Aparita

Toronto Star, [12/22/2003]

Think Canadians are becoming addicts?
Check out India, soon next-to-top user

APARITA BHANDARI

SPECIAL TO THE STAR

New Delhi-Tired of sifting through the “marriage resumes” of prospective brides, and going to endless “meet-the-potential-bride-teas,” Suresh Krishnan came up with an idea. He’d give his mom one of the latest Samsung fit-in-your-palm cellphones and further update at least one part of the modern arranged-marriage process.

When his mom goes to see the girl or gets her photo, while Krishnan is slogging away at work, she can snap a picture with camera built into the nifty phone. She can then MMS him - use the Multimedia Messaging Service - and send the picture to his phone.

“Oh yes, there are many anecdotes like that,” says T. V. Ramachandran, director general of the Cellular Operators Association of India (COAI).

“There are fishermen in Kerala who are using cellphones to do better business. Every morning the fisherman sets out to sea. But when they come back, they’d be at the mercy of the middleman, because fish is a perishable product. These days, the fisherman has a cellphone. As soon as he’s heading back from sea, he calls up the local villages, finds out where he can get the best price and navigates his boat that way.”

Ever since its introduction in 1994, the cellular phone has fast become one of the most sought-after products in big and small Indian cities. The boom in cellular phone usage has seen telecom become one of the fastest growing sectors in the country.

Not having a cellphone is almost unheard of - cabbies, university students, or jet-setting executives, everyone’s got one. And cellphones have become extremely affordable here.

Rivalry is fierce between the service providers.

The constant competition in the provider market has the cellular phone operators in a constant “how low can you go” mode, while the falling import tariffs on handsets means the best and latest technology is available to the Indian cellular phone users at the price they are willing to pay.

India’s embrace of cellphones is behind predictions it will become the world’s second largest user of cellphones, after China, by 2005. The Indian cellular phone industry has decided that it has finally arrived.

However, the industry is also not without its share of bad signals and static.

There’s currently a turf war going on between the industry’s old hands and the newbie cellular operators, with the Indian government and its various telecom policies thrown in the middle.
The old hands are comprised of companies such as Hutchison Telecom, Bharti Tele-Ventures and Idea Cellular. The newbie is Reliance Infocomm, a division of India’s largest private sector company and petrochemical conglomerate Reliance.

Cellular operators such as Hutchison, Bharti Tele-Ventures and Idea Cellular work on the GSM (Global System for Mobile Communication) technology, whereas operators such as Reliance work on the CDMA (Code Division Multiple Access) technology. In very general terms, while the GSM technology uses different frequency channels to transmit a call, the CDMA technology encodes each call in different language.

It’s hard to escape cellular phones in India.

The cellular phone industry in India could brag of having a cool 26.48 million subscribers last month, according to COAI. While GSM-based operators added 1.37 million subscribers, CDMA-based operators added 520,000 subscribers during November alone. Although this is a small percentage of India’s billion strong population, the cellphone subscriber base has nearly doubled in the past seven months.
The billboards of cellphone operators such as Hutchison Telecom and Airtel dominate prime advertising space in the cities and small towns.

Whether you’re walking down the traffic clogged street because of a caravan of cows, sitting in one of the several multiplexes that have opened, or even in the silence of a dingy government library, you’ll likely hear a Bollywood ringtone emanating from someone’s purse or pocket.

Downloading the latest hit single from a Bollywood movie or one of the “golden oldies” is as much a fad as acquiring the latest handsets with all the bells and whistles. Take the Nokia 6600 which includes a “camera and video recorder with zoom,” xHTML for browsing rich content, bluetooth wireless technology, e-mail capability, a 65k colour display, video and audio streaming and a 32MB multimedia card.

Text messaging, called SMS in India, is all the rage - whether it’s used to cancel appointments, send directions to get to a particularly obscure neighbourhood, or to while away the hour required at the hairdresser’s to touch up your highlights.

In fact, during peak hours of the day networks get so busy that calls can’t go through and text messages can’t be sent.

For Jasbir Singh, a taxi company owner in New Delhi, cellphones are a heaven sent answer to deal with irate customers. He’s given one to each driver.

“Parking spaces are difficult to find in the city,” says Singh, speaking in Hindi. “So, we often got annoyed customers. They couldn’t locate the driver, who had parked a distance away. Now, all our taxi drivers have cellphones with them all the time. The client can just call them when they are ready to go. It’s been better for the business.”

For Manav Sharma, a recent university graduate looking for a job, the fierce competition between the cellphone operators in India has made his cellphone usage easier to manage. All incoming calls are free, and the average cost of making a local call is about 0.3 cents (U.S.) a minute.

Recently the competition between the operators has gone beyond GSM vs. CDMA, and extended to battles within the GSM club or the CDMA club. As a result, the cellphone consumer is constantly being offered new incentives. A week ago, cellular operators Hutchison Telecom, Idea Cellular and BPL Mobile services cut their outgoing text messaging charges to Rs. 0.30 (about 1 cent per message) and cut roaming rates where users move between systems in Western India.

Also, in November, the Indian government approved a unified licensing system. Now any licensed telecom company is permitted to offer mobile phone services.

The move has the existing cellular operators in a huff as they have poured more than $5 billion (U.S.) over the past nine years in building a GSM cellular network infrastructure. They complain that the fixed-line service providers such as Reliance can offer the same services without having to jump through the same hoops as they have.

But the subscribers are enjoying the benefits.

“The customer is king,” says Ramachandran, quoting the latest industry stats from COAI. “Despite the relatively low per capita income, we’ve seen a substantial growth in subscribers in the country. Because India has the lowest usage fees in the world, far below China. In fact, cellphones have become so accessible now that people are returning their (landline) phones. Earlier, you used to have two or more (landline) phones because one would always be out of order. Now, with every family member carrying a cellphone, there’s no need for a (landline). I don’t have one in my home.”

That’s obviously the customer viewpoint.

For the investor and operator, the cellular phone industry isn’t for the faint-hearted, says Hutchison Telecom country head Asim Ghosh.

“Whoever wants to remain in this market has to take a long view, have a strong stomach for constantly evolving regulatory measure, fairly deep pockets of investment, and a business model that recognizes that the Indian customer is arguably the most demanding in the world,” he says.
Hutchison Telecom, a subsidiary of the Hong Kong-based Hutchison Whampoa, is one of the two earliest multinational entrants in the cellular phone industry in India.

The other, American-headquartered cellular giant AT&T Wireless Services Inc., recently withdrew one of its alliances from the market. Its 49 per cent stake in BPL Mobile Cellular was bought out by partner BPL India.

Analysts predict many more mergers and acquisitions in the Indian cellular phone industry after the Indian government’s clubbing of landline and mobile services under a single licence.
But the market is at a take-off stage, and despite the bugbears it has tremendous potential, says Ghosh.

“While the revenue growth is not as much, about 25 per cent annually, the subscriber growth rate is exponential. The players in the market have to realize that this is a high volume, low margin business,” adds Ramachandran.

“Things are falling into place now.”

Despite some niggling details, then, the Indian cellular industry continues to grow, and new services are constantly being added.

As for Krishnan, he’s thinking of giving the new SMS matrimonial service a whirl. Who knows, maybe his wife is just an SMS away.