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Smart Cities : More Questions Than Answers

Published May 17, 2015 by vishalvkale

SMART CITY
A ‘smart city’ is an urban region that is highly advanced in terms of overall infrastructure, sustainable real estate, communications and market viability. It is a city where information technology is the principal infrastructure and the basis for providing essential services to residents. A Smart City, should have Power, Water, Cleanliness, Seamless Information, 24/7 Utility Services, WiFi zones, Recreational Spaces, Waste Management, Connectivity in transport as well as communication, Speedy Service, Transparency and Accountability etc.

While there are good points & it is also a good and needed step, but…. firstly, it doesnt take into account the realities of the Indian Demography, Polity, Bureaucracy, Governance and Systems. it doesnt take into account the Indian Economy, and its doesnt take into account the status of the real estate sector, as also any number of other realities that beset the Indian Economy.


ECONOMIC STRUCTURE

Economic output by the entire corporate contributes just 18% or thereabouts to the Indian Economy. The rest is Agriculture, and unorganised sector. A smart city implies high doses of technological capability, which scores upon scores of our companies do not possess, and the gap is too large for them to plug, given the history and the monetary requirements. Other nations enjoy economies of scale and can produce whatever we can at cheaper rates. If we keep a purchase local condition, we are finished before we start, like the FDI in retail brouhaha.


If we cant compete in a commodity like Stainless Steel, it is foolish to believe we can compete in high-tech sectors. We have skills aplenty; they have the economies of scale, which is what is needed. For that, we have to dismantle a large part of our taxation structure, which is inverted in more than a few categories.



Next, how do you fit in the small variables like the thelaa-gaadis, small eateries, roadside stores etc – all the things that define a lovely Indian City in a Smart City concept? Is it clear? What happens to these small support services? They are a cultural reality; I wouldnt be caught dead in a 5-star; too stuffy and showy for my taste, Give me the fantastic Idli-Vada at Sion Station; given a choice, I would eat Idli Vada over those showy dishes in a Marriott any day! The point is that these minor details need to be idenitified and clarified before we start, or we run the risk of overzealous officials banning or relegating such activities to the backburner, leading to loss of livelihood to thousands, and an erosion of uniqueness and attractiveness as well.



Next, Sustainable Real Estate. End of Story. Take a gander at the real estate market in India. It is controlled and cartelised, beset by crime and corruption. TIll last year, prices were holding in Urban India depsite their being a 50% vacancy rate of unsold inventory. What happens when the Smart City Ball gets rolling? Sustainable? That it isnt. Valuations will go through the roof, and that is a fact. 


It completely ignores the structure of the Economy, which is characterised by small entrepreneurs. I would like to understand how the small entrepreneur with 50000 seed capital can make a mark in your smart cities. These ventures are capital intensive, and import oriented, which is the real reason why everyone from China to USA is agog; they see $$$$Kaching$$$$! Study the incomparable report on the Indian Economy by Prof Vaidyanathan – India, Uninc; it gives figures from Government sources and introduces you to the real India.


There are two data points available : 5th Economic Survey, 2005 and NSSO 2011, Both tell the same story: Smart Cities are nothing but a fantasy. They are premature, they are the future, but very premature. The Idea is right, but a decade or two too early. As per the first, there are 41.83 Million establishments in India; 76% of these worked without any power; employing 100.9 Million; 46% were own account establishments. As per NSSO 2011, 66% were OAE; retail trade slipped from 42% to 30% and ,manufacturing grew from 23% to 31%. Own Account Establishments were 60% of retail, 72% of Manufacturing, and 63% of service. Contribution to the GDP : between 46-58%.


Given the Smart City definition, a good number of them don’t fit – and largely for no fault of theirs. These organizations do not have the money to upgrade – they will upgrade eventually : a process that is currently underway. That is the time these concepts can work. And this will happen in tandem with improvements in education etc basic facilities in India, not before.

