It is not true that cellcos have no niches left for them to compete over. If they’d only quit whining and look closer, they’d see that as basic operators see ever-thinner margins in their long distance business, they’ll have no choice but to raise local call rates (which was subsidized by long distance rates so far). Given that most cellcos (except Bharti) have no long distance business, and see a bulk of their income come from local and intra-circle calls, I’d say this would be a good hammer for them to hit basic operators with.

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It is difficult to find worse whiners in India today than the GSM cellcos. I’m writing this after laughing over this line in the Financial Express: Industry sources said the TRAI directive on interconnect came as a ’shock’ to the cellular industry last Friday and forced players to take it up with the regulator as a first priority. These are people who went into business with eyes wide open: they knew that

• India’s basic-telephones-to-cell interconnect costing was ridiculous
• deregulation in the fixed-line sector was imminent
• the new players would be much more nimble and aggresive than the lumbering dinosaurs called BSNL and MTNL

Well, now they have a velociraptor called Reliance in their midst, and it’s drawing blood without even coming starting to offer services. And they are surprised that the regulator is siding with the basic-service-providers? After all, the TRAI is merely interpreting the rulebook, and the rulebook says that cellcos have to offer interconnects to all basic providers. If the cellcos are discovering only now that the rulebook was so firmly stacked against them, then (if I was a cellco shareholder) I would raising cain about what the cellco legal eagles and due-diligence people were doing all this time.

Of course, the correct answer to that is they were playing a wink-and-nod game with their only ‘competitors’, BSNL and MTNL, comfortable in the knowledge that both was doing what they knew best — fleecing customers while providing substandard service.

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Worth re-reading: a mid-1998 piece by Paul Krugmann: The Ice Age Cometh.

…suppose that, for whatever reason, the market goes up month after month; your MBA-honed intellect may say “Gosh, those P/Es look pretty unreasonable”, but your prehistoric programming is shrieking “Me want mammoth meat!” - and those instincts are hard to deny.

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At least one Reliance employee has a weblog. Surprise, surprise, his site looks better than his employers’.

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Keith Dawson confirmed this in an email to TBTF subscribers — there will be no further updates to TBTF^?.

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After about 2 weeks of bluster from Indian cellcos, the TRAI finally shows some backbone and asks them to stop selective interconnects or else. Of course, this will probably go to court, and in no small part due to the TRAI’s mulish refusal to at least try to implement a calling-party-pays structure for cellular calls.

More interestingly, Sunil Mittal announced yesterday that Bharti received approval to carry data on their i2i submarine cable on Friday: We have got the necessary clearances on transmission of data only last Friday and the consumers of bandwidth can expect some announcement in this week. Last month, I had written about how 160G of India’s total outgoing bandwidth of 900G is wasted on voice alone. Things will improve further if Dishnet can get its act together.

Of course, most of India’s data flow is to the US, so I don’t know what latencies will result in these Singapore-routed connections, but anything around 300ms will be good to have.

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Rediif: Mobile Users not impressed with new rate cuts. Sunil Mittal of Bharti Telecom clarified that the customers would have to pay charges for long distance call from cell to fixed line. … Ashim Ghosh of Hutch said that there was no question of offering free incoming calls. The GSM cellcos are still in denial. There are 42 million landlines in India (versus 9 million GSM cellphones). Creating a gated community of mobile GSM users will not help, especially as each CDMA user can interop with landlines seamlessly. What these people need to do is lobby to remove the interconnection tariff that they pay. And offer free incoming, no strings attached. (Britain’s 7-prefixed cell numbers is a good model, one knows one has to pay more to call the number). But considering these guys negotiating skills (heck, they can’t even decide termination charges so that they can offer cell-to-cell incoming free) I am not surprised they have made no headway with the TRAI so far.

On another note, I’m still waiting for BSNL and Bharti’s long-distance price-drop announcement.

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GSM Operators strike back, customers smiling: In a bid to compete with limited mobile services by basic service providers, cellular companies on Thursday announced a uniform mobile-to-mobile STD rate of Rs 2.99 per minute. Not good enough. Here’s what Airtel will have to do to retain me: 1. most important: free incoming - from landlines as well. 2. STD rates should be be 2.99/minute for all phones - including landlines. 3. Cheaper SMSes. Rs 1 per SMS sent doesn’t cut it anymore. And I don’t care what the COAI is whining about interconnect rates: if Reliance can lobby, so can you - go get those interconnect rates scrapped. But for God’s sake stop whining and try to deliver value to the customer for a change.

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