Has Airtel Dropped the Innovation Ball?

October 9, 2006

Although I’m a diehard Airtel loyalist- back in my Patiala days, I was a beneficiary of the price war dividend- I criticised them a few months ago for not doing what a tyro like Spice was doing. Now, I’m going to ask if they’ve dropped the innovation ball altogether.

Their last major new VAS was the portfolio tracker they launched ast May. Since then, all they’ve done is expanded the range of smartphones Blackberry is available on and introduced GSM based Fixed Wireless. Considering Blackberry is shortly ending its exclusive tieup with Airtel, and that Reliance and Tata Indicom have had fixed wireless for donkey’s years, that’s not very impressive. Even in pricing, the lifetime prepaid offer was really a reaction to Tata Indicom.

In the meanwhile, Hutch has come up with a stunning funda: Fun Cards, with which you can install ringtones and ringback tones the way you do a prepaid recharge. That’s a customer delighting product for sure- just buy and scratch a card, instead of going through a long list, or navigating IVRS menus, or paying for premium SMSs.

You could argue about whether the product actually makes business sense. Hutch has been facing a retailer boycott since it slashed retailer margins on prepaid recharge cards. Fun card margins are probably higher, but there’s no guarantee that they won’t erode either, or that this will mollify pissed-off retailers who get most existing business through recharges. Not only that, if Hutch miscalculates the popularity of a particular Fun Card, it’s got a lot of dead inventory sitting in it’s supply chain- not really a problem when your distribution model for ringtones is purely electronic.

Of course, the possible weakness of Fun Cards as a product doesn’t justify Airtel failing to innovate anywhere else.


The Risk Industry

October 7, 2006

Three months ago, I pointed out that telecom is a bad poster child for reform because it has an unfair advantage- the network effect. I wrote about how retail is a better poster child, and also sidetracked into services retailing, but left one question unanswered: is there another industry which could benefit as much from the network effect as telecom has? Well, it’s time to answer that question.

The answer is: Yes. The financial services industry (which is actually several industries together: banking, insurance, wealth management, brokerage, capital markets, consumer lending, project finance, and probably half a dozen more).

Financial services benefit from the network effect because the fundamental product that all these sectors deal with is not equity shares, or bonds, or currency. It’s not even money. It’s risk. And every person plugged into the organised finance system is a producer and a consumer of risk.

This is similar to how the telecom industry’s fundamental product isn’t phone calls or SMSs or IP packets, but information. And everybody plugged into a telecom network produces and consumes information. The important thing is that they trade it with each other, not with the phone company- which is why the network effect kicks in.

Similarly, in the financial system, the important thing is not that a particular company takes on risk. The important thing is that all customers produce some sort of risk, which they sell to some financial intermediary- whether a bank, an insurance company, or to investors directly- which then repackages or restructures it, and sells it back to other customers. The more consumers of financial products there are, the more valuable the financial system is.

Of course, there are complications which the telecom sector doesn’t face. A voice call or an SMS goes through pretty much as it is, intermediated only by machines, but risk has to be broken down into its components and repackaged by human beings before you can sell it on further. This means that there’s more intermediation, and less transparency between intermediaries. Transaction costs are higher. But the model is the same.

What all this means is that the Indian financial services industry could take off as fast as the Indian telecom industry. It would have to overcome a bunch of hurdles first: regulatory, technological, environmental, and organisational- but the potential is there.

(Disclosure: I work in the financial services industry myself, so I may not be entirely objective.)


Customisable Ringback Tones

August 5, 2006

Caller ringback tones are not being utilised to their greatest possible extent. Their true value will be unlocked only when they become customisable.

Right now, everyone who calls you hears there same ringback tone. For unmitigated fun, the tone would change depending on who was calling.

Smita would call Ravi, for example and hear ‘Humein Tumse Pyaar Kitna’. But when Scahin calls Ravi he would hear ‘Yeh Dosti Hum Nahin Todenge’. Of course, if Ravi’s mother called she would get to hear ‘Om Jai Jagdish Hare’.

When Ravi called Smita back, he would hear ‘Bhaiyya more’, but that’s part of life, no?


St. Valentine is a Fraud

July 25, 2006

Mukesh Ambani and Sunil Bharti Mittal have done more for lovers than he ever did.


Spice Telecom on the Right Track

March 3, 2006

Spice, the also-ran cellular operator in Karnataka has been trying to rebrand itself over the past few months. It doesn’t have the muscle or subscriber base of an Airtel or a Hutch, so it’s been fighting where it can: innovation in VAS.

I’m not sure how much of a market some of their stuff would have- things like keeping your organiser on a server and accessing it by SMS: the sort of people who would need a calendar regularly could probably afford a PDA anyway. Then, stuff like video ringtones is nothing really differentiated.

When I was out shopping yesterday, though, I noticed something much more interesting: the ‘2gether’ plans. (Links: 99 rupee postpaid, 250 rupee prepaid)

This is a regular potspaid plan. You get to call one other number at discounted rates, which is nothing new. What is new is that they throw in a little bit extra: the two numbers are next to each other. Spice is pitching this as a plan for young couples. The advertising is all big red hearts and cupids.