PRIORITIES & REQUIREMENTS

What does the nation require? Research shows that nearly 93Million of our farmers are losing 800-odd per crop; data shows the level of poverty in our nation; consumption trends corroborate, with the top 10% growing at a rate of 3% as opposed to 1% consumption growth for the bottom 40%. Farmer suicides are going up; the economic fundamentals are shaky; the global economy is in unprecedented turmoil, and all we can think of is Smart Cities? Our Armed Forces are in dire need of funds; and all we can think of is Smart Cities? We spend the lowest in GDP terms on Education, Defence and Health, and all we can think of are Smart Cities?



We dont need Smart Cities, We need Schools, Colleges, Primary Health Centers, Rockets, Mortars, Fighter Aircraft, Missiles, Satellites, Seed Research, Irrigation, Water Purity for Agriculture, Extension Workers to teach our Small and Marginal Farmers, Redoing our Duty and Taxation Structures, Fair prices for farmers at farm-gate, cement or pukka roads, etc etc. A smart city can come after that.



Besides, a Smart City requires – data connection. We in India have average & unreliable speeds of around 1,5mbps; the developed nations have a speed of upwards of 22mbps. They have high penetration of credit and debit cards and acceptability of online commerce; we dont. India has precisely 73Million broadband connections – this is including individuals with a double connection; I have three. Less than 69Million Indians consume more than 512mbps of data on a monthly basis; and cashless transactions are unknown outside the protected environs of top places.


The logic is sound, I clearly stated that concept is needed – but a decade or two too early. This will work in a relatively corruption-free atmosphere, where the Land issues are under control. That we dont have. Next, this works in economic reality which enable the above, which again we dont have, as I have been at pains to point out.


The shift to the small cities will not happen in the industrial sector; the vast majority – upto 90% – of the actual producers are concentrated in only a select few agglomerations, namely Mumbai, Delhi, Chennai, followed by Kolkata, Bangalore, Pune, Ahmedabad. Other second-level sites are Nashik, Meerut, Hyderabad, Coimbatore, Ludhiana, Kanpur, Rajkot,Surat. No one else comes even close to these cities, although Jaipur, Chandigarh, Hissar, Nagpur and a couple others do try hard. These are further populated by small enterprises.



The shift will not happen from these established centers; there is in existence an ecosystem that now is impossible to replace,. with manufacturing facilities being deeply interlinked with their vendors and suppliers who have now set up in the same or nearby areas. In B2B industries, a symbiotic relationship has started with the consumers and the manufacturers sometimes co-located, or located within 8-10Kms of each other.



The proof is in the manifest failure of industrial areas in other wannabe metros, like Indore and Bhopal, which have simple failed to take off. They remain consumption and trading centers, not producers, despite an incredible level of support given to them by successive Governments. The failure of Bhilai to rise as a comparable center to even Nagpur, let alone Surat & Rajkot, is a case in point.


MY FEAR
We are only exacerbating the rural-urban divide. As on date, few Urban Indians show the same level of passion for rural development, which is the only thing we need. Rest will take care of itself! We are asking people to focus their valuable- sorry, waste their valuable time on cities, where the conditions are utopic in comparison to villages and that is a fact! Large numbers of villagers would willingly settle for facilities comparable to our current “stupid cities” and that is also undeniable.


No amount of planning will overcome the serious objections there are, some of which are enlisted below. I dont buy visions; they are a dime a dozen. I buy execution – call it my sales instinct, but I am not impressed by Grand Visions without a proper execution document, which contains detailed studies & steps.  And this is not made after finalising the plan; that is stupid, blunt and straight. Typically, that is to be visualised before finalising the plan and the execution.



Where is that plan? If it exists, why isnt it in the public domain? Where is the detail on what exactly a “Smart City” means in practical terms – real world terms, not meaningless jargon, which even I can write, given I am a part-techie and a part-telecom / business person to boot?????? Give a person time and opportunity, and out comes a logical sounding plan! That is dead easy; doesnt require any great skill whatsoever. What will be the mode of transport in a Smart City? Residence and Commercial Areas? Connectivity in Roads? Size of internal roads? Drainage?



What will be the connectivity in terms of data and communication? What technology will be adopted? How will the technologies communicate with the other “stupid’ cities? What will it cost the residents?What happens to the slums? Or doesnt the concept apply to the slums? If they are in a smart city, they should be smart slums too! Each city has bylanes with crowded marketplaces; these are the epicenter of business in India, commanding a lion’s share of the business volume pan-India. What does this mean for them? What is in it for them?



How will rural India benefit? Please give specifics : not general statements like find jobs, or employment generation. Jobs in which industry, at what level paying what? Where will they stay? Where will the land come from? What will it do to land prices? How will you ensure proper settlement for dues – and if you think this is not important, I can produce 40 years worth of terrifying tales of neglect? How will you ensure Land Mafia is controlled – without real and serious administrative reform which no government – AAP apart- has shown any appetite for?



A Smart City means Power, Water round the clock, Where will that come from? We dont have enough power now, wont have for another 2 decades. Who will sacrifice their power for these Smart Cities? And why should any stupid city sacrifice even one kilowatt for a smart city, pray tell? Where will water come from? Any number of cities are seriously water deficient. Where is the plan for all this?????????



A Smart City implies a certain level of data connection backbone; which we dont have, and wont for a minimum 5-10 years more. It also means seamless information availability. How will you ensure that, given the various data collection points, formats, protocols? When your land records are not computerised? When any number of public facilities are not online fully, and there are no plans for them either? When you still have no common information system in the Government? When there is a redundancy in several documents?  I could go on and on… Where is the real plan?


Why does this generate this level of interest? Why doesnt the question of farmer suicides, famers earnings, rural facilities, etc generate the same level of attention, interest, passion in Urban Indians? Arent they Indians? What is being done for them, pray tell? We are still focussing on cities, not on the villages where the situation is decidedly bad. Why hasnt the same level of euphoria, the same level of passion, the same vision, the same money been generated for setting things right in Rural India? The government is hard selling this concept abroad, showcasing our development, whereas we require basic steps like Education, Health, Governance and Defence!



What it should have done is launched rural programmes with the same fervor, passion, vision and attention – which is not the case. We have finite resources both in terms of money as well as other aspects. How we spend those resources is the key.

In point of fact, Smart Cities is the last thing we need; we dont have the ground realities even in urban India for it, and that is a fact. Not one person anywhere in India has even tried to meet the serious and potent objections being raised by any number of people; and are focussing on the vision. 




Remember : Great plans fail on execution as, among other reasons, it turns out that the ground realities did not support the plan in the first place.



UNDERSTANDING THE INTERNET : Reaching Into The Gut Of Existing Systems

Published April 17, 2015 by vishalvkale

UNDERSTANDING THE INTERNET : Reaching Into The Gut Of Existing Systems



At first glance, the title – understanding the internet – seems an anachronism, something out of place in the modern world, where the internet is ubiquitous, at least among the educated classes; and is rising fast in the rest of the people. You only have to look around to see people using the internet, gaining from it, and being completely comfortable with this medium.

And yet, that is precisely what my contention is : that this medium is actually the least understood, and in just about everything. The potential of this medium is being felt in just about every human endeavour, and as I have observed before, its raw power to reach into the gut of existing models is only just being felt across industries. What is this raw power I am referring to? And why is it the least understood medium?

The average person comes across individual levels or layers of the internet at various times; this interaction is in two distinct areas in terms of purpose of usage : Personal, & Business / Professional. On a personal level, we come across Facebook and Twitter, News Apps, Online Shopping portals, and many more sites targeted at the individual; traditional classification extends to such terms as Social Media, News Portals, and so on and so forth. But, on a professional level, depending upon our profession, we similarly interact with many sites and types of portals like dedicated B2B or B2E portals and other sites – which include the above listed personal sites!

If the above sounds confused or disorienting, let me clarify : my point, simply put, is that we need to reverse our outlook; when we think of the internet, all of us think of it from the lens our personal interaction on the internet, even when looking at the professional aspects. We always think of how the internet has reduced distances, made price discovery easier, information dissemination faster and borderless, made customer contact easier and so on – in other words, looking at it Point-To-Point, individually or lacking a systems perspective

The internet is all that, and much much more. We need to turn it around 180 degrees, and look at it from a business perspective, from a strategic perspective and a systems perspective to understand the raw power, as well as appreciate how little we understand this medium, or just how wrong we have been. This has profound implications for all businesses, as we shall see.

