Telecommunications in the BRIC economies : India, August 2007

Will cheap voice reach 500 million users by 2010 ?
I visited India August 19-22, at the end of the monsoon, to study 3G multimedia services potential. We all know that 190 million mobile subscribers (+ 7 million/month) were signed in 5 years, as a result of lower rates, cheaper handsets and networks expansion into rural areas. On the fixed line side, there are 2.5 million broadband out of 40 million connections and these are not growing at all. India has 12 telecoms operators competing for world's extreme blended ARPU of 7$ and MOU approaching 400 min. according to regulator TRAI. TRAI's approach is to license 10 operators per state but there is no sight of number portability. Current mobile penetration below 20%, given a population of 1.1 billion, but with huge industry investment it should grow this to 60% by 2010. The government plans targets 500 million subscribers by 2010.

Will the boom lead to multimedia ?

During this visit, I was happily surprised to hear about the interest for 3G instant messaging and mobile video services as I had not expected from market focused on subscriber/MHz optimization. Several operators offer mobile video streaming and download services or are planning for this in 2008.

Hera also industry investments are neeeded. On August 23rd, Nokia's CEO Olli-Pekka Kallasvuo was also in New Delhi announcing $100 million investment by Nokia Siemens Network in Nokia's $500 million Chennai facility which produced 60 million handsets for India's market since 2006 and operates managed networks. And Vodafone is bound to introduce Vodafone live multimedia services after deploying the cheaper handsets.

Incredible India mobile operator's tour
Encouraged by India's advertising motto's my HP hosts arranged for a tour of operators : Vaibhav Sahai, Delphine Reffet and Jagdeep Jagdeep Sekhon . Up to date subscriber statistics are available from the cellular operators association of India (COAI)





Reliance Communications, Mumbai.
Business overview :>35 million subscribers, expanding to cities of 5K inhabitants.
Network : 97% on CDMA, 3% on GSM. ARPU is at 9$ (370 INR). The network supports CDMA 2000 EVDO 1xRTT. The evolution plans for a migration towards 3G WCDMA. Reliance acquired FLAG http://www.flagtelecom.com/ long distance network for 450M$. Reliance independent tower company RTIL plans to deploy 20,000 multi-tenant/technology towers in 2007.They have an IMS / SIP network test bed with softswitches from Alcatel-Lucent. Video : Have installed mobile video streaming (Apple Darwin). Reliance broadband offers Adlab

Tata Teleservices, Mumbai
Trying to convince Tata requires enthusiasm...
Business overview : > 18 million subscribers (Indicom brand) and a postpaid that let's you choose your number.
Network :CDMA 2000 1xRTT network
Video : interesting discussions on video for CDMA2000


BPL Mobile, Mumbai
Business overview : 1 million premium subscribers from urban Mumbai. BPL mobile is a great brand, strong in value-added data services. They introduced Voice SMS and ring-back-tones on the Indian market
Network : GSM
Video : offer a Mobile TV and music service on GPRS (37.52 Kbps) with WAP menu and Realplayer in handsets (30 models from Nokia, Motorola and SonyEricsson) Tariffs are : real-time streaming 0.05-0.1$ (2-5 INR/min up to 15 min), download
PPV 0.25-0.5$ (10-15 INR). Content includes CNBC, AajTak, CNBC, Aawaz.

Bharat Sanchar Nigam (BSNL), (not visited)
Business overview : 31 million mobile subscribers (CellOne brand) + 34 million fixed lines including 2.5 million internet subscribers, 0.5 million broadband subscribers. BSNL is the state-owned incumbent operator and consequently focuses on reach to rural areas (7000 cities, 5 million villages).
Network : GSM (20 million) , 18000 BTS, 37000 SSPs, plans to expand to 125 million fixed lines.

