WiMAX set to drive broadband growth in Sri Lanka?

Sky Network: WiMAX offering set to shake up Sri Lanka's broadband market?

News items from Sri Lanka's mobile market have caught the eye of DevelopingTelecomsWatch a few times of late. Most recently, DTW asked whether the arrival of the UAE's Etisalat as a player on the island nation's cellular scene would cause price competition to become even fiercer. It was noted that a sustained price war has been eroding tariffs and weakening cellcos' profitability over the last four years. Since then, further worrying figures from the country's telecoms sector have been released.

On November 11th, for example, Reuters reported that market leading MNO Dialog Telkom posted a fifth straight quarterly net loss for Q3 2009, disappointing analysts who had predicted the company would break even. Reuters reports that the telco, a unit of Malaysia's Axiata lost 438.9 million Sri Lankan rupees (USD 3.83 million) in the quarter which ended on September 30th. As well as margins being squeezed by fierce competition, the Reuters piece traces a link between between this loss and profit remaining elusive at Dialog Telekom's broadband and direct-to-home satellite TV operations.

That's the latest from the Sri Lankan mobile market. What, though, of the country's incumbent wireline operator, Sri Lanka Telecom (SLT)?

SLT, which was part-privatised in 1997, hit the headlines this week for its efforts to improve the availability of its services in the country's Northern and Eastern provinces, the areas affected by the on-and-off conflict between government forces and the Tamil Tigers, which ended earlier this year after twenty-six long years.

Harshini Perera of Sri Lanka's Daily News writes that SLT has addressed the need to improve its services in these areas by expanding its copper and fibre access networks, installing new exchanges and the CDMA base stations.

With a view to improving its broadband offering across the whole island, Sky Network, a subsidiary of SLT, will, according to Sri Lanka's Daily Mirror, be providing the WiMAX services to parts of the country where ADSL services are not offered. The Daily Mirror reports that the venture will commence operations in March 2010 and will initially provide services to Colombo, Gampaha and Kalutara Districts.

It will be interesting to watch for the impact this WiMAX offering has once launched. Australian telecoms research company BuddeComm's Sri Lanka Internet Market report indicates that Internet access and other forms of data services have lately been starting to take off in the country, but that coverage and accessibility remain limited, with user penetration estimated by the ITU to be at around 6% by the end of 2008. Buddecomm's report contends that early moves to offer broadband Internet in Sri Lanka have met with only limited success, albeit with some promising signs of growth in 2008-09. The report notes that early activity in the wireless broadband segment of the market has not yet translated into significant subscriber numbers.

2010 looks to the year during which it will become apparent whether wireless access technologies will contribute significantly to the growth of broadband services in Sri Lanka.

WiMAX set to drive broadband growth in Sri Lanka?

Unsurprising news of the week

India's Communications & IT Minister: summoned to explain falling revenues at BSNL

To my mind, the least surprising news item so far this week comes from Mansi Taneja of India's Business Standard, who reports that state-owned Indian state-owned telco BSNL is likely to exit a consortium that has been aiming to acquire a 46% in pan-MEA mobile group Zain. According to Taneja, MTNL, the other public sector operator party to the consortium, is also likely to exit since it had agreed to follow BSNL’s lead in the deal.

DevelopingTelecomsWatch has no axe to grind with regard to these two telecoms enterprises, but it won't have escaped the notice of regular readers that this blog has observed some pretty strong criticisms of their performance in their domestic market, most notably in an article written in August.

It was partly with these criticisms in mind that DTW was unsurprised when Etisalat rather than BSNL prevailed in the scramble to acquire the Sri Lankan mobile operator previously owned by Millicom International Cellular. It would, then, cause raised eyebrows at DTW HQ were MTNL to win what looks to be a hotly contested scramble to buy a controlling interested in Zambia's soon-to-be-privatised incumbent fixed line operator, Zamtel. As a recent Cellular News item points out, the list of other interested parties contains some formidable names including Orascom Telecom, Telkom of South Africa and Russia's pan-CIS cellco Vimpelcom, which has recently expanded its footprint into Southeast Asia.

Lest anyone feel that this blog returning quite regularly to the troubles of India's two major state-owned telecoms enterprises is somehow unwarranted, it is worth noting that concern about their prospects has been expressed in the highest circles in the south Asian country. Monday's Economic Times, for example, reported that Prime Minister Manmohan Singh is likely to meet the BSNL's management along with Communications and IT Minister A. Raja to look into the causes of the company's falling revenues and to find ways to improve its performance.

According to the Economic Times, BSNL says the loss in net profit and revenue is due to huge wage costs and customers deciding to terminate their fixed line subscriptions. The article states that the company has been struggling with the problem of landlines being surrendered for years now, due to a combination of the increasing popularity of mobile phone and its own service levels falling below customer expectations. In the past three years, the article reports, 6.3 million landline connections have been terminated.

This blog has also documented the company's struggles to capitalise on first-mover advantage in the 3G mobile services space or to take make much of a similar head start with WiMAX broadband services.

In light of all this, DTW remains wary of any claims that BSNL makes about ambitions to grow its business into unfamiliar overseas territories.

Unsurprising news of the week

Aptilo Networks positive about prospects for WiMAX in developing countries

Johan Terve, Aptilo Networks:
good opportunities for WiMAX in emerging markets

DevelopingTelecomsWatch was a proud media partner of this year's iteration of the annual Africa Com conference and exhibition held in Cape Town. The event concluded on Thursday this week, wrapping up two days of discussions and networking among the continent's telecoms operators and their business partners from the vendor and systems integrator communities.

One theme explored in some detail at the conference - via a special breakout session - was the question of to what extent WiMAX is gaining traction in Africa.

With this in mind, DTW spoke this week with Johan Terve, VP Marketing at Aptilo Networks, a supplier of pre-integrated management solutions for control of billing, user services and access in WiMAX and Wi-Fi networks. Aptilo Networks had a presence at Africa Com so we were keen to get a sense of whether this was indicative of an upbeat view of the scale of the WiMAX opportunity in Africa - and across developing countries and emerging markets more generally.

For proponents of WiMAX, the emerging markets opportunity may grow in importance - certainly if we are to believe bleak analyses of the technology's ongoing prospects in more developed economies. One such comes from Terry Norman of consulting and research firm Analysys Mason, who in August predicted a difficult time ahead for equipment makers.

Norman believes that "over the last two or three years, WiMAX has gained a strong foothold in developing countries in which there is a need for broadband, but the fixed infrastructure is poor." He feels, however, that these markets offer insufficient growth potential and size "to sustain continued investment from such heavyweights as Cisco Systems, Intel and Motorola without additional sales in the developed markets". Therein lies a problem, argues Norman, because "in the developed markets of Europe and the USA, we see some early signs of a difficult future for WiMAX."

