23 Dec

End of inter-circle roaming: Good or Bad move?

 
Today I read in news about Govt’s decision to finally end inter-circle roaming agreements between Airtel, Vodafone & IDEA.
Well, the case is not new. It has been up with doT from over months and got highlights when CEO’s of all 3 firms wrote letter to Prime Minister of India for his intervention.
 

Little background

In 3G auction held in 2010, none of the operators got pan India spectrum across 22 telecom circles. Most of them have license in around 10 circles (few in 9, few in 11 and so on) and thus no one can provide full Nationwide 3G coverage.

Why did that happened?

Well, it was already expected well before auctions as Govt. gave only 20Mhz of spectrum in 2100 band in most of circles. It was decided that each player will get just 5Mhz, which brings number of 3G operators per circle to just 4. In all circles one slot was reserved for BSNL & MTNL (infact they were allocated spectrum back in 2008) and hence in most of circles there was scope of just 3 more operators. This was a problem as we do have more then 3 mobile operators at pan India level and which are big and doing pretty good business. Airtel, Tata Teleservices, Reliance, Vodafone, IDEA, Aircel, and few other small operators. Hence it resulted in cases like Airtel getting spectrum in Delhi, while IDEA missing in Delhi and going in for Haryana, where we find Airtel missing. (Here’s detailed circle wise allocation)
 
Few months back , Airtel, Vodafone and IDEA eventually got in an agreement for inter-circle roaming. It was a situation where a user say of Airtel Haryana (where Airtel has no 3G spectrum) will use IDEA’s 3G network and will have seamless experience and no roaming or any extra cost.
 

Inter-circle roaming agreement: loss to Govt?

One of big controversies here is claim from Govt. that Inter-Circle roaming agreement was huge loss to Govt as operators who have not paid for a specific circle are offering service in that circle. Thus Airtel giving 3G in Haryana is like Rs 300 crore ($60million) loss to Govt. and same applied on IDEA giving 3G in Delhi – loss of $600million to Govt.
Is that true? Well, I am not a lawyer, nor I have read 3G agreement carefully from legal eyes to find if such sharing is permitted or not but from common technical sense I can say that’s just a bad judgement from Govt’s end.
 

Why bad judgement…

  • Less spectrum was auctioned initially (that too after years of delay) and operators had no choice but to go for just few circles. (mistake from Govt. end)
  • Broadband still suffers badly in India due to very poor policies of Govt. ranging from very poor management of BSNL to poor niXi tariff policies. We stand no where in top 50 list in terms of broadband speed and penetration. Checkout NSN’s Connectivity Score Card on India.
  • Since operators had limited spectrum, capacity is always limited.  Thus if Airtel is sharing 5Mhz with IDEA, it is still 5Mhz in total. Hence Airtel is probably not making an undue gain from the deal. Airtel has not paid to Govt. for Haryana circle but in a sense paying to IDEA for the same. They are not getting things for free!
  • All operators all already feeling hard on cash and another auction doesn’t makes sense + they are still investing a lot in building new network which is used by just a few users. Such sharing would have boosted up  usage significantly.

 
Well, based on above points, I don’t see any sense in not permitting such agreement. If it was illegal, then may be a policy should have been re-considered rather then causing another road block for broadband in India. What else Govt. of India expects from telecom players after getting $15billion in 3G auction that too just for 5Mhz block.
It is again one of decisions where I see Govt. to be less responsive towards pain of poor broadband in India and more concerned about making money from telcos which in-turn is passed on to end users of India.
 
With hope that India will have better broadband soon, Good Night! 🙂
 

20 Dec

Start of competition based on speeds

 

Yesterday I read about BSNL increasing speeds from 512Kbps to 1Mbps (with caps). Today I came across news in Business Line about Bharti Airtel increasing speed on wireline DSL. This is really good believe me! I am not refering to little bit increase in speeds, but I am refering to start of competition within ISP’s based on speed. Right now it’s Wireless (3G) Vs Wireline (DSL) players, and I am sure very soon we will see competition within wireline Vs wireline players. Competition is always good specially in telecom industry. We can clearly see where we stand now: from 8years of waiting for a telephone connection to 5min of prepaid sim purchase, from 56Kbps at $1/hour to 10GB data at $20 a month. We have came so far, but yet long way to go!

 

One of key thing to understand here is the fact that wire has enormous amount of capacity (not just fiber but copper too) and this can scale very well as compared to wireless 3G spectrum. Probably we won’t see any huge change (minor will be there for sure) in 3G data pricing for now because of limited spectrum purchased at whooping $12billion and on-going network upgradation costs but wireline broadband market is very different. Wherever wires exists (theoretically) capacity is there and market demand followed by competition will bring that un-lit in real world.

 

Last week at India Telecom 2011, one of my friend asked me an interesting question with regard to speed. His question was when it doesn’t costs much to Airtel to upgrade DSL speeds from 512kbps to 8Mbps, what really prevents them from doing that? 

Well, that’s a common confusion lot of tech people have (who are little bit away from simple economic factors of demand and supply). If you ask – does it really costs Airtel to upgrade speeds from 512kbps to 8Mbps?

Answer: Not much. Really, very negligible cost but the real cost comes from other part where they will loose money from high paying user. Today say for example if Airtel gives 512Kbps for $10/month while 8Mbps for $250/month, and they eventually decide to upgrade speed on 512kbps plan 16 times, what will happen to ultra high speed $250 plan?

Assume they also offer an upgrade to ultra high speed plan user to 20times taking speeds to 160Mbps – how many of users would be really willing to upgrade? Not many, seriously very low. Even though supplying speeds greater then 16Mbps will be technical problem due to DSL limitation. Thus, Airtel is going to loose over $240 or so a month from such a lot of such heavy users who will just downgrade to $10 plan. Now, based on current demand, that loss is not justified by gain in number of users by offering such high speed. Hardly 4-5% users really care for speed, and most of them are using broadband already. Very few people will be in mindset that “I will get connection only when they offer 8Mbps for $10 else I am not going to take even 512Kbps” . This simple economic factor along with few other factors (including technical limitations) force ISP’s to keep speed low on low end plans while offering ultra fast speed to premium users. Only way out for this problem with increase in demand which will also bring competition and I am sure we will see competition within wireline ISP’s taking speeds over 10Mbps for very affordable price within few years.

 

 

Following are the things to look forward in broadband domain in 2012
  • Launch of TD LTE – pretty solid wireless broadband from players like RIL Infotel, Bharti Airtel, Aircel, Tikona etc
  • More increase in speeds on wireline broadband with fast provisioning (though last mile unbundle still looks bit far!)
  • More of wireless hot spots from telcos in metro cities
  • Conversion of most of TDM based core infrastructure to IP based
  • Push of IPv6 within Indian backbones, datacenters and core level infrastructure
  • Auction of spectrum for BWA in 700Mhz for efficient LTE networks

 

It’s the start, long way to go. Again, thumbs up for BSNL & Airtel for starting! 🙂