Again, this might not actually work. I don’t know how many young couples in Bangalore, leave alone the rest of Karnataka would actually want to advertise their relationship status. When Samanth calls up his mother to tell her that his number has changed, so that he can now be one number before Shilpa, sparks will fly.

Leaving that aside, Spice is still on the right track, even if this particular plan might not work. Selling connections to all the people who call each other together is a much better idea than selling to individual customers, who might use it only to receive incoming calls from landlines for all you know. This way, you’re definitely getting most of the call volume for yourself.

In fact, I’m shocked that Airtel or Reliance haven’t come up with something like this for families. Both have their own number series (99 for Airtel and 93 for Reliance) so it’s not like they have a constraint on available adjacent numbers. American cellphone operators have been doing this for years now, and in fact go a little bit extra by putting all the numbers together on one single bill. It’s not as if they have to come up with a completely new model, they just have to imitate whatever Verizon and AT&T are doing. And Airtel is usually quick to pick up whatever works overseas: they saw the Easy Charge system in the Philippines and installed it in India practically overnight.

Hmm. So maybe they’re already doing it. I think the next six months might just see one of the big three private players aggressively marketing adjacent numbers and a unified bill for families. Let’s see.


It Isn’t Just…

February 10, 2006

It isn’t just Reliance Infocomm which tries to cheat BSNL. BSNL employees do the same thing. So who’s to blame- Reliance, or the stupid system of tariffs and cross-subsisdies that sets up arbitrage opportunities like this in the first place?

It isn’t just airports which are seeing private participation and development. The MMRDA has received fifteen tenders for a new bus terminus to be run on a build-own-operate-transfer contract. Which should hopefully answer Dilip D’ Souza.

And it isn’t just Jayalalitha who nationalises industries to give political rivals a poke in the eye. The Andhra Pradesh government has just handed all the well-managed dairy cooperatives to the bureaucracy. Once again, the political rivals will eventually come back to power, and it’s the consumers and dairy farmers who’ll get shafted.


Municipal Wi-fi

January 11, 2006

Many American cities- San Francisco is the most well known example, but Philadelphia and some others are also planning it- are planning to roll out free wireless broadband networks covering the entire city.

If you have an opinion, please answer the following questions:

  1. Is this a waste of public money? Shouldn’t municipalities be more concerned with providing water, police and fire services, garbage disposal and so on?
  2. Would your answer to question 1 change if the city in question was Bombay or Bangalore or Belgaum or Patiala? Why?

Update: For question two, I don’t really care about the relative waste of public money, or that San Francisco can afford to waste public money. What I’m asking is if internet access is an essential municipal service in the first world and not the third (or two-point-fifth) world.


Data Mining or Dumb Luck?

December 1, 2005

I got this SMS from Airtel today:

Dear customer, Congrats! In appreciation of your long-standing association,we have actvd ISD facility without any additional deposit, w.e.f 23-Nov-05. Thank you

I wish Airtel wouldn’t use SMS-ese in their offficial messages. It’s irritating. But that aside, I’m thrilled I’ve finally got ISD without having to shell out a deposit. I’m on a peculiar plan- it’s a postpaid plan meant for salaried people, but the Airtel sales office offered it to IIMB students. The problem with that is that to activate long distance calls to landlines, or international calls to any phone, you had to deposit your salary slip. Without a salary slip, you had to deposit ten thousand rupees. Ouch.

Anyway, their customer sercive centre calls me every two months or so and tries to sell me an add-on service. I usually decline, but when the call centre would ask if there’s something I’d rather have instead, I used to tell them how irritating it was not to have an ISD facility. Now, they’ve given it to me just for sticking on for fifteen months.

What is now intriguing me is- did they give this freebie to everyone who’s been on for fifteen months, and has paid bills (very substantial bills indeed at one point of time) promptly? Or, did the customer service rep actually flag the fact that I wanted ISD, enter it into their CRM package, which decided that I would like an ISD facility best when it went through the records and saw that I had been on the same connection for fifteen months. What’s more- is Airtel’s data mining smart enough to figure out that if the bulk of someone’s bill comes from national long distance calls, (s)he might be an even juicier prospect for international long distance?

I’m not too sure. Their Karnataka database was pathetic six months ago- the Airtel centre didn’t know how much I had on deposit, how long I’d had roaming, or how long I’d had my connection. My request to terminate roaming vanished into the ether, and I finally did it myself online when they revamped their website (which now works really well). Still, six months is a long time, and maybe they’ve refined their CRM a lot since then.

Does anybody know if this zero deposit on ISD has been offered to more people than me, or about Airtel’s CRM in general? Comment or drop me a line, please.


Competition at the Bottom of the Pyramid

November 15, 2005

Two interesting links. First, MobilePundit links to an Economics Times piece on Bharti and Motorola entering a retail tie-up to sell Motorola handsets. As I mentioned earlier on my old blog, Motorola is selling Bharti the sub-$40 C110 series phones at discounted rates.

Now, Business Standard is reporting that Philips is looking at the bottom of the Indian pyramid, and is trying to gain a lead in mobile phones by coming up with a sub-$20 phone.

I’ll believe a twenty dollar new phone when I see it- there’s a high chance that the Philips CEO is simply putting fart- but the fact that he’s said it it does indicate that there’s going to be competition in this segment. Which is good for consumers, and even better for society in the long run.