One difficulty could be any reluctance on the part of of leading mobile operators to deploy the technology. Terry Norman writes that in developed European markets, operators are almost certainly upgrading their 3G technologies to 4G LTE in order to match the rising demand for data. Norman draws a connection between leading no leading MNOs hinting that they might adopt WiMAX and the idea that "LTE is imminent."

Johan Terve rejects the notion of that it being "too late" for WiMAX in developed markets. Terve feels that such language would suggest that "this is a race with a single winner". He believes the opposite to be true and that both WiMAX and LTE will co-exist just like xDSL and fiber do in the wired broadband world.

While Terry Norman of Analysys Mason was downbeat about the growth prospects for WiMAX in Europe and US but sounding somewhat positive about the case for the technology in emerging markets, some analysts are more cautious even about the latter opportunity.

A Cellular News article published last month asks whether there really is a big market for WiMAX in the developing countries. The article is built around opinions recently expressed by industry watchers Ovum, who find "that the confluence of several factors including technology cost, coverage, vendor support and service provider choices will limit WiMAX to only a niche technology in the emerging markets, forming part of established fixed and mobile operators' broader broadband access portfolios."

Johan Terve responded to this point by saying that "if they mean that WiMAX technology will be niche based on size, then there is an element of truth in that since in the end LTE will be bigger because of its massive support amongst mobile operators" and because "the industry expects LTE to be a replacement technology for 2G/3G mobile phones as well."

"The WiMAX market does not have the ambition to be a new mobile phone system", argues Terve. "In terms of pure mobile data technologies for portable laptops and mobile Internet devices," he continues, "the two markets will be more equal, and for the 'Wireless DSL' or CPE market WiMAX will probably be larger".

Last month's Cellular News article, however, contends that most emerging markets WiMAX operators currently have thousands, or tens of thousands of subscribers, rather than the hundreds of thousands of subscribers that they planned to have at this stage. DTW asked Johan Terve to what degree he is concerned by these modest numbers.

"We in the vendor community are always far more optimistic in growth projections than the reality," he answered. "The projections of rolled-out LTE networks and subscribers will most likely have to be revised down in the coming quarters. However, there is a big difference between LTE and WiMAX in that the tier 1 mobile operators already have a huge subscriber base just waiting for more bandwidth [and] disappointed with what the current 3G networks have been able to deliver. This will make the LTE ramp-up quicker than it has been for WiMAX having to deploy from scratch. Essentially all larger WiMAX operators are new to market, including Clearwire, PacketOne, Yota and UQ. None of them have the luxury of just adding WiMAX technology to existing cell towers. Are we concerned about WiMAX? No, we are seeing signs now within our customer and prospects base that things are really starting to move. One encouraging factor is, for instance, one of the largest operators in India that is currently deploying Aptilo’s solution. This type of operator tends to scale very quickly in terms of subscriber growth. As a company, we are continuing our multi-wireless support (currently Wi-Fi and WiMAX) and have added LTE to our roadmap to be able to cater to all the help operators need in managing their mobile data traffic."

Where, then, does Aptilo networks see some of the richest opportunities in Africa and in emerging markets more generally?

"We see the greatest opportunities with existing Internet Service Providers and new greenfield challengers in the first phase," says Johan Terve. "We also see a great opportunity with CDMA mobile operators that have hesitated to deploy EV-DO for broadband data services. Their strategy is to keep developing their voice offering in CDMA and then choose between LTE and WiMAX for data. For them LTE is a heavier fork-lift than for 3G operators and WiMAX has the benefit that it is here now, ready to deploy."

Could Terve point to any specific examples of this particular deployment scenario?

"We are currently working with one of our Caribbean CDMA mobile operator customers that will continue with their CDMA for voice and build their data broadband on WiMAX," he responded.

Aptilo Networks, then, is among those continuing to make positive noises about the value WiMAX may be able to add to the communications landscape of emerging markets and developing countries worldwide. It is likely this theme will be revisited when DTW reports on next year's Africa Com event, and it will be interesting to see how far this view has proven to be accurate by that time.

Aptilo Networks positive about prospects for WiMAX in developing countries

Knocked back in Sri Lanka, India's state sector telcos continue to eye international expansion opportunities

BSNL: global ambitions?

DevelopingTelecomsWatch has followed, with some interest, suggestions that India's two major state sector telecoms operators - BSNL and MTNL - might be aiming to become international players.

In September, this blog went on a meandering tour of emerging markets M&A rumours, during which it was mentioned that BSNL's bid for Millicom International Cellular's Sri Lankan MNO had been unsuccessful. Tigo Sri Lanka, as reported more recently here, was eventually acquired by Etisalat of the UAE, in a move which prompted some analysts to express fear for the profitability of the island nation's other mobile operators. These commentators have noted that Etisalat tends to compete fiercely on price when coming late to a cellular market.

In the same September M&A tour, DTW also quoted industry watchers who were warning both BSNL and MTNL to steer clear of reported attempts to acquire a stake in Kuwaiti-owned pan-MEA mobile group Zain. A Mint article by Shauvik Ghosh was referenced, in which an anonymous analyst said that BSNL would be advised not to purchase a stake in Zain. "BSNL has a lot of cash on its books but it lacks the ability to execute," said the mystery man. Not shy of the odd split infinitive, the unknown analyst said "Africa is not a market for an operator to just add some revenue to its balance sheet. They have to first show that they can execute in India with the opportunities already in front of them like broadband and 3G before they can venture into bigger game like Zain." A previous DTW article discussed at some length the view that the two public sector telcos have perhaps not yet demonstrated that ability to "execute in India" to anything like a satisfactory degree.

There is evidence, though, from as recently as mid-October, that BSNL and MTNL have not been deterred by such criticism and that the two companies continues to investigate both the Zain opportunity and other potential foreign adventures.

Writing on 15th October, Mansi Taneja of the Business Standard reports that a consortium led by Delhi-based Vavasi Group is in discussions with both BSNL MTNL for a majority stake in a special purpose vehicle that is being formed for a bid for Zain.

Taneja quotes "a top source close to the consortium" who has said: "Our talks with BSNL and MTNL are on track, but we don’t have any exclusivity contract with them. We are also holding informal discussions with other telecom companies, including China Mobile, in case talks with BSNL and MTNL do not fructify."

(note to self: attempt to use the word 'fructify' in conversation this week)

Is it unfair on the two Indian operators to venture the suggestion that the giant Chinese cellco might be a far more powerful player to have involved in an audacious bid to acquire operations and subscribers across Africa and the Middle East? Way back in 2002, the Chinese operator stole Vodafone's crown as the world's leading mobile operator in terms of subscriber numbers. Vodafone was subsequently seen to stake out its credentials as the world's largest cellco by revenues. Finally, in September this year, this accolade was also swiped by China Mobile.

