Archive for the ‘Karma Cola’ Category

Telecom Apocalypse in India 2020

Posted by Dev Baul - 20/09/20 at 12:09 pm

Context

Unified Licensing policy 2012 separated spectrum and license prices. Spectrum would be auctioned to Mobile telephony operators only. For all telecom-related services license fee would be charged @8% of Adjusted Gross Revenue. Adjustments being in the nature of taxes and pass-through charges paid off to other network We explore two specific  points that  we believe have escaped scrutiny in the  spate of current commentary on the  issue.

1.   Absurd interpretation of what constitutes “Adjusted Gross Revenue”

Revenue of a telco accrues from its core telecom based operations and   other income from rentals, treasury operations etc. Most analyses by industry experts/journalists have flagged off inclusion of ‘other income’ as the precipitating   factor for this huge licensing fee demand. “Other Income” may be one of the causes but definitely not the main cause. Operators like Airtel and Vodafone would have   factored this in and   minimised the effect of ‘other income’ in their P&L. It is the interpretative definition of ‘core incomethat is causing the heartburn. It is our hypothesis that telcos calculated their   licence fee liability as a percentage of their realised revenues after setting off cash and dealer discounts. Cash discount is the difference between TRAI prescribed price and the telco offer/plan price that the customer actually pays. Given the price levels prevailing today, cash discounts are very high. As against this, the Government is calculating the licence fee payable as a percentage of the TRAI prescribed!! It is like selling a Rs 100 service  at a 40% discount for Rs 60  and then paying a licence  fee   of Rs 8 ( 8% of notional revenue) instead of Rs 4.80 (8% of actual revenue)!! To give another analogy, if   a similar licence fee  regime is imposed on the hotel industry, they  would  have to  pay licence  fee as  a percentage of their  rack rates and not  at the rates at which the rooms are   let out. All of us know that not  a single room is let out at rack rates It is this difference in the  interpretation  of  the liability that started  with a  couple  of thousand crores and has now snowballed into 50+K crore millstone. Telcos kept on paying licence fee based on real revenues and hoped  for a quashing  of  this absurdity of licence fees based on notional revenues

2.  Selective application of the law amongst the mobile operators

In 2016, Jio launched its 4G services and gave it free (100% cash discount over TRAI prescribed price) for nearly a year. In the process they   got around 50 Cr customers and became the No 1 Telco. No revenues accrued as services were given free and thus no licence fee was payable except a minimum fee based on a presumptive AGR. It may be noted that concept of licence fee based on a percentage  of the TRAI price(notional price) was not applied in Jio’s case !!  Government was deprived of licence fee from Jio  based on 8% of notional revenue  from 50K customers. The figures are not exact but are in the ball park. Jio also gave free handsets to customers  against an interest free 3 year deposit of Rs 1500. This implied this was not revenue and thus no licence fee was payable. It was a triple whammy for the government
  • No licence fee  accrued for the  first one year of operation
  • No GST/Sales Tax  revenues  as there was no sale of handsets
  • Lesser Income tax as all handset purchases were expensed off as  sales promotion expense in the P&L

Resulting Scenario

In light of Vodafone’s  deposition to the  SC  stating their inability to pay and BSNL  defaulting  on salary payments  for last six months it is abundantly clear that  we  are  going  back to a  monopolistic   or  at best  duopolistic market. We will  be moving to a fifth generation technology   in  a first generation market with the attendant  monopolistic market malaises. TRAI’s task will be made simpler  as the incumbent cartel of two will  decide on the prices. Having  experienced the BSNL-MTNL services with QoS of high tariffs and procurement/repair  time , it will be interesting to see  how this hegemony unfolds

Disclaimer

Conclusions  and surmises  arrived at in this  write-up are predicated on information  available in public domain. References are not cited  for ease of reading  and the fact  that this is  more of an RFC  document purporting to throw open the debate. Interested  may write to dev.baul@gmail.com  for  further exchanging of notes.
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Steve Jobs – a personal tribute

Posted by Dev Baul - 07/04/20 at 12:04 pm

9 October 2011

Steve Jobs or Apple did not invent the mouse, the Graphical User Interface., the touch screen, gravity sensor, or the technology underneath the portable music player. The mouse and the GUI were created/invented in Xerox labs; the touch screen and the gravity sensor were being used in avionics for decades before iPhone was launched; Robust and feature-rich MP3 players were available for years before the iPod was launched.

If all the good stuff we associate with Apple products were not invented/created by Apple/Steve, why is he being hailed as the next best inventor after Edison by Spielberg, and what is compelling me, an ordinary user of Apple devices to write a personal tribute?

His genius lay in making these technologies/ enablers accessible to the masses, packaged with his signature elegance.

  • The mouse would have rotted in Xerox R&D lab, had Steve Jobs not used it in the Mac. Xerox bosses had shelved this R&D initiative as they did not think that there would be any serious use for such a plaything !
  • It took his chimerical vision to find a use for the touch-screen and gravity sensor in consumer electronics. Impact of the touch screen on the consumer experience cannot be overstated—A very large number of keyboard-phobic folks have morphed into tech-savvy power users of computers, smart phone thanks to Steve’s vision.
  • In the portable music player market, while others were busy selling the MP3 technology, compression ratio etc., Steve said, “Carry your entire music library when you go jogging, dancing, cycling.” Moving music from the PC to the iPod is an absolutely cumbersome process, but all iPod lovers would just ignore such nags—such is the seductive persuasion of an iPod.

To use an overworked phrase, his product offerings directly ‘touched’ the way we communicate, get entertained, or compute – but there are other areas where Apple’s offerings and business practices have affected the consumer indirectly.

Digital Rights Management or DRM is one such area where Apple’s initiatives had an enormous impact—they went beyond changing the rules and changed the game itself (apologies for using another overworked phrase).

Giants like IBM. Xerox, Microsoft have faltered and lost billions as their DRM was way below par. Apple, through its iTunes marketplace, not only protected its own interests but perhaps helped reduce piracy in the audio market.

In places like China, Microsoft has given up on licence tracking. In places like Sudan (on US blacklist) American companies have no access to the market and only pirated software is ‘freely’ available. Apple’s business model makes it China-&-Sudan-proof—to get a Tom Cat, Angry Birds or the latest Justin Bieber track, customers sitting in Shenzhen, Khartoum or Timbuctoo will need to go through iTunes and Apple will get its 20% cut. It could not be simpler. Others are learning from Apple—The android marketplace comes readily to the mind.

Ending this note with a couple of personal peeves.

  • Peeve #1: Non-availability of Adobe Flash on iOS. Whatever be the stated, unstated, ostensible strategic reasons, do not agree with them—hope better sense prevails with the change of guard and I get to play Facebook Scrabble on my iPhone.
  • Peeve #2: Absence of a file manager app and attachment facility for outgoing mails.

Steve Jobs – Be good, R.I.P. wherever you are.

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