen by enough people that they will shape public opinion.

Thanks to Pedestrian Pictures, I saw two such documentaries — In Search of Gandhi and Freedom…!, and I have been pondering over them since I got back.

In Search of Gandhi (2007) is a film not about history, its about the contemporary India which lives on the trail of the Dandi March. The filmmaker visited various cities and villages en route to see how much people think about and remember Gandhi — and he finds that it is awfully little. Ellis Bridge in Ahmedabad, which was where Gandhi gave a famous speech about equity, is home to a slum, and the government threatens to use its muscle to clean up their homes and build a garden. In most places, people have no qualms in saying that Gandhi’s principles will not work in today’s India, because you have to resort to the unscrupulous and the immoral to get your job done. Perhaps the most shocking was the xenophobic diatribe which a 80 year old Gandhi follower unleashes — his opinions of the Muslim community is that they are like a dog’s tail which can not be straightened. Unfortunately, he is a well respected person of the society there. The tale is the same with youngsters and the emotions in both communities run high post-Godhra and Modi’s ascent to power. Statues of Gandhi lie dismembered, disrespected as Modi’s huge hoardings proclaim a period of wealth and development. In fact, in Surat, Gandhi keeps watch with grave determination over a bunch of people who have congregated in the name of ‘Mahatma Gandhi Laughing Club’. Elsewhere, people have shown little respect while cutting trees to clear off forests, livelihoods, societies, in their hurry to build castlesque shopping malls. The economy is booming, and the booming noise threatens to forever dampen the few noises that remain. (I had written an earlier piece about Mahadevbhai, a play I saw on Gandhi’s assistant, and some posts on India)

Freedom…! was a slightly older film (2002) concentrating on how our 9% Y-O-Y growth is affecting people we don’t think about, sometimes even consciously ignore. Floods in the Kosi river, cutting of Mangrove trees in Gujarat, destruction of forests in Orissa, are shown as case studies of how in some cases people rise up, complain, and ask for their rights. In many cases, the leaders were brutally tortured by the police (Colonel Salve in Kutch — I could not find a link, if somebody can, please let me know and I will put it up), in some cases murdered by perhaps the big-pocketed businesses they were fighting against (Chattisgarh Mukti Morcha’s Niyogi murdered in 1991). However their legacies have lived on, and the remaining unheard voices of fishermen and farmers are trying to make themselves heard, justifying the martyrdom of their leaders.

All this after having seen Hazaron Khwahishein Aisi last night. The story of Siddharth, Vikram and Geeta is a must watch. An extremely strong hat-ke story, incredible performances, and an ending that leaves you pinching your conscience. In fact, the ending is available at Youtube:

And where does all this leaves us? The reason for making these documentaries is to make people think. What is the right model for development? Rampant capitalism which most people are now purporting, can do irreparable harm to our country, its natural surroundings, culture, and even unity. At the same time, the juggernaut of growth and development will roll on, it is not something that can be stopped. The people who have tasted success will not stop at anything, and I am not even sure if they should, because this growth and development is giving India its rightful place in the world — with world leaders knocking at our doorstep ever so often. However, how can we channelize this hunger, and ambition, so that the growth does not come at the expense of the many that have not had the good fortune of being able to get the same level of training, education and opportunities. How does the elephant march forward without trampling his own soldiers?

I wonder.

Small Car, Giant Leap

image Ratan Tata really pulled it off. Half a decade back, he had said that he wanted to give India a small car that would be within reach of the millions of Indians who have to make do with two-wheelers, and last week in the Auto Expo, he delivered on his promise. And in what style — the whole world sits up an takes notice! The media’s been abuzz with the grand success that Tata has pulled off, to the dismay of all nay-sayers who believed that the car who found a thousand and one ways to make fun of the whole concept.

Even after the car came out, people have been debating why we need to clog our roads further, how RK Pachauri’s heart would miss a beat, and Sunita Narain would get a shiver down her spine, and Chidambaram due to the oil import bill. While I agree that such a cheap car is such a disruptive thing that the whole way we think about roads, infrastructure, and gas imports needs a rehash. (This really came out of a discussion on the Blogaloreans mailing list:) I would say that in the midst of all the praise and criticism, we miss a few important points.