If the Vavasi Group does turn out to be more impressed by the credential of the world's most gigantically-huge-mobile-operator-by-every-measurement-ever than by what BSNL and MTNL can bring to a bid for Zain, where else might the two Indian operators look for overseas growth opportunities?

One possibility, again aired by the indispensable Business Standard, is a much more modest foray into Africa, namely the acquisition of a majority stake in Zamtel, the state-owned incumbent telco of Zambia, which competes in the mobile space and is the monopoly fixed-line operator. On 15th September, the Government of the landlocked southern African country announced its intention to part-privatise the telco through the sale of up to 75% of the company’s equity. Industry watchers Buddecomm, in their Zambia profile, describe the country's wireline infrastructure as "at a very low level of development, which in turn has impeded growth in the Internet sector." Zamtel's monopoly in this space is set to be threatened, continues the Buddecomm profile, which notes that "the country’s ISPs are rolling out wireless broadband networks, which will also position them as competitors in the telecoms sector once VoIP is fully liberalised", something which is meant to be "a key component in Zambia's new ICT Policy."

The Zambia Development Agency (ZDA) makes a more upbeat assessment of the Zamtel fixed network, claiming that it connects all major population centres and is undergoing a substantial upgrade, with over 80% of switching infrastructure now digital, and DSL capacity being rolled out. The ZDA claims that Zamtel’s primary fixed-wireless network is also being upgraded and expanded, with coverage and capacity expected to more than double within the next twelve months. Zamtel’s secondary fixed-wireless network, based on WIMAX technology, is designed to cover the whole of metropolitan Lusaka, and is scheduled to go live during 2010, says the ZDA.

In the mobile space, Zamtel lags a long way behind its competitors in terms of market share. The stats, estimated for September 2009 by WCIS look like this:

1. Zain Zambia - 72.17%
2. MTN Zambia - 23.12%
3. Zamtel - 4.71%

Zamtel, then, is struggling to compete effectively against two of Africa's leading mobile groups. There is, however, room for all competitors to grow, with Zambia's mobile penetration rate currently standing at just under 33% according to WCIS. Whether BSNL and MTNL are ideally suited to improving the fortunes of the company, however, could be questioned in light of some of the criticisms aired here about their performance in their home market of India. According to the Business Standard, the two public sector telcos are joined by seven other companies or consortia from in having successfully prequalified to participate in a bid for Zamtel.

Should both the relatively modest aspiration of buying control of Zambia's incumbent operator and the rather more grand designs on Zain both come to nought, MTNL and BSNL do appear to have ambitions to establish a presence in other regions.

Again, I am indebted to India's Business Standard for an update. According to an article of October 23rd, the two operators, along with the Vavasi Group, are planning to set up new operations in Russian and western Europe.

Under this deal, the article states, Vavasi "is acquiring frequency spectrum and licences for Russia and several western European countries" and "the same [special purpose vehicle] that is being formed to acquire a majority stake in Zain will be used to invest in the Russian operations."

Confirming the development, a senior Vavasi executive is quoted as having said: "We are in the process of acquiring a licence for the new generation (NG)-1 technology and have applied in Russia and four other European countries."

This is where I betray the fact that I am not an engineer by wondering about this "NG-1 technology". What is it? The Business Standard article claims that "NG-1 technology is an alternative to GSM and CDMA and was developed in the US universities" and that "Vavasi claims that the network needs lower capital expenditure as well as operating expenses."

I'll hold my hands up. This is a new one on me.

An inspection of the Vavasi website reveals that NG-1 is a proprietary wireless access technology the company has developed itself and which it claims "understands the need of both rural and urban areas". Impressive sounding claims are also made for the spectrum efficiency and eco-friendly credentials of the technology.

NG-1 sounds wonderful - but can proprietary kit from India really prevail against global standards such as WiMAX, HSPA and LTE?

Some grand claims, then, are being made about the ambitions of India's two major state sector telecoms companies. Some of these claims seem to be articulated rather more loudly by the Vavasi Group than by the telcos themselves. I wonder how much there is in all of this. Can two operators that have attracted much criticism in their home market really be set to emerge as global players?

Knocked back in Sri Lanka, India's state sector telcos continue to eye international expansion opportunities

Sri Lankan mobile market: one way or another, consolidation looks likely

Sri Lankans queue to get their hands on Airtel 's low price offers earlier this year

When Bharti Airtel's Sri Lanka operation Airtel Lanka launched its cut price services in January this year, the new cellco became the fifth operator competing for a share of the country's mobile market. The number of mobile service providers in the island nation, however, may soon be set to fall back to four. This will depend, though, on which party comes forward to snap up one operator currently sporting a 'for sale' sign.

Up for grabs is Tigo Sri Lanka, one of the Asian operations that Millicom International Cellular is keen to sell. When this blog first commented on Millicom's planned withdrawal the three Asian markets in which it has done business, Axiata (formerly Telekom Malaysia International) was mentioned as a possible purchaser of two of these operations - Tigo Sri Lanka and Cambodia's Cellcard. In both cases this would lead to market consolidation - in Sri Lanka, Axiata has a controlling stake in market-leading cellco Dialog Telekom; Cambodian MNO Hello is a wholly owned subsidiary of the Malaysian group. As discussed in the most recent DTW article, however, it was another existing shareholder in the Cambodian cellco (the Royal Group) which eventually relieved Millicom of its stake in Cellcard. Given that other organisations have been more recently and more regularly touted as potential purchasers of Tigo Sri Lanka, Malaysia's Axiata also seems to be out of the running with regard to that opportunity.

One potential suitor mentioned very recently is state-owned Indian operator BSNL, whose management committee approved a proposal to submit a bid to acquire the Sri Lankan operator company last week, according to Manoj Gairola of the Hindustan Times.

The public sector telco seems to have attracted considerable criticism of late, some of which has been reported here. Quite striking was the August 12th article written by Kunal Kumar Kundu, who feels that BSNL is crippled by political interference, poor demand forecasting, lack of effective budgetary control and a bloated payroll. This blog has also reported the very modest take-up of BSNL's wireless broadband offerings and negative feedback about the company's preferred franchisee business model for the development of both 3G mobile and WiMAX services. Almost as often, however, the state-owned operator has been linked here with possible overseas investments. Perhaps the competitive pressure from India's numerous private sector mobile players is felt so keenly by BSNL's management that foreign opportunities are seen as a much better bet in terms of realistic growth opportunities. This may explain the fact that in the few months since the inception of this blog, the Indian operator has been mentioned in connection with a stake in pan-MEA mobile group Zain and with a new telecoms licence in Tunisia. BSNL's interest in Tigo Sri Lanka, then, is perhaps not very surprising.