Reaching Into The Gut Of Existing Systems
Let us start at a very basic level – the simple point-to-point interaction. Consider pricing – in any market, it is now common for a customer to compare prices with the internet; it is equally common for a customer to compare prices across geographies. This applies to retailers and distributors as well; meaning, quite simply, that price differentials within the same market will go the way of the typewriter. What all team managers, especially senior managers, tend to forget is that this also applies to your teams, which is now stunningly well connected internally.
It has always been a simple sales tactic, that of differential pricing, which in an earlier era, was nearly undetectable, given the low interconnectivity between the constituent customer profiles and the channel partners / retail / Your own team members. This at times unhealthy practice gave results while harming the system and leading to a leak of corporate money, and harm to many a top performer and talent, as needless discounts are given;  in the current era of Facebook + LinkedIn + Whatsapp + Email + Mobile Telephones, this is just not tenable, as people are way too interconnected at each level of the business ecosystem – making for easy discovery of the stated underhanded tactics.
The combination of just these 5 – Whatsapp, LinkedIn, Facebook, Email and Mobile is hard to beat. You can share information over the mobile – back it up with proof of pricing by the simple expedient of a mail or a Whatsapp photograph, or look and compare online and offline prices with ease, given the penetration of the Mobile Internet. Convergence of technologies at its very, very best.
From a systems perspective, this means that the old tactic of having differential prices for varied distributors and geographies is now a much more challenging task, given the convergence of technologies and gadgets, and ease of connection. It has meant unhindered flow of information across and within markets, ensuring that the price differential gets easily exposed. This is driven by the entire interconnected ecosystem, as employees and the channel connect with each other with ease over various media; customer openly voice opinion on the internet etc.  
What most companies further do not understand is this : there is an increasing push-back from the retail end of the business as well as from teams, who are now converging into interest groups and power fora, and getting together to force companies and managers to alter their short-term tactics of differential pricing within the same channel as well as across channels. This is a direct result of the free flow of information wrought by the internet, the mobile and the entire information ecosystem.
And that is what I meant by stating reversing from an outward looking perspective of how the internet is changing the business environment and making life easier for businesses. That way is a strictly personal look – you are essentially analyzing the advantage you have as a professional. What needs to be done is analyse the entire impact from a systems perspective, from the perspective of not the Manager, but the entire business. In other words – get into the shoes of the Business, not the shoes of the person managing the business.
And that is the most critical learning, and the real power – we aren’t talking about just the internet, we shouldn’t be thinking about just the internet, but rather the entire ecosystem – The Internet, The Computer System, The Mobile, The Falling Cost of Access, The Fast Rising Usage. We should further be looking at it holistically, and from a dispassionate analytical perspective, and changing the operating style as the market changes all around you.
In simple terms, the entire basis of business, the entire basis of doing business on the ground is changing fast, driven by a vastly changed ecosystem. And managements just aren’t in sync with this simple reality. What has happened is, quite simply, the entire bedrock on which internal systems are based has vanished almost overnight, contributing to an exponential rise in pressure on employees, managers, systems and organizations alike, as they failed to change with the times…
There are many other parameters – like the impact on the simple things  – like telling the truth, or stretching the truth; and how the internet ecosystem is setting about revealing the truth and making lying impossible for organizations; or the simple fact that even some of the most tech-savvy organizations don’t understand the 14-21” screen, and how it is to be used for maximum impact, or indeed how to strategically use it… which is the subject of the next article in the Digital Series, of which this is the third…

