DTH services to open up for Interportability

Government is finally waking up to allow real competition into the DTH market. Till now, there is no portability amongst the DTH player which gives players upper hand in pricing ones the subscriber chooses a particular service as the subscriber can no longer switch to other service without incurring huge cost.

Lack of regulation on the technology front has resulted into lack of uniformity amongst the DTH players, though the two biggest players, Tatasky and Dishtv, use MPEG 2 technology the new entrants into the market are using MPEG 4 technology. The Ministry of Information and Broadcasting has asked the Bureau of Indian Standards (BIS) to draft a norm on DTH setup box technology, which will enable Interportability of services.

This decision will benefit the present subscribers which are estimated at around 6.4 million. But, this decision will have major impact on the future growth of DTH market as consumers will find it more attractive to have DTH service with Interportability feature. DTH segment has attracted two new players in recent months and is expected to heat up the competition and growth of this segment.

Plebiscite to solve farmer’s plight and land acquisition for industrialisation?

Maharashtra’s decision to hold plebiscite for MahaSEZ is radically different from WBengal’s decision on land allotment for Tata. This is evolutionary attempt in land acquisition policy for industrialisation. The news of plebiscite is bound to give sleepless nights for corporate, who will find it difficult to deal with the new situation. The new arrangement brings in a new party into the process.

The process gives farmers/land owners right to decide whether they would like to part of an industrial project or not. This is a good step in reducing the backlash over industrialisation in rural areas. It would also give farmers better say in rejecting any proposal to acquire land without a good and sustainable package.

However, there are also chances of manipulation of farmer’s interest as any misinformation would jeopardise interest of both stakeholders. Also unclear is what would happen when a minority of farmers oppose the project. The present policy provides that government will buy only 30% of total land for the project. Will government buy that small portion of land in case of opposition by farmers? This would add more uncertainty.

Government needs to bring in more clarity to the acquisition process, it should take notice of the new experiments and concepts, but until and unless government brings in new measures and rationalise the land acquisition, it will remain contentious issue.

Tata & Ambanis: Ethics Vs Acumen

In span of few months we have seen that one industry house has failed in its dealing with the government while other has succeeded in its endeavor to gain business. While, Tatas are sulking at the failure to break the political deadlock over its ambitious small car project; Ambanis have successfully negotiated with their political adversaries and twisted proposals for windfall tax.

Irony exists between the two industrial houses (well its three now but thinking more or less unites Ambanis). One of the oldest business houses, Tata, believe in more old fashioned way of creating wealth, setting up private ventures with financial institutions. But, they are quite modern about business ethics and governance. Ambanis, on the other hand are more flamboyant with creating wealth for themselves and public through public investment. Though, the same public (and even government) doesn’t have a hint about the company structure and shareholding pattern.

Both Ambanis and Tata pursue policy matters but Ambanis do it more aggressively, they manage to get politicians on every committee to lobby for them. The Ambanis have been maneuvering policies for their good; if something would adversely impact their business they never hesitate to reach out to the top. Tatas on the other hand wait for the policy announcement to come out. Tatas had to scuttle their aviation project with Singapore Airlines due to policy hurdle but Ambanis never had to. One Ambani kept windfall tax at bay; the other prevented scrapping of dadri power project and got into Pension Fund management, where it was not even shortlisted.

But, Ambanis had to pack up their retail biz in many states. Tatas to had trouble with land acquisition in past but not as much as it is in Singur. Also, Tatas seem to have been unable to use their experience in dealing with states that have had inconsistent economic policy (i.e.Bihar, Chattisgarh) with respect to Bengal. They really believed that communist would replicate china’s model without any trouble. Ambanis have been cleverer in continuously amending their offer for land acquisition in case of MahSEZ in new Mumbai. One thing that is visible is none of the Indian industrial houses have learned lesson to tackle is public unrest over industrial projects.

BSNL IPO: Anti-privatisation or under-valuation?

Government and Trade unions are again at clash over mulling IPO of public sector telecom giant BSNL. Trade unions see this move as a step towards privastisation of BSNL and thus they are dead against the PSU going public. While the government insists that listing of BSNL is necessary for granting “Navaratna” status, union leaders feel otherwise. They point out “Navaratna” companies such as HAL and LIC, which are still not listed. Another reason for unions’ opposition is the past decisions by government of ultimately selling listed PSUs like VSNL and BALCO.