Also connected in media reports with the sale of Tigo Sri Lanka is the UAE's Etisalat, which in August was reported to be considering an investment in the country now that the long civil war seems to have finally reached a conclusion. Priyantha Kariyapperuma, Director General of Sri Lanka's telecoms regulator, reportedly met with a visiting official from Etisalat last month and told journalists that "with the war over in May, there is ample scope for investments into telecom services and infrastructure facilities, especially in the north and east," referring to the area of the island that was most affected by the conflict. Few of the reports on Etisalat's possible interest in Sri Lanka have stated explicitly that the UAE company's route into the country's market would be via the acquisition of the Tigo-branded MNO. All of these reports, however, mention the availability of Millicom's Sri Lankan operation, so perhaps it's not unreasonable to infer that the Emirati company might have had Tigo Sri Lanka in its sights.

The most recent name floated in connection with the opportunity, however, is one from India rather than from the Middle East. As with an Axiata purchase, this move would also lead to market consolidation - because the company concerned is Bharti Airtel, already present in the Sri Lanka market since January, as we noted at the top of this article.

It seems, then, that the management of the giant Indian telecoms firm is not completely absorbed by the ongoing negotiations about the proposed mega-merger with South Africa's MTN. That saga has been notable for the repeatedly-extended deadline for concluding the talks and for various parties weighing in with opinions about the desirability of the mooted deal. One recently expressed opion comes from South Africa's Communications Minister, Siphiwe Nyanda, who voiced caution over the proposed tie-up in an interview yesterday. The Minister told the Sunday Times that any deal should take into account that MTN was a "South African company with a footprint in Africa." I take this to mean that there exists concern over MTN potentially losing its identity as a telecoms group with its roots - and the bulk of its business - in Africa. The Minister's comments are certainly of relevance given that South Africa's Government-owned Public Investment Corporation holds a 21% stake in MTN.

Bharti Airtel's interest in Tigo Sri Lanka came to my attention earlier this week, when R. Jai Krishna of the Wall Street Journal reported comments from an unnamed person close to the development. Suggesting that any deal would be worth USD 100-120 million, the mystery source said "in Sri Lanka, if you need to be a significant player in the market, you need to do an acquisition... greenfield, you will not be successful," by way of explaining the rationale behind Bharti Airtel's rumoured move.

A strengthened presence in Sri Lanka on the part of the Indian cellco could be welcomed by consumers - certainly if the company continues to compete aggressively on price, a strategy that has yielded impressive subscriber growth. Since going to market in January, the new entrant had 900,000 subs by the end of June, according to WCIS market intelligence. Another Informa Telecoms & Media service, Global Mobile Daily, reported in late July that Airtel Lanka claimed to have reached the one million subs mark.

The Bharti-owned cellco, however, has seen some of its competitors crying foul over its tariffs. Late last month, for example, Duruthu Edirimuni Chandrasekera of Sri Lanka's Sunday Times, reported that some operators have threatened to cut their interconnection with Airtel Lanka to retaliate for the the Indian-owned company failling to withdraw tariffs not approved by the country's telecoms regulator.

This sounds oddly familiar - the most recent article here covered a very similar wrangle over tariffs and interconnect agreements in Cambodia. Competition in Asia's mobile markets, then, certainly seems to be brutally fierce right now. Again I find myself voicing the view that there may well be casualties when the going gets this tough.

What price on mobile market consolidation in Sri Lanka then?

Sri Lankan mobile market: one way or another, consolidation looks likely

India update: loose ends from previous entries

MTS: Russian cellco's Indian operation - world's first CDMA2000 1x Advanced deployment

The time is fast approaching when I'll want to revisit the twists and turns of the much-discussed MTN-Bharti Airtel merger. That mooted deal, though, is by no means the only interesting story on the Indian telecoms scene so in the meantime I'd like to follow up on a number of issues covered in previous articles here.

Early last month, this blog discussed the desire of Scandinavian telecoms firm Telenor firm to secure a controlling interest in the Indian mobile operator in which it is a shareholder. A stumbling block had been the concerns of the country's security agencies, worried about the Norwegian firm's links to Bangladesh and Pakistan, both neighbouring states inside which terrorist attacks on Indian targets have been planned. When DTW last picked up this story, it looked as though a solution might be on offer - in the form of the transaction being approved on the condition that none of the staff who have worked at Telenor's Pakistan operation will be employed in India. Courtesy of India's Economic Times, I learned yesterday that this proposal to allow Telenor to increase its stake in Unitech Wireless has been sent to the Indian cabinet for approval. Doubtless the Norwegian firm will be hopeful of a positive outcome.

Another recent India-focused DTW article explored how the Government's security fears may be set to affect other telecoms businesses. That piece mentioned the case of ByCell, a Russian-backed firm that has been prevented from entering the Indian mobile services market, with security concerns about the company and its shareholders being the deal-breaker.

Now, another Indian telecoms firm with links to Russia is also the subject of worries over foreign ownership rules. Sistema Shyam Teleservice (now branded MTS India), a CDMA cellco in which Russian conglomerate Sistema has a controlling stake, has been asked to seek fresh approval for its wholly-owned subsidiary Shyam Internet Services, an ISP. According to an Economic Times article yesterday, the subsidiary never secured the mandatory Foreign Investment Promotion Board (FIPB) approval.

The article states that the issue came to light when the cellco's ISP subsidiary, which currently offers services only in Rajasthan, sought approval from the Department of Telecommunications (DoT) to be a pan-India player. MTS India has reportedly told the DoT that since FIPB had previously approved Sistema's 74% stake in the company, it was therefore "assumed that this approval covered all wholly-owned subsidiaries." MTS representatives seem to be confident that this issue can be resolved quickly and without much fuss, but it's worth pointing out that this is not the first time the cellco has run into trouble over failure to obtain FIPB clearances.

Early last year, according to the Economic Times piece, Sistema grew its stake in the Indian mobile operator to 73.97% despite only having got FIPB approval for a stake of 51%. This was resolved, but perhaps the Sistema people will be hoping that these trangressions have not tried the patience of the Indian authorities too far.

On the mobile side, MTS India remains a vigorous proponent of CDMA technology as a good fit for the country. On Tuesday, the operator announced its membership of the CDMA Development Group (CDG), the international consortium of CDMA service providers, manufacturers, application developers and content providers whose roles are to ensure interoperability among systems and encourage the adoption of CDMA2000 wireless technology worldwide. The previous day, the cellco had announced its plan to adopt 1X Advanced technology to support its growth plans. An announcement about the completion and publication of specifications for CDMA2000 1x Advanced was only made last month, so MTS India's claim to be the first service provider in the world to offer this "future-ready technology" seems credible.