Internet and Digital Media- 2: Big Hurdles

Published February 9, 2014 by vishalvkale

This is the second part of the article Online And Digital Media
Part of the credit for this article goes to Team Blogadda, who had a superb programme on Social Media, including sessions with industry experts like Anagh Desai and Lakshmipathy Bhat. The interaction during the entire event of Blogadda Awards {WIN14}, especially with the mentioned experts, enabled me to connect the dots in my mind, and cement my ideas into a firm shape. A part of the credit also has to go to Mr Vivek Sapru, my Senior during my tenure at Amity University as a visiting faculty, my discussions with whom also helped me see some direction
As I noted in the conclusion  of my previous article, this medium has the potential to reach into the gut of existing business models, and rip them apart from within. The other alternative is that this medium has the potential to cause a steady with definite change in existing business models, and change the face of business as we know it today. However – and this is a significant however – there still exist major hurdles in the path, which is rocky and stony beyond the ordinary, a reflection of a reality that is not often quoted in any business analysis I have read till date. To place things in some perspective, and to avoid unfounded exuberance (thereby lending a sense of reality to the analysis), I have taken up the biggest hurdles first, taking up the potential later on in the series
BIG HURDLES
The first and immediate hurdle is, quite simply, data costs. Any product, any service, any Brand on the net has to be accessed – and that can only be through a Data Connection. And any system is only as good as its slowest / weakest component. Surfing the internet and downloading data costs money – and as current things stand, a massive amount of money. It costs anywhere between 175 – 250 Rs per GB on most Service Providers. I myself have a 4GB connection that sets me back by 750 plus taxes – by no means a small amount. Two critical questions arise from this reality – first, what is the size of the Addressable Market Segment; and what is the kind of volume of data consumed by the most demanding application – say, Videos. This second leads to another question – is the current level of 3G / 3.5G coverage sufficient to support this? Furthermore, what are the actual realised speeds generated during surfing? 
Let us take the second question first. One of the major identified segments is Video Downloads of all types. Even here, the things are murky – video downloads are in the top-3 only on desktops; mobiles account for emails, social media and communication. This is further confirmed by the low data ARPUs. Let us take a look at the numbers – which just dont add up, any which way you look at it. A 22-28 minute HD video is about 275 – 375 MB of data; a full feature length video of 2 hours plus equals around 2GB – 3GB of data. I have downloaded Sarabhai vs Sarabhai episodes, Tu Tu Main Main, Dekh Bhai Dekh, Satyamev Jayate, Political Interviews as well as several films on my connection – Don-2, Samay, Aan, and LOC Kargil among others – like The Longest Day, A Bridge Too Far etc. 
Even if you look at streaming data, the picture is no better. I am operating a 12GB data limit connection; the most I was able to get out of it is around an hour  {or a little more} of video streaming on average per day on youtube {Not HQ}, NDTV watch and similar sites. The cost was a humongous 1599 plus taxes per month for data alone. Now this data consumption is massive, given that I only have a  few GB space to operate in – meaning, files of 2GB are out of the question – which is why I still have to download Lagaan, which is 2848MB in size, and Dec 16, which is also around 2800MB in size. I can theoretically download only a few episodes of a length of say, 25 minutes per month. That is frankly, peanuts – and by no stretch of imagination can be extrapolated into an addressable market segment. For it to be a viable market segment, it would have to have volume and mass. Does it? This is a question that can only be answered by looking at some hard data, which is the subject of the next article, so please bear with me. Moving onto other market segments also gets us nowhere as of now, for the issues listed below, as well as usage and penetration realities. 
