THE INTERLOCKED TROIKAS

In the last couple of months of 2011, the government seemed to be working like there was no tomorrow. May be this was to compensate the time lost for legislation due to the controversy surrounding the Lokpal Bill and FDI in multi brand retail. As always there was always something to cheer about after a period of prolonged gloom. Well the cheer was in the form of flurry of encouraging government policies for the ICTE (Information & Communication Technology and Electronics) industry. The draft policy on Electronics (NPE) was unveiled on 3^rd October, 2011 and that on IT (NPIT) was unveiled on 7^th October, 2011. To add to that other policies like the draft NTP 2011 was released on October 10 and the National Manufacturing Policy (NMP) and National Optical Fibre Network (NOFN) were approved by the Union cabinet on 25^th October 2011.

ICT and Electronics industries have been the beacon on which the Indian economy has scripted marvelous success stories. Now it is time these industries synergize more which has the potential to produce spectacular and unprecedented success.

Now considering these three sectors, the challenges faced by Electronics sector (ESDM industry), lesser known of the trio, are something which needs to be taken up as top priority and hence the widespread interest in these policies from the industry.

NPE 2011

NPE 2011 envisions creating a globally competitive Electronics Systems Design and Manufacturing (ESDM) industry to meet the domestic as well as International demands. To accomplish this vision, many policies have been enlisted. The most important objective is to achieve a turnover of Rs 20 lakh crores by 2020 with an investment of Rs 5 lakh crores and thereby creating employment of around 2.8 crore by 2020. Of the total turnover targeted, Rs 2.75 lakh crores is expected from chip design and Rs 4 lakh crores from exports by 2020, an increase of more than 1000% from the current figure. NPE 2011 also aims to develop high-quality electronic products at affordable prices for inclusive adoption and deployment to improve productivity, efficiency and ease of operations in other sectors and also promote global best practices in use and disposal of electronic products. It also aims to provide incentives for setting up of over 200 Electronic Manufacturing Clusters (EMCs) with world class logistics and infrastructure and easy to do business facilities. The consequence of such a policy would be a boost to other sectors like automotive, industrial, medical, and also communications.

NPE 2011 can be a lifeline for the telecom ecosystem. In early 1990s when the wave of liberalization hit our country, the government wanted to develop the software industry as quickly as possible. The fallout, the idea of indigenous manufacturing of equipments took a backseat. These events started off a self defeating cycle where in dependency on imports increased manifold. Today the same government bemoans the lack of manufacturing capabilities in India. So we can see that poor policies for the sake of immediate returns will cost more in the future. Just consider these facts emanating from the industry circles. The demand for telecom equipment is estimated at around Rs 54,000 Crores in 2011 and is expected to increase to around 2.5 lakh crores in 2020, which is the second highest in the import bill after oil. With India being the fastest growing telecom market, the need for telecommunication networks will also increase. Trying to meet this need through imports puts tremendous strain on the exchequer’s coffers and presents substantial security issues. Hence the guidelines laid down in NPE 2011 gives impetus to manufacturing in telecom sector. Another enabling policy is to declare mobile phones specifically and other electronics products for data communication as goods of special importance under the Central Sales Tax Act. The policy aims to significantly scale up human resource creation to 2500 PhDs annually by 2020 in the sector.

NMP 2011 complements the NPE 2011. NMP 2011 also aims to increase the manufacturing share of GDP by 22% in 2022 and create 10 crore additional jobs by 2022.

NPIT 2011

The software/IT industry has been the darling of our economy. It has been a key factor in India emerging as a knowledge based power house. The Indian IT industry as of 2010 is worth Rs 4.5 lakh crores with nearly 80% of revenue coming from exports. The industry employs around 25 lakh skilled people. The current crisis in the developed countries have brought with it challenges as well as opportunities. This means we should start looking within our economy. There are encouraging sign of increasing IT usage due to gaining popularity of ICT industry.

Some of the major objectives include increasing revenues of IT/ITeS to around Rs. 15 lakh crores and expand exports to Rs. 10 lakh crores. Also more focus is laid on service delivery through e-Governance. NPE and NPIT together enable an ecosystem for mobile internet and mobile value added services.

Summary

The triads – IT, Telecommunications & Electronics have been significantly contributing to the growth of the economy. ICT can in fact help to reach out to the masses in the hinterlands enabling them to be hit the wave of development. ICT industry also gives ESDM sector a much needed push due to well known reasons. But to achieve that the government has to build up the brand image of the ESDM sector as it always taken a back seat to accommodate the more glamorous IT sector.

Aakash, an android tablet, is a product developed by IIT Jodhpur in collaboration with Datawind. It costs as low as Rs.2500 (commercial version costs around Rs 6000). This is an example of how innovation within the country can lead to cost effectiveness. The most interesting part is that the tablet was manufactured in India and not in China which was a cheaper option (import of finished goods attracts lower duty than the raw materials). Datawind CEO once said that since it was an Indian design, he wanted the phone to be manufactured in house. The point I want to drive home is the sense of pride and satisfaction in creating something in our own backyard. This can also be a trigger for breathtaking success in the near the future with appropriate enablers.