Unions are also using the VSNL/BALCO sale as argument for undervaluation. They have accused government of undervaluing the PSUs and are using case of BALCO sale to strengthen their argument. The government has valued BSNL at around $100 bn based on the Vodafone and HutchisonEssar deal. However, the unions are in opinion that BSNL is valued ten times more than the government valuation, which would put it at $1,000 bn. According to union’s estimation, the actual divestment of shares for the IPO collection should be 1% of BSNL shares not 10%.

The BSNL valuation funda becomes murky, as the government assessment based is based on some deal and some other company with less similarity to BSNL. Vodafone, unlike BSNL attracts customers that attach premium to the service offered by the service provider while, BSNL’s product offering is considered economical. BSNL also has large number of workforce and its productivity and efficiency yet to be determined. Its growth rate has not been as high as some private players in GSM market.


But, BSNL still is the largest telecom player and has virtual monopoly over wireline and rural telecom business, plus it is a big time player in long distance call and internet business. Its tower unit will attract huge valuation. Also, unions prefer companies to be valued on their assets rather than their net worth and business prospect. The government, which is in desperate need of funds will like go for IPO as early as possible but its one time friend and present nemesis, CPI & CPM, are bound to create ruckus over the issue of valuations.

3G Services & Number Portability to finally hit India; Delhi Mumbai circle tough challenge for Indian Telcos

India’s telecom subscribers are finally going to see the light of the much hyped and discussed 3G services and number portability. The government unveiled its plan to take India’s mobile revolution to the next technological level by opening 3G spectrum auctions to global players that would allow better multimedia services and also quick data and video transfer. Government also announced the first step towards number portability, a major consumer-friendly move that will let the users to switch their mobile operators without losing their numbers.

The 3G spectrum will be initiated in the next 15 days under the supervision of an independent agency to ensure full transparency, there would also be strict roll-out obligations to avoid spectrum hoarding. The Auction is expected to garner around Rs 30,000 cr (around $7 bn) to the government exchequer, a huge respite for the government during the current phase of rising global oil prices, huge subsidy payouts, double-digit inflation and slowing growth.
Currently the country has 60 Mhz of 3G spectrum available, the auction will take place in the 2.1 Ghz band, with 3G services likely to be available by the mid-2009. Initially, only two to five operators would be allowed to offer 3G services in each circle. However in the Delhi and Mumbai circles, only one operator would initially be allowed to offer 3G services, apart from State-owned MTNL due to spectrum crunch. Similarly, for the rest of the country the other government telecom giant, BSNL would get 3G spectrum. The base price for a pan-India license will be Rs. 2,020 cr for each bid, while UASL fee would be Rs. 1,650 cr.

The government also took concrete steps towards introduction of mobile number portability (MNP) by announcing guidelines for an MNP service licence. MNP would first start in the four metros in next two months and subsequently roll out in rest of the country over the next 6-12 months. According to the guidelines, the whole country will be divided into two MNP zones consisting of 11 service areas with two metros in each zone. The MNP service provider and the mobile operators would not be allowed to have equity (direct or indirect) stake in each other's operations. No single company/legal person/the MNP License applicant or MNP Licensee company either directly or indirectly will have any equity, in any of the telecom service provider (basic service, UAS, Cellular Mobile, NLD or ILD) and vice-versa.
The government would allocate the licenses for MNP soon and the eligible applicant should have an experience of operating successfully, number portability solution for a mobile subscriber base of not less than 25 mn in one or more countries for at least two years. The applicant company shall also be required to have a minimum paid up capital of Rs 10 cr on the date of application and a networth of Rs 100 cr. The applicant company or its share equity holders having direct equity of 26 per cent or more in the company should have the required experience. Also, the government has fixed one-time, non-refundable, entry fee of Rs 1 cr for the grant of MNP services license and the company shall have to pay annual license fee of one per cent of the Adjusted Gross Revenue. According to method of selection, the pre-qualified applicants/bidders shall be subjected to a "techno-economic Evaluation" for final selection. The MNP license shall be for a period of five years and can be extended by another five years by the Department of Telecom.

What is 3G?
3G represents the next step in the evolution of mobile telephony, offering markedly greater capacity and efficiency than the current 2G systems. While 2G is focused on voice, 3G supports high-speed data of at least 144 kbps enabling broadband internet access on the mobile, and ‘‘triple play’’ features like mobile TV and converged communication services.

What is MNP?
MNP allows subscribers the freedom to retain their mobile number while switching over to a different service provider. The system when implemented will allow consumers more choice, lower prices and significantly better quality of service.