There are other critical operations issues at hand – which I shall, for the moment, ignore – given that this is a nascent industry. For example, the difficult interface you have to negotiate in finding the exact right video, especially on a handset : I have tried this on Lumia 720 as well as Karbon A9, finally going back to my trusty laptop due to coverage issues – to be taken up later; as also the issue of mobile battery life when using a 3G connection. Then there is the entire question of paid revenues, which is a topic unto itself; namely, how do you monetise and build a paid model of data consumption as a Brand, given the online Credit Card and Debit Card usage is in a distinct minority of the 1.27 Billion Population.
When we talk of Mobile Data, the first question that should be – but isnt – asked is, what is the kind of data coverage and actual delivered speeds that are prevalent? The answer to this is a very disturbing one – very disturbing indeed. Even in a city like Mumbai, I have experienced serious issues in coverage from not one, but 4 operators. What do you think it must be like in the other cities? The data connection @ 3.5G frequently falters even when the mobile is kept at a stationary location – to say nothing of coverage while on the move. The experience is somewhat along similar lines even in the other cities that I have had occasion to visit. Coming to speeds, I am yet to get the maximum advertised speed on the internet. Right now, speedtest tells me I am getting 3.22 mbps download speed and 1.20 upload speed; and this is among the fastest speeds I have experienced. The actual speeds range from 1.20 mbps and go upto 5.8 mbps, depending upon the Service Provider. Yet again, when you put the two (coverage and speed together) the numbers just dont add up – as movies take upwards of an hour, at times several hours to download – while serials and short videos take 30 minutes upto  an hour or more to download.  You cant keep stationary for that long during an average day… which means download at night – further limiting the market. Not only that, coverage also tends to falter… and with 2G, sites either wont load, or take one hell of a long time. 
The next question that should be asked is, just what is the penetration of 3G handsets in the market – not smartphones. Smartphones are frankly irrelevant to the data consumption market; the real question is, and will remain – what is the penetration of 3G handsets in India? And, from this sub-group, how many can afford a premium data plan – which is the only plan that can offer video downloads and high data consumption. There are around 143 Million users of internet on handsets – both GPRS and 3G, as well as Desktop and Laptop combined. 
That is the universe as on date – a figure on which we currently have zero demographic or income data. 23.8 Million users access the internet on their mobile as on date. As can be seen, yet again – the data does not add up. At a growth rate of 30% – we still have only 62 Million consumers of mobile data in 5 years – and this is GPRS and 3G combined, mind you. It will take a scorching growth rate of 60% five years in a row to reach a decent figure of 155 Million Users! The current growth rate, as per some expectations, is between 30-40%. Further, India, as a total added 40,000 Broadband users in May 2013. How many months will it take to add up to a significant number that can support the plethora of players in the market? Yet again, the numbers dont add up! 
Now assume that all these are 3G handsets. To try and balance (since 3G handsets penetration is likely to be 20-30% at the maximum level), let us assume a monthly billing of 200 Rupees. That gives a market size of 1254 Crores in 5 years time at a growth rate of 30%, and 1828 Crores at a growth rate of 40%. To put things in perspective, it has taken an expense of 67000 Crores into this market, and an expected growth rate of 30-40%. To make matters even more interesting, the data ARPU in June 2013 was 56 Rs. To round off, the total ARPU of Delhi circle was 182.33 on an average; and Mumbai was 192.82 on an average in Q3 2013, the latest period for which the numbers are available. The numbers just dont add up; not enough to justify the immediate euphoria. 
Are we then to assume that these are insurmountable hurdles? That this is just a bubble? How many Indians can actually afford a 500 – 1000 expense on data alone? How many Indians actually realise the value of a data connection? If they did, why is churn such a big issue in telecom? Why are people frequently switching providers, and even disconnecting them? Do you actually get seamless conectivity  on 3G? Does your battery play out the day? Why is wired Broadband slowing in terms of sales, in a market where supposedly there is loads of current opportunity? Where is the market? Who comprises the market? Where will the monetisation come from – any industry dependent only on advertising revenues cannot be sustainable; there has to be monetisation. 