IT and Telecom have achieved tremendous growth in the past and now with collaboration with ESDM sector can look forward to exponential growth given the opportunities available in our country. For all this to happen the government should continue to play the role as an “enabler” and drive home the point that the policy statements are not mere statements of virtuous intentions but those which will enable the engine of the economy to chug along merrily.

L.KISHAN CHAND

Class of 2013

COMMON TELECOM TERMINOLOGIES

The mobile world moves at a breakneck pace, and it's difficult to keep up without the technical jargons and abbreviations most industry insiders throw around. And they do love to toss those terms around! One has to understand and be familiar with these jargons and abbreviations to know the industry better.

Following are the few examples. 

ARPU : It stands for Average Revenue per User. The term is mostly used in context to understand how much a person is paying for phone bill. The average revenue per user has different components in it. Generally a mobile phone user spends on voice minutes, text messages and data transfer. Carriers also consider users extra spending such as wallpapers and ringtones in this category.

Average Revenue per User (ARPU) Erosion : ARPU erosion is the business condition where monthly average revenue per user continues to go downward for an extended period of time. The statistics show that the user spending has remained same despite the voice rates going down, also an exception to the Law of Demand! One reason for the average revenue per user remaining same is, customers are heavily spending on text messages and data transfer instead of voice minutes.

ARPPU : An acronym for Average Revenue per Paying User which is calculated by dividing up the revenue amongst the users who paid anything at all. This yields a figure that is significantly larger than ARPU.

AMPU : It stands for Average Margin per User. It is related to one of the criteria for measuring the success of a telecom company but less being used. It focuses on the margin produced per sold unit and not the amount of cash (revenue) earned from each customer. Thus, one can afford low volumes and still have a healthy company.

Churn : Churn is a term used to describe the number of subscribers who leave a supplier during a given time period. The churn is typically measured monthly.

Churn is an important figure in subscription based services like mobile telephony and pay TV because it’s an indicator for customer dissatisfaction.

MOU : It is an acronym for Minutes of Use; often used in the telecom industry. It is the total time which is measured in minutes that a customer uses his or her mobile phone during a day, month, or year.

SAC : It’s an acronym for Subscriber Acquisition Cost. It is an average cost of signing up a new customer. SAC is the amount of money a company spends for each new subscriber they gain. It is also most frequently used by mobile telecoms companies. The customer acquisition cost of mobile companies is complicated by the number of costs involved. Example includes mobile telecoms companies which frequently pay incentives to retailers who bring in customers for their networks.

LTV : It stands for Life Time Value and it’s calculated by multiplying Average Revenue per User (ARPU) by the average length of the company’s relationship with a customer. One can figure out the length by dividing 1 by the churn rate for the period.

For example,

If there are 1000 customers and revenue generated is Rs. 25000.

Then, the ARPU is Rs. 25.

Let’s take churn rate 20 % which means the average length of the relationship is 5 months. (5 * 20% is 100% turnover)

Thus, LTV = Rs. 25 * (1 / 0.2)

                 = Rs. 125

CPM : It’s Cost per Mile (CPM), also called Cost per thousand (CPT) (in Latin mile means thousand) and is a commonly used measurement in advertising. CPM as a metric is used in advertising across a number of mediums (TV, Online, Radio, etc). And as advertising moved online it continued the tradition and stuck us with this somewhat cryptic metric.

CPM is commonly used by Internet marketers to price advertisement banners. For example, a Web site that has a CPM rate of Rs. 25 and guarantees advertisers 600,000 impressions will charge Rs. 15,000 (Rs. 25 x 600) for those advertisers' ad banner.

Kaushal Joshi

Class of 2014

BUSINESS DISRUPTION - CONSUMERIZATION OF TECHNOLOGY

Today everything is becoming consumer centric, be it a common FMCG product or the latest technology, it is the consumer who is driving the business of any organization by forcing them to think and innovate. This was not the case till early 1990’s when all the technology and product innovations were driven by business or enterprise since the technology at that stage was not matured. The trend started changing with the emergence of World Wide Web in mid 1990’s when companies like Yahoo and Google developed personalized services of emails and since then most of the innovative technologies are emerging from consumer side only. For example popularity of social networking among consumers made business firms like Facebook, Twitter and Linkedin such a big success. Unlike earlier days the new age consumers are demanding, eager and tech savvy and it is becoming a challenge for many firms to satisfy their needs. These days, new technologies that come-in are adopted, used and even dumped by the consumers even before they can gain acceptance by the business firms.

With this changing trend, enterprises are now increasingly looking at consumerization of technology within their own organization. One of the latest example is of Bring your own device (BYOD) concept which describes the recent trend of employees bringing their personally owned mobile devices to their work place and using those devices to access privileged company resources such as emails, fileservers and databases. As technology continues to advances, these mobile devices like smart-phones, iPhones and tablets with the richest collection of latest apps are becoming everyday commodity for most of the IT professionals and with such practices like BYOD they are able to converge their personal technology with the enterprise IT, what is commonly known as CoIT – Converged IT. It gives the employee an alternative to be self sufficient in meeting their IT needs using their personalized technology and devices. It can also bring the dispersed mobile employees together to build more than just a business; they can help build relationships that can make business a successful one.

This trend towards the adoption of not just personal devices but also personalized technology like cloud at work seems to be inexorable. In fact many firms have realized the power of social media and are providing consumerized services like Google, Facebook and Twitter as the essential components of their market strategies. As per Gartner, “Consumerization of IT” will be the most significant trend affecting IT for the next decade.

Although this consumerization of technology in enterprise or in other words the movement of consumer technology into enterprise brings a lots of scope of bringing more value to the business by revolutionizing the way it is currently done, enterprises are still reluctant to adopt it seeing it as a Business Disruptor and encroachment of consumerization on IT as its adoption will have to be backed by a lot many significant changes and reshaping of the IT as well as business model. One of the primary concerns is the loss of control of IT over the technology being used which leads to security concerns. Few of the major concerns are listed below.

• Loss of Control and track over the way operations will be carried out in an enterprise.
• Ambiguity in the compliance and ownership for data security.
• Data and access retrieval once the employee leave the organization.
• Careful planning and appropriate policies need to be defined ensuring there are no loopholes in the security.
• It will require more efficient and scalable database operations.
• New IT support system needs to be developed for converging the personal devices with non-standard operating system with the enterprise network and database.
• The dynamism in the field of technology. The speed with which the new technology comes in and become obsolete. It can lead to management Chaos.
• The volume of options available in terms of technologies to the consumers.
• It can lead to business risks.

In view of the above concerns regarding consumerization of technology at work place, enterprises feel that it will disrupt their normal business. But these concerns can be allayed if the IT team starts to learn to manage and govern the ever changing technology as today the market is dynamically evolving and the company needs to adapt to such innovative ideas if they want to be successful in such kind of environment.

The security and controlling concern can be remedied by using technologies like Intel’s “Trusted Execution Technology”, Data encryption with easy-to-use key management for virtual and cloud environments, unified security management solutions and other mobile security solutions like Mobile Data Protection (MDP) and Mobile Device Management (MDM). Careful and proper descriptive planning and policy definition outlining the rules of technology engagement is also a must for implementing such kind of change. With these capabilities in place the corporate data can be securely accessed and shared across physical, virtual and cloud environments and embrace consumerization.

For the business risks that consumerized technology might expose an enterprise to, it should be noted and thought upon that the business risks will only become bigger if companies do not capitalize on capable and skilful value creating employees which is developed and enhanced using consumerized technology. It brings and enhances the agility and productivity level of employees. So, there is actually a tradeoff between the two types of business risks and many other implications of using and not using the consumerized technology as well which a company must consider before making a final call regarding implementation of consumerized services like Bring your own device.

Finally it can be concluded that a win-win situation can be achieved for all the stakeholders of a company – the consumers, the technology vendors and the organization itself if it realizes the immense innovation opportunities by integrating popular tech-solutions in their enterprise system and instead of being considered as a business disruptor it can rather be a primary enabler for business growth. 

Ankita Singh

Class of 2014

Indian telecom sector and Energy Struggle

Diesel: Is the savior justified?

The power failure which occurred in North India due to the collapse of the interconnected northern, north eastern and eastern electric grid was one of the biggest blackouts in the Indian history.  The telecom operators like Bharti Airtel however managed to provide the services, thanks to the voluminous diesel consumption.

Due to the unreliable electrical grid supply the service providers currently use diesel generators, batteries, and a variety of power management equipment to cover the demand-supply gap. Today more than 60% of the towers in India depend solely on diesel for power generation .The telecom sector consumes high quantities of diesel to keep its towers working. The disadvantages of using diesel generators would include:

1. They require sophisticated maintenance which can be costly and less than timely;
2. Produces 5.2 million tonnes of CO2 emissions (out of 13 million tonnes overall) annually which is over 2% of the country’s total greenhouse gas emissions.

Considering this many tower companies currently use renewable energy sources such as solar, biogas and wind besides hydroelectric power, for their respective towers. There are off grid telecom model proposed by Renewable Energy Services Company (RESCO) which promise

• Dead simple installation 
• A business model that scales
• Low cost
• Low power usage

Interestingly the tower companies can earn credits (similar to carbon credits) that can be sold at a later time. However there are issues such as having to keep the solar panels clean for efficient usage and the unreliable weather conditions.

Another alternate would be Fuel cells: electrochemical devices that generate direct current and can be connected in parallel as a generator replacement. They can also be hybridized with solar, mains, batteries, and other power supplies. Their promised prospects include:

1. Greater reliability
2. Reduced CAPEX and OPEX
3. Energy conservation and eco-friendliness

I feel that fuel cell-solar hybrid solution may prove ideal for eco-friendly base station operation; the solar energy electrolyzes water to produce hydrogen, which is used by the fuel cells to generate power when the solar cells are down. This would not only reduce the risk faced by the telecom sector from electricity grid but also reduce the diesel consumption, thereby proving to be a beneficial backup.

SHRUTI

CLASS OF 2014