To the next 25 years !!!
31st July 2020 holds a special significance in the history of mobile communications in India. This year would mark the 25th anniversary of the first mobile call made in India. For enthusiasts and for nostalgia, this first call was made in 1995 by the then CM of West Bengal (Late Sh. Jyoti Basu) to the then Union Communications Minister (Late Sh. Sukhram).
In these past 25 years, the mobile phone or, better to say, the mobile connectivity has traversed the entire spectrum of being touted as an uber-luxury in its earlier days to now being termed as one of the “physiological” need in the lowest tier of Maslow’s hierarchy. In today’s times, it has become common to see that a mobile phone is one of the first toys that any infant lays its hands on. The journey has been full of achievements, despairs, scams and controversies, at times more than what has been seen in other sectors. What this journey has not been is — simple!!!
One of the biggest achievements of the mobile revolution has been its contribution to the Indian economy. It is a unanimous view that the communications businesses have contributed immensely not only to the government coffers but also to the society at large. The revolution gave birth to entire value-chains of equipment, solutions and services. Over the past 25 years, this sector (and now I’m treating mobile communications to being synonymous with telecom sector in India) has brought much needed foreign investment in the country. In different phases of this journey, the sector has given birth to different value players — be it in the infra space, value added services space or the mobile handset space. There have been numerous studies around the contribution of the sector to GDP and thus putting a figure would be doing injustice to the sector. In fact, I am more than sure that the indirect benefits have surpassed the direct contributions by a vast margin. It would be worthwhile to say that the success of government welfare schemes because of the JAM (JanDhan — Aadhar — Mobile) trinity, that we are witnessing today, would have been nearly impossible without the “M” being as prevalent as it is these days.
Business innovation has been the key to survival in this sector. As such, and as Indians, we should be proud of the many firsts that this sector has brought about — not only in the domestic arena but also internationally. A little internet search would tell you that the minutes-factory model conceptualized by Bharti Airtel has been hailed as one of the most innovative outsourcing mechanism of its time and has seen reciprocation at a global level. Not only this, the sector had shown tremendous innovations even in the infra space. In a one-of-its kind phenomenon, three competitors came together to create one of the most valuable Telco Infrastructure company in the world — Indus Towers. In fact, even before that, we had another interesting business success story in GTL, that pioneered the concept of infrastructure outsourcing and at one time was the largest tower owner in India. This mobile revolution also gave birth to a lot of startups in the Mobile Value Added Services stream, though the word “startup” was not in vogue at that time. A host of these players emerged from nowhere and went on to create immense revenue not only for themselves but for the telecom operators too. I am not aware of any other nation, wherein CRBT (or the songs that you hear when you dial someone) has been such a hit or should I say a killer application. The setting up of the largest 4G greenfield network by Jio was another such unique achievement that was followed up by the launch of the cheapest 4G phone in the world. Certainly these innovations have been no mean feat.
The sector has also witnessed amazing participation from the International community. Though business analysts have known this for years, but it may still come as a surprise to some that Singapore based Singtel and Temasek were some of the initial strategic investors in Bharti Airtel. Malaysian sovereign fund Khazana had also invested in Idea, long back. Telenor and MTS (for the brief period they were here) also had sovereign investments either in their parent companies or in their Indian business. The latest addition being Saudi’s PIF and UAE’s Mubadala & ADIA investing in Jio Platforms. Not only sovereign funds, but a lot of foreign telcos had also started operations in India, but have more or less exited owing to the tough business conditions. Interestingly, Idea in its earlier avatar was informally referred to as BATATA — being a result of an amalgamation between Birla Group, AT&T and the Tata Group. OEMs have been some of the biggest contributors in this journey. Despite their foreign-origin, they have contributed immensely to the sector not only by setting up their factories in India but also by supporting the businesses through their wise counsel and business adjustments even in the tougher times. To give you a trivia fact, Ericsson has been in India for more than 100 years now. It would also be worth mentioning that the sector has witnessed not only incoming contributions, but outward investments as well. Bharti Airtel has been a huge investor in telcos not only in other Asian countries but even in other continents. Owing to so much of internationalization, it is not hard to find Indian human resources working for telcos across the globe.
Even in this short time frame of 25 years, the sector has seen its good, bad and ugly days almost in a continuous-cyclical manner. It would not be hyperbole to say that the sector has witnessed value creation, disruption and wealth destruction many times over. Nevertheless, the businesses have shown their phoenix-like spirit and have risen to whole new levels, whenever the chips were down. But then, 25 years is a very small time-frame for a critical analysis of any sector in any country, more so when the country and the sector had been in their evolution stage.
As such this moment should also serve as a time for retrospection, and of learning what went wrong and what could have been better. For starters, Indian telecom sector has been too heavily regulated when compared to its contemporary technology space. It would have been important at some point in time, but as the sector enters its youthful years, it is time for the guardians to have a more hands-off approach. As is evident all around the world, this is the time for experimentation and I believe that a certain degree of freedom and flexibility would go a long way in overall value creation in the sector. One of the most urgent requirements being the need to reduce the financial burden on the telecom operators by way of reducing or eliminating various levies (and there’s no end to it). The administrative (read spectrum) costs, coupled with the (unpredictable) regulatory costs and the (never-ending) legal costs are bearing too heavily on the young sector.
Moreover, it is also time to reflect on the things that have been left behind in the rat-race mode of operations. Even after 25 years of the first call, we have more than 40,000 villages that are still digitally unconnected from the rest of the world, despite there being a dedicated fund and a dedicated administration wing in the Department of Telecom. Funds don’t seem to be a challenge; at last reading the USOF still had more than Rs. 55,000 crore in its kitty and continuous inflows accruing from the operators. Add to this, the urgently needed but the deeply missed success of the Bharatnet project. Unfortunately, laying of telecom infrastructure is still a massive challenge in the country. Even after the notification of RoW rules in 2016, the businesses are still at the mercy of the last government department for the right of way — despite everyone understanding the need for such an infrastructure. The businesses too need to play a more effective role in getting connectivity to these last patches by drawing up innovative solutions, which would ultimately help them too. One other aspect for future should be greening of the telco-operations. With improvements in grid supply and the development of alternate sources of fuels, telcos should further bring down their reliance on diesel and reduce their carbon footprints too.
I believe that the clouds always have a silver lining. Given that the last few months have been witness to the massive infusion of funds in the leading operators in the country means that the silver has still not worn off. The innovative streak and resilience of our business leaders would surely help overcome some of the remaining gloomy patches. Else who would have imagined, even a couple of months back, that Jio would be able to raise more than Rs. 1.5 lakh crores from leading global investors or that Bharti Airtel would bid and win the rights to own a new-age satellite company in the UK. The Covid19 pandemic has also truly brought out the need and effectiveness of a robust mobile communications sector. In fact, the combination of this pandemic with the overall reset of the sector and a forward looking NDCP does set a bright roadmap for the coming decade.
In a nutshell, the journey till date has been about the transformation of the communications sector from a vertical to a horizontal layer, that is increasingly becoming critical for other sectors to survive and innovate. As the sector is aging, our approach towards technology is getting matured and we are also gaining confidence in our ways and means. One of the marquee evidence being that we are on the verge of getting one of the first Indian standard for 5G technology ratified from ITU, a standard that is designed bearing in mind our local needs. This coupled with the announcement that “Jio has designed and developed a complete 5G solution from scratch” clearly indicates towards the fact that the best is yet to come.
Here’s to the next 25 years….
Cheers!!!
(Disclaimer: The views expressed above are my personal views and do not concern my employer.)