Firstly, the car is not made just for the cities. The whole problem of parking and traffic vanishes as soon as you move outside the city’s center. The upshot for the rest of the country is far too high to just write off the car. Personally to me, preventing less privileged people from having the luxury of cars when the more affluent income groups easily swift around is a rather elitist point of view. To quote form WorldChanging:

Which leads us to the inescapable fact that a Tata Nano in Chennai is, from the biosphere’s perspective, similar to a Toyota Corolla in Vancouver.

Even within the cities, the traffic argument fails to pass muster when you consider that traffic and other problems would occur anyway — Nano or no nano — and all the new car has done is to accelerate the process. We would have to come up with more innovative means of handling the growing traffic on our roads anyway (taxing vehicles in the Central Business District like in London is one idea) and improve the mass transport system (like in Kolkata and Delhi). The government and the Municipal Corporations need to be more proactive both in legislation and regulation.

I am personally of the view that a car should be used as a means of last mile connectivity and local transport, and I like the concept of driving to the nearest Metro station, park your car there and go to work using the Metro. IMHO, this is the model that can scale in the long run. Obviously, another important use of a car is the drive through the highway, where the safety of a car is far more reassuring than a bike or a scooter.

Autos and cabs would be another thing that would benefit greatly from this development, and if we think about what causes the most madness on the roads (autorickshaws, bikes and the like) we would be better having single-sized four wheel vehicles, which have no option but to stick to the lane discipline.

image There are other fallouts as well, the chest thumping we can now do in a major manufacturing conference is only one of these. The world is sitting up and taking notice of India’s design and engineering prowess, and I am sure the outsourcing companies have already started giving higher revenue projections. The Tata car has almost become a barometer in some circles, and its making its competitors re-think their strategy. It’s already got them new enemies — Bajaj was so worried that he announced his own car! And the ramifications are not limited to the automobile segment alone! The new car revolution might just take the country by a storm just like the mobile revolution, and change our fundamental assumptions about a host of things.

All said and done, to me the biggest advantage of this new development is that Indians will have another thing to boast about — when they promised and delivered. It will add a new spring to their step, and inshallah, help our country forward over the coming years.

India and Development

P. Sainath, the Magsasay award winning journalist and writer of Everybody Loves a Good Drought wrote an excellent article in the Hindu today (link) about India’s standing in the Human Development Index of UNDP. India apparently stands among the bottom 50% lower than countries like Sri Lanka, Vietnam, Cuba and El Salvador, countries that have been devastated by civil strife and war. In fact, if you just consider India’s adivasis and dalits as a separate nation, they are in the lowest 25. He says,

Note that some of these nations rank up to 30 slots above us. Others fall within 30 nations below us. Not one of them has had our nine per cent growth. Few of them have been touted an emerging economic superpower. Nor even as a software superpower. Not even as a blossoming nuclear power. Together, they probably do not have as many billionaires as India does. In short, even nations much poorer than us in Asia, Africa and Latin America have done a lot better than we have.

India rose in the dollar billionaire rankings, though. From rank 8 in 2006 to number 4 in the Forbes list this year, but we slipped from 126 to 128 in human development. In the billionaire stakes, we are ahead of most of the planet and might even close in on two of the three nations ahead of us (Germany and Russia). It will, of course, be some time before we erase the national humiliation of lagging behind the top dog in that race, the United States. (Which, by the way, dropped from 8 to 12 in the HDI rankings this year.)

In fact, he points out that most statisticians had been using stale data for measuring Purchasing Power Parity (PPP). If you re-calculate based on the new 2006 data, India’s GDP (in PPP terms) reduces from $3.8 trillion to $2.34 trilliion (and the GDP at nominal exchange rate is $800 million billion, still less than a trillion), and the per-capita GDP falls from $3 779 to $ 2 341. He warns that we might soon be in for a surprise when agencies start using the new figures:

It is not clear yet how agencies other than the Bank, like the UNDP for instance, were working with PPP. Were they using updated measures or the old data? If the latter (which seems the case), and given India’s entry in the Bank survey is recent, even our awful HDI performance could get worse. The captain has switched on the seat belt sign. Buckle up: we could be landing soon on the updated numbers.

Aside: There is a new innovative way to crack CAT. This bloke added me on Windows Live Spaces (have you heard of it?) with the following message:

dear
friend
add me

i m perporsition on cat 08
so plzzzzzzzzzz.
help me
friend

so add me

I still am at my wits end how my friendship will help somebody crack CAT. I think I should start enriching tuitions for CAT :P

[BTW, is he preparing for CAT, or is he proposing to a CAT?]

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