CDMA2000 1x Advanced is intended to enable best-in-class and simultaneous voice and high speed EV-DO data services. MTS India CEO Vsevolod Rozanov says "with a need to offer uncompromising, seamless call connectivity with fewer call drops, and data services at ever faster speeds, operators are in search of solutions that utilize limited spectrum more efficiently, to be able to support a larger subscriber-base on it. 1X Advanced is designed to meet both these needs and will help MTS to significantly increase its capacity to provide outstandingly clear voice quality to its growing subscriber base."

This operator, then, seems bullish about the prospects for its advanced services. Last month, DTW covered the apparently less successful efforts of India's two major state-owned telecoms businesses to compete in that space. That article noted that both BSNL and MTNL have registered very low subscriber numbers for their 3G offerings, failing to capitalise on the first-mover advantage they should be enjoying - India's private sector mobile operators continue to wait for oft-delayed licence auctions to take place. I am not sure to what degree high handset prices have been a barrier to consumer adoption of the state sector telcos' 3G services - in previous articles here, it has been noted that the two state-owned companies have a rather lower ARPU subscriber base than some of their private sector rivals. If the price of devices is a major stumbling block, MTNL will be hoping that its recently launched own brand 3G handset - priced at around USD 110 - will have a positive impact.

MTNL is also looking to develop its 3G play in partnership with franchisees, whose role will be to acquire, serve and retain customers and provide customer care, according to a Business Standard article of 16th July. Two interested parties have emerged - Virgin Mobile and Spice Group. The former is well known globally for its MVNOs in the UK, Australia, Canada, France, South Africa and the USA. The Virgin Mobile brand has also been present in India for a little while, with services offered via the CDMA and GSM networks of Tata Teleservices.

Whether the franchise route will turn out to be the best way forward for MTNL remains to be seen. The DTW article which covered the public sector telcos failing to sell good numbers of 3G subscriptions also mentioned the criticism BSNL has received for selecting the franchising model for its WiMAX deployment. A vocal critic was the WiMAX Forum's top representative in India, who has asked the telco to consider how much revenue it may be foregoing by employing this approach.

This criticism, then, implies that the franchisee in this arrangement can make a tidy sum. Perhaps with this in mind, and presumably encouraged by its existing arrangement with BSNL, wireless solutions provider Harris Stratex is eyeing a role in MTNL's WiMAX franchisee project, according to Thomas K. Thomas of Business Line, writing recently.

In the case of 3G mobile services, perhaps MTNL's management would be encouraged by how successful Virgin Mobile has been in the UK and be attracted to the idea of working with a company whose brand value can prove very attractive for consumers. That said, in April this blog discussed how much less successful the Virgin Mobile MVNO in South Africa has been. In terms of market maturity (measured by mobile penetration), Virgin Mobile South Africa made its debut rather later than its UK counterpart had done some years before, thereby finding itself needing to win custom away from the incumbent MNOs. I don't have figures to hand, but I daresay that here in the UK, the Virgin-branded MVNO was the first supplier of mobile services to many of the customers it signed up. In India, mobile penetration might look attractively low to Virgin Mobile, causing the group to hopeful about experiencing growth more akin to the UK scenario than the frustrating South African one. I wonder, however, how strong an affinity for the Virgin brand exists in the minds of Indian consumers. Here in the UK, the brand is associated with a plethora of other products and services and its founder, the charismatic Sir Richard Branson, is often described as one of this country's most admired citizens. Does this brand resonate much more strongly here in Britain than, say, India?

It remains to be seen whether these franchising deals or the launch of new devices will do much to improve the fortunes of India's two ailing state sector telcos. For Amit Gupta of telecoms and IT advisory firm Ovum, none of this is as important as the need to privatise both BSNL and MTNL. In a recent opinion piece, he argues that "political intervention, a bureaucratic culture and pre-liberalization mindset are the root causes for BSNL and MTNL’s poor performance". Even with control handed to new investors, argues Gupta, "the challenge to transform BSNL and MTNL from state owned sick companies into customer centric service providers will be daunting". He feels that "due to the size and complexity of these companies, it won't be possible for an outsider to manage change without the cooperation of the existing employees", which could be tricky if we believe the argument that "at the same time, investors will have to cut the flab from a bloated workforce." These concerns notwithstanding, Gupta continues, "privatization is the only economically viable option" if these companies are to be saved from "their eventual demise."

Amit Gupta argues against the value of the Indian Government merely divesting stakes in the two operators while retaining control. He feels that this is inadequate. I imagine, then, that he would warn off any potential bidders for minority stakes in either opco. One such might be the giant US telco AT&T, which is reportedly considering a bid for a chunk of BSNL.

I've written so much about India on this blog since February that I daresay other loose ends from previous entries may need tying up soon. Watch this space. The next article on India may well zero on that mega-merger whose developments have rumbled on all summer.

India update: loose ends from previous entries

WiMAX and 3G trials and tribulations for India's public sector telcos

'India Week' here at DevelopingTelecomsWatch concludes with a round up of views on the prospects for the country's public sector telecoms enterprises.

State-owned telco MTNL is one company somewhat keen to experiment with WiMAX, but is also keen to mitigate the risks and reduce costs through a proposed partnership with another organisation.

Writing for the Economic Times on Saturday, Joji Thomas Philip explains that the public sector operator has invited global telecoms businesses to set up and run its Delhi and Mumbai WiMAX operations on a franchisee basis for a six-year period. If a willing partner is found, MTNL plans to enter into a revenue sharing agreement with the successful bidder. Philip writes that the contract will be reviewed every two years and can be terminated if the franchisee partner does not meet prescribed targets. MTNL wants to work together with the winning bidder when working out strategies for advertising, marketing and promoting the broadband services, and wants those services to carry the MTNL brand. Execution on the sales and market side, along with the business of credit checking customers will be the prime responsibility of the bidder. MTNL, on the other hand, wishes to retain responsibility for fixing tariffs. While there will be room for consulation with its partner, MTNL's word will be final on this issue, the company has said.

How attractive is this opportunity? This may depend on interested parties' views of where WiMAX fits into India's evolving communications landscape. Any prospective bidders who envisage strong demand for a mobile WiMAX service, for example, may encouter words of warning - even from the CEO of the one company already offering WiMAX-based services on a franchisee model.

San Francisco-headquartered Soma Networks, is a supplier of WiMAX base stations, CPE and a multimedia application system designed to provide essential software elements for broadband service providers - support for simultaneous multimedia applications; integration with third-party, IP-based billing and provisioning; interoperability with IMS infrastructures.

