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.

Follow

Get every new post delivered to your Inbox.

Join 1,843 other followers

%d bloggers like this: