The Indian telecom industry is now reeling under the pressure of low ARPU and subsequently low RoI for the telecom operators. If the explosive growth in mobile subscribers’ base is taken into account, the Indian market holds huge potential, but no one knows how to convert this into a moneymaking proposition. Corporate thinktanks are now working overtime to come up with plans for new revenues.

To help the industry out on the issue, VOICE&DATA and Cisco organized the TopView 2004 seminar on generating new revenue streams. The panelists included officials from the ministry of communications, TRAI, BSNL and MTNL, and private players like Bharti, Cisco, Idea Cellular, and Data Access. They deliberated on issues relating to technology, roadblocks in rolling out new technologies, and new ways to push up the revenues.

According to industry estimates, operators’ ARPU had come down to $7 in 2003 from $10 couple of years ago and is expected to further dip to $5 by 2005. When compared with the European or American ARPUs, which are more than $50, the Indian figures seem very disheartening. However, the panelists agreed that low ARPU indicates a huge untapped user base.

Rakesh Kumar, senior DDG, ministry of communications, emphasized on the need to take phones to the rural areas and educate customers there on phone usage. Kumar said the low usage time by Indians is the main reason for the ARPU being so low. In India, per line per day usage is less than 30 minutes. Operators must find ways to utilize the lean period when the line usage is low.

According to Kumar, technology might increase effectiveness but per line usage has to go up for more revenues to flow in. He said, though operators might find the investing in rural areas a loss-making proposition initially but in the long run revenues would come from these areas. He also emphasized the need to do away with monthly rental schemes because low tariffs would prompt more usage and hence more profits.

AK Srivastava, senior VP, administration, MTNL, was of the view that the existing revenue streams must be enhanced and sustained. He said, the user is not bothered about the type of technology being used and hence the technology by itself is not responsible for generating revenue; it is the affordability in terms of cost that matters. Easy-to-use and customer-friendly technology finds favor everywhere, and these need not be the latest or the best in the industry.

He said there is need to hybridize various technologies to suit Indian needs. There is a need to increase telecom-penetration level and ensure that networks are free from faults. If the operators put reliable networks, utilization would be maximum. And, if the customer gets good service then revenues would flow in.

Private players agreed with the government operators on the technology part and added that a filter must be placed keeping the Indian requirements in mind. What has been a success in other countries might fail here. Customers would accept what they require. Outside this, everything became useless.

The main challenge for the Indian telecom industry is to identify the right technology and deploy it within the stipulated time frame. Everything is out in the market, it is on operators to install and make them usable and cheaper for the customer. The revenues would come from content and the user-friendly applications; technology would take a back seat.

Vivek Jhamb, executive vice president, Data Access, said the main roadblock in network deployment is not the choice of technology but putting up the network on time. Jhamb said that with the fiber connections coming fast, the connection charges are further downward bound. In the coming days, both satellite and fiber connections would compete for quality of services and prices to lay claim to market share.

Vivek Jhamb Ashok Juneja AK Srivastava SN Gupta executive vice president, Data Access Bharti senior VP, administration, MTNL advisor, converged networks, TRAI

The panelists agreed that voice traffic would be the main money generator but solutions to the ARPU woes would lie on the converged networks. The terminal devices also play an important role in delivering quality user experience. Lack of low cost, new-technology terminal devices at both ends creates roadblocks in rolling out more and more converged applications.

SN Gupta, advisor, converged networks, TRAI, said if the quality of service improves then user logs on to the phone lines more often and the operators would not need to spend time and energy on planning new revenue streams. He stressed on consolidating the present models, improving the service quality, and educating users to use new technologies to push the revenues upward.

Gupta added that the government is adopting a technology neutral stance and is open to anything as long as better services are delivered to the customers. He said India has come a long way from the times of placing emphasis on installing good communications infrastructure to now when customer the king.

He added, customer is still the king but real money now lies in better content. And, content and applications—not technology—are going to drive revenues. Operators must plan to use the newer technologies over the current infrastructure to deliver more services and in turn hike revenue returns, he said.

However, Mario Mazzola, chief development officer, Cisco Systems, differed on technology being just an enabler. He said technology creates opportunities and it helps in visualization of the future trends. On wireless technologies, Mazzola added that it is in its nascent stages but would play an important role in the future.

Commenting on the issue of too many pilot projects failing, Mohit Bhatnagar, head, value-added services, Bharti Tele Ventures, said the failure of pilot projects gives an opportunity to identify the constraints and improve services. It also gives an insight into the requirements of the market. Adding to this Ashok Juneja, director, Bharti Tele Ventures, said one should not be afraid of failure and an open culture should be developed to innovate and generate new ideas.

Anil Jain, DDG, marketing, BSNL also echoed a similar viewpoint and said the public operator had completed projects in DSL and ADSL services, broadband, and other value-added services. BSNL has targeted five lakh DSL subscribers by the end of this year and has already tied up with various companies for its broadband services.

On being asked how aware the Indian corporate and enterprise customer was about the technological changes and their adoptions, Jaishree Ullal, senior VP, optical networking group at Cisco, said though the Indian customers are waking up to the latest technologies, worldwide the corporate customers are driving the service provider beyond voice and storages
services.

Mohit Bhatnagar Mario Mazzola Rakesh Kumar Rajat Mukarji head, value-added services, Bharti Tele Ventures chief development officer, Cisco Systems senior DDG, ministry of communications VP, corporate affairs, Idea Cellular

The operators said that Indian enterprise customers are also becoming more demanding and are conscious of the technologies being deployed. They pointed out that corporate users are driving the price matrix.

Rajat Mukarji, VP, corporate affairs, Idea Cellular, said the operators have to understand the customers’ requirements and deliver accordingly. He said every operator has similar kinds of services but it is the ‘being different’ concept that would attract customers and help in retaining them. He also emphasized the need to have better terminal and access devices, calling them the key to accessing the latest services and applications being offered.

Taking the point on carving niche services to retain customers, Ashok Juneja said Bharti believed in building a brand and it is brand equity that drives the market dynamics. According to him, slashing the price is just a tactical move. It is new services and ideas that attract revenues.

Another point of concern raised at the conference was the high churn rate among the mobile users, which is almost 50 percent. The public operators appeared unfazed because the percentage of churn rate for them appeared to be very low.

However the private mobile operators said they were taking measures to stem the churn, which would include educating both employees and customers to solve problems. The operators agreed that merely establishing a call center does not help and there more needs to be done to deliver better services.