A former colleague of mine, Ken Wieland of Informa Telecoms & Media, recently summarised the deal struck between Soma Networks and BSNL, India's other major state-owned telecoms operator back in January 2008. Writing for the telecoms.com portal, Ken notes that BSNL uses Soma Networks as a mobile WiMAX franchisee in the three circles (regions) of Goa, Andhra Pradesh and Maharashtra. Under the franchise arrangement, Ken writes, Soma Networks pays for the WiMAX equipment in exchange for access to BSNL infrastructure (such as tower sites and backhaul facilities). A revenue-sharing deal is also in place as part of the arrangement, with a 70-30 split in favour of the kit-maker.

Soma Networks CEO Yatish Pathak, in an interview with Business Line last month, argued that the mobile WiMAX opportunity in India is probably quite limited, at least in the short term.

"One of the reasons that Soma Networks chose to use WiMAX 802.16e-2005 technology, also called Mobile WiMAX, is that it supports mobile broadband as well as [having] the capability to provide wireless broadband to homes and offices," Pathak told Business Line. "However, its application depends on the context and availability of competing technologies. In an emerging market such as India with vast areas under-served due to lack of wired infrastructure or due to sub-optimal DSL connections, the best use of WiMAX today is to deliver broadband to the homes and businesses that have no broadband, or poor broadband connectivity."

"Using WiMAX as a mobile broadband application is better suited for developed, more mature markets that have high data consumption," Pathak asserted. "Classic examples are Tokyo and Korea."

Pathak can see the business case for broadband service providers opting to use WiMAX to target the Indian laptop user market, saying that "then it will simply be a service such as EV-DO, but with higher data rates." The Soma Networks CEO believes that India's existing mobile operators will continue to evolve their network towards LTE to address their customers' evolving mobile broadband needs. He feels that cellcos might opt for WiMAX deployments in select high traffic business districts and cities to address the enterprise market. However, Pathak does not envisage any Indian MNO deciding to use WiMAX for mobile data on cellphones, arguing that such a service would require the operator to invest in and run two separate networks - an FDD network for 3G and a TDD network for WiMAX. Besides, he continues, the service would require dual mode phones, and the support for two different types of radios would make the handsets cost-prohibitive for Indian consumers, "until there is service acceptance and we see economies of scale."

Soma Networks, is, then, in Pathak's words, currently focused on the delivery of a "broadband data service that optimises the use of bandwidth link to wirelessly deliver a megabit-rate experience within the comforts of a fixed location, such as home or office," notwithstanding the fact that the company's technology, used for rollouts in India for BSNL, "supports mobility even today". It is BSNL's prerogative, Pathak states, to make a decision depending on its business model and strategy on when it wants to extend the mobility features to consumers.

Pathak feels that "going for mobility from day one is a very ambitious plan and requires massive investments." He told Business Line that broadband penetration across the three circles (total population 240 million) served by Soma Networks and BSNL is currently just 0.5%. Even if this rises to 3% over the next three years, he says, we are still talking of very small volumes to justify that kind of investment, given the low ARPU numbers in India.

"In my opinion," Pathak says, "a prudent approach is to focus on Wireless DSL market where there is a huge pent-up demand. This helps us deploy in a scalable manner without making billion dollar investments before any revenue starts accruing. By phasing the rollouts, we lower costs and risks to achieve rapid ROI and then scale up the investments to stitch the coverage areas to offer mobility."

BSNL, however, does not seem to share Mr. Prakha's cautious view about the prospects for mobile WiMAX. Earlier this month, wireless solutions provider Harris Stratex announced an agreement to supply mobile WiMAX technology to the Indian telco. Under the multi-year contract, run the announcement, Harris Stratex will supply its StarMAX™ WiMAX solution to extend BSNL’s public wireless access network to provide high-speed wireless mobility services to enterprise and retail customers in urban areas across the southern Indian state of Kerala, the country's fourth largest telecommunications market. Financial details were not provided in the announcement, but media coverage indicates that this is another franchising model arrangement.

This has presumably not met with the full approval of global trade and standard body the WiMAX Forum, whose regional Honorary Chairman for India, C.S. Rao, in June asked BSNL to avoid further use of the franchisee model.

"While adopting the franchisee model, we feel that BSNL is losing out on the opportunity of racing ahead of the private players in this space," said Rao, who argued that if the state-owned telco deployed networks itself, this would result in revenues amounting to about USD 1.2 billion annually. In the franchisee model, argues Rao, BSNL would only get about USD 500 million per annum.

That public sector telcos BSNL and MTNL are the ones dominating WiMAX news from India at present is due to the period of exclusivity the two organisations have had in this space. As James Middleton, another former Informa Telecoms & Media colleague of mine, observed in February, BSNL also has a first-to-market advantage when it comes to BWA (broadband wireless access) spectrum. While the BWA auctions are scheduled to take place the same time as the 3G licence awards, BSNL is already sitting on a chunk of pan-Indian 20MHz spectrum in the 2.5GHz band, for which it does not have to pay until the auctions take place. BSNL’s 20MHz of BWA spectrum will cost the state-owned operator the same as the highest amount paid for the three remaining 20MHz BWA licences that will be up for auction, two in the 2.3GHz frequency band and another at 2.5GHz. Whether BSNL can be said to have made of the most of this advantageous position seems debatable in light of the low broadband penetration figures and conservative-sounding projections offered by Yatish Pathak of Soma Networks.

BSNL and MTNL have also gained first-to-market advantage in the 3G space, again not having to make payment for spectrum until private sector operators are involved in an auction. As with the BWA auction, and as noted in a Wall Street Journal article today, the two public sector operators will have to pay the Government an amount equal to the highest bid in that auction, the date of which the article only predicts in the vaguest terms, i.e. "later this year."

The state-owned operators may have got into the 3G space ahead of their rival cellcos, but I'm not sure they can be said to have "enjoyed" first-mover advantage. In Tuesday's piece about Mobile Number Portability, we heard from Rajiv Sharma of HSBC Securities, who warned the public sector telcos not to make significant further investments in 3G mobile technology and from Alok Shende of Ascentius Consulting, who believes that the below-industry ARPU recorded by MTNL and BSNL reflects that the companies have attracted price-sensitive, low-MOU subscribers who do not use VAS and do not gain from the enhanced capabilities of a 3G offering. We noted reports that in the six months since its 3G launch, BSNL has acquired just 10,733 subscribers and that the figure for MTNL is said to stand at a mere 902, an average of just 150 per month across Mumbai and Delhi, considered the two most lucrative 3G markets in India.

It is in the context of these extremely modest 3G subscriber numbers that I'd like to consider an Asia Times article written this week by Kunal Kumar Kundu of consulting and IT services firm InfoSys. This - which is a summary of the writer's personal opinions - is nothing short of a withering analysis of BSNL, a company Kundu describes as showing "signs of sickness." Kundu feels that India's largest fixed-line telco looks set to go the way of struggling government-run Air India, "which has had to crawl cap in hand for a state bailout to survive."