IDEA Cellular, New Delhi
Business overview : 17 million subscribers; blended ARPU is 9$ (450 INR). Operates in 11 circles covering 45% of population. Idea completed an IPO to finance growth.
Network : GSM EDGE moving to WCDMA
Video : plans to introduce Mobile TV and personal mobile video calls at 3G roll-out

Spice Communications (not visited)
Business overview :3 million subscribers, operates in 2 states. 46% ownership by Telecom Malaysia.
Network : GSM/GPRS

Developping multimedia value added services in India

So with the charm of Bollywood and the most cost-effective mobile network infrastrure in the world, could we expect value-added services growth? Currently it's more below 10% of ARPU including data charges. But several of OpenCall partners expect to change this.

Kirusa
Voice SMS has been supplied by Kirusa to BPL and Idea and is extremely successful in India. It delivers value add SMS feature over voice. And it's so simple : Sending :dial *recipient's phone number, record a 30 second message, hang-up. The message is delivered in the SMS inbox. Retrieving : dial *0* to listen to all new Voice SMS


Bharti Telesoft
At Bharti Telesoft with Vaibhav Sahai
They provide VAS platforms worldwide such as m-entertainment solutions, messaging. With HP OpenCall they developed a mobile surveillance with streaming live/stored video to handsets. Their platform VDP facilitates multimedia (audio/video/data) content hosting, distribution, and delivery.

One97 Communications
With Vijay Shekhar Sharma
One97 is a king of ring-tones and traditional value-added services they supply to most operators in India. They have a 3G video dating service. A new way to speed date, through one single video call the users gets to date five persons. on WAP of with an SMS, participants select a category, then participate to 5 one-on-one video calls 1 minute each, all set-up by the service. And obviously, they rate and send messages the most interesting dates. And with had great discussion about mobile advertising, social and content services. We coined the expression the phone address book is the largest social network .

Vijay on mobile advertising video
Whatever your personal interest in dating, I recommend you start with Vijay. He gave me an insight into the success of Indian start-ups. He has vision, energy and most important he is fun.

My phone's favorite ring tone now includes Jhoom Barabar Jhoom.

Big changes in Brazil, August 2007

I visited Brazil August 13th-17th to study 3G multimedia services evolution. I saw big changes from my previous visits. In 2002, the big thing was 2G prepaid launches - my job contributed to a large deployment (at TeleSP, now part of Vivo) together with Portugal Telecom Inovacao. Then in 2004 the topic was NGN and VoIP, we shared our experiences with operators such as Brasil Telecom, and their CEO, marathon runner Carla Cico. I was really impressed with her but remained a modest ½ marathon runner. Between 2004 and 2007 I saw the following changes :

2G mobile penetration reaches 60%, and 3G is coming fast
Growth exceeded 20% in recent years, Brazil has now 115 million mobile subscribers, a 58% penetration, 80% on pre-paid plans according to Anatel . I have estimated the monthly ARPU at 13$. All this makes Brazil the 5th largest mobile market (after China, US, Japan, Russia).
On the mobile innovation side, 3G is finally being rolled-out with auctions by Anatel of 1900MHz and 2100MHz bands (announced in 2000 but delayed to 2008). The plan anticipates 80% urban coverage by 2010 at a cost estimated at 3B R$.

Mobile operators are consolidating in a duopoly
The 2nd change is that competition in Latin America with Mexico is leading to a duopoly of mobile operators in Brazil. Telefónica’s is taking control of Telecom Italia and resulting an equity in 53% of Brazil's cellular. This balances América Móvil’s control of Claro led by Mexican billionaire Carlos Slim, who also controls Telmex and is expanding in other Latin American markets. A good measure of market concentration is the HHI index which went down from 3213 to 2257 in 5 years (Herfindahl-Hirschman Index) and should drop further after recent M&A.

Like for my previous visits, I was hosted by excellent colleagues : Jefferson Kishida who has a lot of insight on the network infrastructure in the country and Fausto Dedeschi who has been working with the Latin America telecom industry for years. (in the picture Jefferson Kishida with me at Brazil Telecom in 2004 and in 2007 at Vivo with Fausto) Dedeschi and Carlos Alberto Pinto "Cap") During this visit, I had the opportunity to get feedbacks from major operators on the 3G plans : Vivo and TIM (Telefónica–controlled) and Claro (América Móvil’) who dominate but also Oi who is gaining market share (controlled by Brasilian operator Telemar).

• Vivo (Telefónica, Portugal Telecom)
  30 million subscribers 1600 M$ revenue 370 % growth, 403 M$ profit
  The company is present in 20 Brazilian States or 86% territory coverage. According to their network director Attila Branco, VIVO are consolidating their networks (CDMA/TDMA and GSM/EDGE; deploying HP's HLR solutions). They are also innovating with content services (using CoreMedia DRM with PT’s MMBox/DiNO platforms) and now preparing 3G video services.
• TIM Cellular (Telecom Italia, Telefónica)
  23 million subscribers, 3400 M$ revenue, 84 % growth, -153 M$ losses
• Claro (América Móvil)
  22 million subscribers (GSM1800, TDMA800)
  3900 M$ revenue 39 % growth, 498 M$ profit
  also plan to launch 3G services over existing 850MHz spectrum
• Oi Movel (owned by Telemar)
  13 million subscribers (GSM1800)
  1600 M$ revenue 35 % growth, 64 M$ profit

Brazil's social networking expands into mobile 2.0
The 3rd change is the continued expansion of the Brazilian internet phenomenon . On the infrastructure side there has been visible progress : internet users doubled to 41 million since 2004 [ITU 2007] connected using 51 million fixed lines (26% penetration) and 6 million fixed broadband (3.1% penetration, 11th worldwide). Some new cable companies are challenging the 5 incumbents Telesp, Telemar, Brasil Telecom, Sercomtel, and CTBC Telecom : I noted the cable operator Net Servicios offering a 8Mbps service. Broadband price is still a big inhibitor, the cost ratio to the average income being 10 X that of western Europe. PC penetration is 11% and HP is one of the manufacturers contributing to efforts to lower prices and there are offers in the range of 500$ with 24 month payments.
Brazil leads is social networking usage. The country takes the number 2 position worldwide in Ipsos’ Face of the Web survey. They measured active (30 days) SNS usage in South Korea 55%, Brazil 41%, China 27%, Mexico 26%, and the US 24%.

MSN Messenger and Google's Orkut social network were adopted immediately in Brazil . Google's Orkut claims 12 million monthly visitors in Brazil, that’s 50% of their worldwide traffic and over 30% of Brazil’s internet users. Unfortunately a few of them showing illegal content as Wall Street Journal reported. The settlement of such abuses by peer moderation as well as regulation is unfortunately part of reaching the maturity of services.

In Second Life, Brazilians are the 6th largest group with nearly 5% of worldwide users. I have seen Paulisto SNS users in trendy internet bars such as this one :


The natural evolution of social networking on mobile has already generated a few announcements. Dada Brazil launched a mobile SNS that enables mobile blogs with pictures and video. Dada Mobile has 7 million members worldwide, 3.2 million in the US. Vivo and StreamVerse ran a proof of concept for mojo, which enables mobile blogs, RSS feeds, vote/picture-vote, chat, share images, and status. And .but does not disclose number in Brazil. Focus Films / Conquest, a Brazilian media company together with Korean IntroMobile launched a personal blog solution NetMirror. IntroMobile had previously deployed its mExtendMedia MMS solution at VIVO.

Mobile instant messaging is also being promoted nicely. This add for MSN mobile was posted on You Tube :


Mobile 2.0 must fit with social and economic differences
Brazil is that is a country with divisions. Sao Paulo state and city account for 3 million of the 5.3 million Brazilian enterprises. A majority of subscribers belong to the poor population but a small part are educated and rich . To deliver the potential of 3G social networking services it’s important to think about services that would have both a high-end western-style (like mobile TV content and video blogging) and a cheaper 2G version (like and group SMS, ringtones, cards, notifications). Brazil’s economic position is however in the top tier within BRIC countries (GDP per capita at purchasing power parity, source: Economist)
Brazil 8,997
Russia 11,059
India 3,508
China 7,498
Mexico 10,817