But then how do you explain the scorching growth rate experienced in the market? How do you explain the applications that are being developed, and are increasingly in vogue? How do you explain the undeniable truth that internet and cloud based applications are adding value in countless homes and businesses across the length and breadth of India? How do you explain the pressure of the internet that is being experienced in markets as diverse as Consumer Durables to Handsets to Books? What about the various e-commerce sites, services and brands, some of whom might also be making money? Questions, too many questions… and too few answers. 

References : 
COAI Website

Digital divide: does India need 4G right now,as it is struggling for broadband?

Published March 9, 2012 by vishalvkale

Digital divide: World gets 4G iPad, India still struggling for broadband – The Economic Times:

‘via Blog this’

While the west moves to 4G, we are still trying to get Broadband. Nothing surprising with that – we have been late movers in communication technology and therefore, it is only to be expected. But if you look at the Broadband scenario in India, the statement that we are struggling is simplifying the state of the market in this space. In India, Broadband solutions in the B2C space are given by Wired and Wireless technology platforms and at speeds ranging from the basic 256/512 kbps to 4 mbps and above. What has been their experience? Have they managed to cover costs? Is there a market for 4G services that is big enough to justify investments? My take on this is that it might just be premature to roll-out 4G services in a market that has yet to fully experience 3G and broadband. First, the market needs to mature and second, the current hypercompetitive phase of the Telecom market needs to settle down.
The cost of a broadband connection in the B2C {Business To Consumer / Customer} market is in the region of Rs. 250 per month (free upto 1GB), ranging upto 2100 per month for 3G sticks. Even at the lower level, the 1 GB usage limit means that the total bill in some customers is going to be substantially higher. Given the nature of the market, this means that the potential market needs to be defined very clearly in terms of  household income. Second, the penetration of home PCs – while on the upswing – in nowhere near the west. Even in households with PCs, internet awareness is low and usage limited to only checking mail, simple reservation checking etc. The full gamut of the internet has yet to reach the majority of households. So much so that even households with high income will sport a Home PC: but it will be used primarily for games for the kids. The primary earner will be the regular user of the laptop or desktop – but usage of the same will be limited to stocks and financial markets; reservations, simple googling. Services such as online cinema booking / restaurant booking, hotel booking, online purchasing, e-papers, news services etc are simply not used, as the customers find it more convenient and safe to do these the old way. The point of the above is that the Indian market is still on a learning curve, and the consumers have a long way to go before the full potential of the market can be realised.

On the income aspect, there are again 2 factors at play: the first is perception and the second has to do with expenses. Given that the internet has not yet become a need, a necessity for the majority of users outside the top 8 – 10 cities of the country, there is a perception in place that expense on broadband connectivity is a luxury, or a needless expense. This perception will only recede with the increasing awareness levels and usage of technology. The second factor is actual expenses: shelling out Rs. 1000 for a true broadband connection with 1 mbps speeds calls for a heavy investment for a typical household: this expense takes the total expense on communication to above Rs. 2000 per month given that there will also be 2 mobile connections at least in  operation. That makes this a very significant share-of-wallet for a normal household, and places high-speed broadband firmly out of reach of most normal middle class consumers. Further, when people have not even experienced high-speed connectivity and the supporting applications for the same, one cannot expect them to upgrade to 4G. Please note that I am talking about high-speed plans with decent usage limits: 1 mbps unlimited with 5 GB high speed limits at least.

This factor can be seen in the various prepaid broadband and 3G plans in evidence – 1-day, 7-day vouchers; 1GB limit vouchers, cheap postpaid plans with low limits of 1GB – 3GB at less than 500 Rs. which are meant to pull in non-users and get them to experience the world of high-speed connectivity. This fact itself is a powerful indicator of the state of the market, and that things are on a learning curve. This market is still at 256/512 kbps, and the customers first need to experience the high-speed phenomenon. Further, the awareness of applications needs to increase. And third, either rates have to come down – or PPP has to increase for it to be a mass market. This does not mean that there is no market: indeed, there is a very large market as evidenced by increasing penetration of smartphones, PC and Laptop Sales, Data Usage on 2.5G networks (GPRS). The challenge is to convert these customers to high-speed customers through exposure to applications through any means that are available – for example, net-kiosks; bundled handsets (as tried by idea and vodafone); gaming parlours and websites; support to application developers; links via sms; co-advertising with events / websites / applications etc. There can be any number of strategies for that. And this is precisely what the telecom industry is currently working on.

The last point is that the trade needs to settle down and get into working mode after the tough 2011 year. Some sense of order needs to emerge especially as a huge amount of investment has gone into 3G networks, completing 2.5G rollout obligations, network upgradation. This is painfully evident on the stock market performance and the ballooning debt of the sector due the above factors. Thinking about a further upgradation does not seem to be warranted in this scenario. This does not mean that the industry forgets 4G. I am advocating an increased focus on content and application development, customer education initiatives etc: in other words, the development of an entire ecosystem that engenders increased usage of data. Data consumption increase will directly translate into revenues for the industry: which will make 4G far easier to introduce.