For Kundu, "the signs of sickness are all too obvious, led by bloated payroll costs." He states that BSNL's salaries now account for about 25% of revenue, compared with rival Bharti Airtel's 5%, after rising at an compounded rate of 21.5% per annum between the financial years ending March '02 and March '08. Kundu notes that this far outpaces revenue gains, which in the same period increased at a compounded 5.53% per annum. He also argues that only by earning interest in cash kept idle in bank deposits has BSNL kept out of the red, and reports a deterioration in finances in the year to March 2009. Analysts, says Kundu, are forecasting a loss of between around USD 825 million-1.03 billion as salary costs jump by about USD 500 million.

The company, says Kundu, once regarded as one of the Government's crown jewels, is now one of the top candidates for disinvestment this year. He is especially critical of BSNL's performance in the fixed-line space, where "an abominable quality of service and increased options from the private sector have led to a drastic fall in the company's landline subscriptions."

Whether a proposed merger between BSNL and MTNL would cure these ills remains to be seen - and there may be some wait. A week ago, the Business Standard reported that India's Communications and IT Ministry will decide on the merger between the two state-owned telecom companies only after the listing of the former.

"MTNL is a New York Stock Exchange-listed company, and a merger would not be possible without the listing of BSNL. We will first look at listing BSNL and then will decide on the merger," Union Minister of State for Communications and Information Technology Gurudas Kamat said.

WiMAX and 3G trials and tribulations for India's public sector telcos

Bridging the digital divide between the provinces and regions of Pakistan

Pakistan is the world's sixth most populous country. It is also one which features regularly in TV news broadcasts that remind us of the country's strategic importance - as a state armed with nuclear weapons; as a country whose long history of troubled relations with neighbouring India took a new turn after the Mumbai terrorist attacks of November 2008; as a country with a porous border with troubled Afghanistan.

The country, however, has not featured very heavily here at DevelopingTelecomsWatch - before today, just five of the our first 100 stories even mention Pakistan. Today's short essay will, I hope, go some way towards making up for that glaring omission.

That I was able to round up a few interesting recent stories from the country is due mainly to my knowing of a very useful blog/news site - TelecomPK.net, set up and maintained by Babar Bhatti, a a senior IT professional now based in Dallas, Texas. Most of the news items, articles and reports referenced here today came to my attention via Babar's site and his tweets.

One item I found interesting was written by Babar himself, and concerns how the takeup of mobile telephony in Pakistan has been very uneven across the country's different provinces and regions. Mobile penetration in Pakistan currently stands at 54.11%, according to the World Cellular Information Service from Informa Telecoms & Media. Babar cites figures from the country's telecoms regulatory agency, which indicate a wide variety of cellular penetration rates in the four provinces:

• Sindh - 64.28%
• Punjab - 59.35%
• North-West Frontier Province (NWFP) - 35.37%
• Balochistan - 25.01%

Sindh, in the southeast of the country, is a major centre of diversified economic activity - heavy industry, finance and agriculture. The second best performer in terms of mobile penetration, Punjab, is the county's most populous region and its most industrialised. The two other provinces, where mobile penetration is well below the 50% mark, are places whose share of the national economy is much smaller.

Babar writes Balochistan's low cellular penetration rate is most likely attributable to the province having few urban areas and, as a result, high costs for the roll out of telecoms infrastructure. He feels, however, that recent Universal Service Fund (USF) projects may improve the situation in the provinces. I assume these include the three contracts recently signed by the USF and the country's incumbent fixed line and broadband provider Pakistan Telecommunication Company Ltd (PTCL), as reported on 3rd July by TeleGeography. These include arrangements to bring fibre-optic connectivity to all tehsils (administrative divisions) in southern Balochistan, involving the installation of 1166km of fibre-optic cable in the region.

Much of Pakistan's population is denied access to the range and quality of vital services taken for granted in highly developed countries. Two obvious examples are the provision of health care and education services. Canada-based technology journalist Jerry Blackwell, a regulator contributor to Wi-Fi Planet, wrote an interesting article earlier this month about how communications technology is making an impact with regard to the first of these.

Blackwell's article quotes Phil Cruver, President of KZO Education, an American company that develops content and technology for online interactive learning, who points out that "the literacy rate in Pakistan is only about 50%, and for girls, it’s lower. The country has about 1.3 million teachers now, but it needs double that number in order to meet the standards [in education] that are needed."

The article is part of a series which examines the state of the worldwide WiMAX industry in 2009. According to Phil Cruver, WiMAX will be "absolutely critical" in ongoing efforts to pull Pakistan's public education system up by the bootstraps. Cruver's plan is to deliver interactive streaming video-based learning over WiMAX networks and KZO has already launched pilot projects in Islamabad. This has involved connecting two schools to a WiMAX network operated by Wateen Telecom, a provider of telephony, broadband and multimedia services that is part of the Abu Dhabi Group, which also owns Pakistani mobile operator Warid Telecom.

Comments about technical issues and allegedly poor service for Wateen Telecom WiMAX customers were aired by Chris Cork, a British social worker settled in Pakistan, in September last year. Writing in Pakistani newspaper the News, Cork provided a personal history of the frustrations of getting a reliable Internet connection in the country during his time working there. This concludes with a none-too-complimentary account of dealing with a company whose "name begins with a 'W' and ends with 'n'" when he asked for an externally-mounted receiver to get full benefit of their service.

One Pakistani blogger, writing in December, also reported that the Wateen Telecom WiMAX service, the first such offering for consumers in the country, was facing bad press and suffering reliability problems. That writer's feeling seemed to be that this created opportunities for the providers of two other WiMAX-based services. One of these is Infinity from Orascom Telecom-owned mobile operator Mobilink, the market leader in the cellular space with an estimated market share of 29.74% according to WCIS. The other is wi-tribe Pakistan, part of an international collection of wireless broadband operations owned jointly by Qatari incumbent telco QTel and Saudi firm A.A. Tukri Group of Companies (ATCO). According to TeleGeography, wi-tribe Pakistan began commercial operations earlier this month.

Gerry Blackwell writes that according to the WiMAX Forum, at least two other operators, including Supernet (owned by Telecard, a fixed wireless operator known for its CDMA service) and Burraq Telecom, also plan to launch WiMAX services in Pakistan. The Supernet/Telecard offering, however, may be in doubt if nothing has changed since Babar Bhatti wrote in March about a dispute between wi-tribe and Augere, a European company that was planning to offer WiMAX services in Pakistan via the acquisition of spectrum in the 3.5Ghz band from Telecard.

Although some have raised concerns about Wateen Telecom's WiMAX service, Blackwell reports that Phil Cruver of KZO Education has no complaints: "It was so quick to get service," says Cruver. "We paid for it, and it was up and running within 24 hours."

Blackwell writes that when KZO first got involved in Pakistan, WiMAX wasn't on its radar. "To be very honest, we didn't know there was a WiMAX," Cruver says. "It's just serendipity that Pakistan has the first nationwide WiMAX network."

Cruver's last comment might not be accurate. Gerry Blackwell writes that Pakistan is really just "on its way to having a nationwide network", with service is only available in major population centers, and coverage spotty outside city centres.

As discussed, the second area of vital services in which WiMAX could potentially make a very valuable contribution in Pakistan (and other developing countries) is healthcare.

Earlier this year, Monica Paolini of Senza Fili Consulting (from whom I once sought advice about the agenda content for a Fixed-Mobile Convergence themed conference I hosted in Miami many moons ago) wrote a paper on the theme of expanding the reach of healthcare in developing nations with WiMAX. Sponsored by Intel and Cisco, this paper notes that today, in developing nations, patients have to travel to their nearest clinics or hospitals to receive even basic treatment and to more distant institutions for specialised or emergency care. Monica argues that this model does not provide comprehensive and efficient access to healthcare and suggests that reliable, always-on broadband wireless connectivity makes a new healthcare model possible -medical professionals reaching out to patients where they live and when they need care, bringing access to a range of medical resources through voice, data and video applications.

In her paper, Monica discusses an example from Pakistan - a Cisco trial combining satellite and WiMAX connectivity to mobile units that provide early oncological screening for patients in rural areas.

Overall, Monica uses her paper to make a case for why WiMAX stands out as an ideal technology to support telemedicine initiatives. Rather than focus on the capabilities of the technology, however, I'd like to consider the business models needed to make such initiatives a success.

Monica quotes Debra Sloane, Global Healthcare Solutions Partner Manager at Cisco, who says that "extensive cooperation among public agencies, health care providers and [telecoms] operators is necessary for the creation of new business models that can address the specific
needs of communities."

Just as we have noted that WiMAX networks in Pakistan are currently confined to urban centres, Monica notes that wireless networks tend to be initially deployed in high population-density areas and suburban business districts where the highest-paying subscribers can be found. Monica argues, therefore, that governments, health care agencies, and NGOs need to work together with network operators to ensure that operators see a business opportunity in under-served urban and rural areas. Perhaps Pakistan's Universal Service Fund could be used to intervene in this way. As far as I can tell, however, the USF's activties do not yet include any such initiative.

To conclude, while it seems that a number of worthy initiatives are improving the currently uneven access to telecoms and Internet services and to other vital services, Pakistan continues to be notable for a marked digital divide between its various regions.

Bridging the digital divide between the provinces and regions of Pakistan

Vodafone to brave India's 'Internet graveyard'?

Thanks to Indian digital and media business watchers Medianama, I learned today that Vodafone Essar has gained the approval of India’s Foreign Investment Promotion Board (FIPB) for setting up as an ISP. The intention to do this, and to gain a National Long Distance Licence was reported by the Press Trust of India last month.

Medianama believe that while wanting an NLD license is understandable, the interest in an ISP licence is "intriguing." Their article wonders about the logic of this "when the last mile is still not open" and with "other telcos like Airtel and Reliance struggling to add wireline and broadband subscribers." The Medianama writer goes as far as describing India as an "ISP graveyard" with just 6.28 million Internet users in the country as of April 2009.

These figures are in line with the ones quoted by Australian telecoms industry research house BuddeComm, the synopsis of whose India Broadband Market report notes that by early 2009, "there were around 6 million broadband subscribers – a lowly penetration (by population) of less than 0.6%."

The Medianama article suggests possible reasons for Vodafone being optimistic about its prospective entry into the ISP market. One could be the cellco possibly planning to bid for a Broadband Wireless Access licence.

BuddeComm analysts, however, do not seem terribly excited by the country's BWA scene either, noting that "by early 2009, the number of WiMAX subscribers remained modest." On the other hand, some are more bullish regarding WiMAX. The organisers of a WiMAX-themed conference taking place next month in New Delhi, for example, believe that India is slated to become the largest WiMAX market in the Asia-Pacific region by 2013, citing an (unnamed) recent study which predicts India's WiMAX subscriber base hitting 14 million four years from now. The conference blurb says that "WiMAX will find relatively greater utility and less competition from competing technologies in smaller towns and villages" and that all of this "means that in the next four years about 20 per cent of the global WiMAX users will be in India", making it a USD 13 billion market.

Another reason suggested by Medianama for Vodafone being keen on an ISP play is some expectation that India's last mile will be opened up soon. The article notes that public sector telcos BSNL and MTNL are the country's largest ISPs due to their legacy ownership of copper to the home. I am not clear on when this status quo is set to be challenged. Without having watched the issue very closely, I recall that past calls for local loop unbundling in India have gone unheeded by the Government. The regulatory-best-practice-fanboy in me feels that this is misguided and that the better way forward is to enable anyone with the will to do so to set up an ISP. Not all of them would succeed, but the winners would offer lower priced services to a broadband-hungry population.

Perhaps, though, by not forcing the telcos it owns (BSNL, MTNL) to offer cost-based access to its infrastructure, the Indian Government feels it is protecting the interests of these two valuable state holdings. Another way of looking at it is to suggest that failing to unbundle the local loop has simply cut off a revenue stream in the form of the access fees.

Vodafone, then, seems to be heading into a potentially challenging space if it intends to make a serious go as an ISP in India. Let's keep watching.

Vodafone to brave India's 'Internet graveyard'?

More snags for strategic investors eyeing Iran

I was saying only yesterday that telcos looking to invest in the Islamic Republic of Iran have faced some daunting problems. This came up in a brief discussion of Etisalat's stalled attempt to grab the country's third national mobile licence, as well as the problems Turkcell faced when trying to get hold of the second licence a few years ago.

I also mentioned that last year I hosted a conference at which Russian cello MegaFon signalled its interest in the third licence.

At that same conference, the Iranian delegation in attendance were talking up the attractiveness not only of the GSM/UMTS concession but also of two other investment opportunities - the sale of WiMAX-suitable spectrum and the part privatisation of the country's national incumbent wireline operator, TCI. One party interested in the latter opportunity now seems to have hit snags of its own, according to to TelecomPaper.

Telekomunikasi Indonesia, says the article, had announced in January that it planned to form a consortium with unnamed Iranian Government agencies to purchase a 20% stake in TCI. The article cites reports from the Jakarta Globe, whose journalist has been told by Telkom Vice President Heri Supriadi that the deal will not go ahead until "political hurdles" are cleared.

The TelecomPaper article suggests that one of these hurdles would be the matter of Telkom's US shareholders, which include pension funds, being forced to sell their holdings because of the US sanctions against Iran.

More snags for strategic investors eyeing Iran