Maladies of the Mobile Wallet

Nowadays mobiles are being used as GPS navigation devices, TV screens, music players and so on. But the reality is that it has failed to create a mark as a mobile wallet. Despite being the easiest method of payment considering the fact that people carry smart phones all the time, mobile payment has not gotten its fair share amongst the consumers.

The marketplace is flooded with mobile payment applications. Three years ago, Google introduced Google Wallet, a mobile app that lets consumers transfer money, redeem coupons or pay for purchases with a tap of their smart phones. Consumers can also store their credit, debit and retail loyalty cards as well as other information in the app. AT&T, Verizon Wireless and T-Mobile launched a mobile wallet called Isis. Amazon is testing Amazon Wallet now, and Apple is rumored to be introducing one as part of iPhone 6. But despite this easy availability, mobile wallets are in a dormant state. According to a study by mobile research firm Yankee Group, a mere 16% of consumers used their phones to make an in-store purchase between December 2013 and February 2014. Among these buyers, 73% made fewer than five purchases a month. Such low rates of adoption have already killed off the Square Wallet, a mobile app that was introduced in 2011.

It is fairly clear that the developers of mobile wallet have not been able to create trust in the minds of consumers especially regarding the security of their account details. People are still skeptical about it. According to a 2013 study by Pricewaterhouse Coopers (PwC) people trust storing their loyalty cards and discount coupons in a mobile wallet, but when it comes to money or digital house keys, they will take a big step back, the PwC report says. Their main concerns are theft and loss of access, such as when their phone loses battery power or hits a technical glitch. They also do not want their mobile carriers knowing what they are doing with their funds.

There is hesitation in the adoption of any new innovation which involves money but that is overcome by the efforts put in by the developers.

Another problem is that people do not feel the need of mobile wallets. Their life is going on perfectly fine with either cash or debit/credit cards. Hence, for its success, the current payment methods need to be broken. If not, then there will be less compulsion to have to adopt.

A new entrant in this segment is the NFC. The focus is shifting to NFC since it is enjoying a lion’s share in the market. According to the latest reports, the new iPhone will reportedly come equipped with a near field communication system that powers a brand-new payment platform. People need to get a taste of this wonderful technology and then will they realize its benefits. And once they get addicted to its comfort, the demand for it will increase leaps and bounds.  

POOJA SONI 

Systems and Finance (Batch 2014-16)

SITM

 

INTRA CIRCLE ROAMING

Service Provider does not have adequate coverage in your circle (Eg. Pune) then it may tie-up with some other operator within the same circle which would allow you to use its network in the areas of low coverage. Thus a subscriber of operator 'A' would be latched onto the network of operator 'B' within the same circle. This is intra-Circle roaming. The MVNO's also use a similar concept of infrastructure sharing. In near future, operators might start sharing the 3G infrastructure on the similar concept to allow 3G services to its customers.

Current scenario:-

May 2014 Telecom operators Vodafone and Idea Cellular have resumed 3G services in circles where they don't have spectrum through intra-circle roaming (ICR) pacts with other operators. Bharti Airtel has also announced resumption of its 3G services in circles where it don't have spectrum.

This announcement by the operators comes post the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) ruling last week. The TDSAT bench headed by Justice Aftab Alam has said 3G ICR agreement signed by Airtel, Vodafone and Idea Cellular was not violating of licence agreement.

Airtel, Vodafone and Idea Cellular had approached TDSAT against department of telecom order to stop 3G intra-circle roaming agreement under which they had also agreed to acquire customers in area where they did not win spectrum.

Vodafone would provide circles where the 3G roaming services will be provided to both post-paid and pre-paid users are MPCG (Madhya Pradesh, Chhattisgarh), Karnataka, Rajasthan, Andhra Pradesh, Kerala, HP, J&K, UP West, Bihar and Assam and North East. 

Idea would provide customers in Delhi, Mumbai, Rajasthan, Karnataka, Kolkata and West Bengal, Tamil Nadu, Bihar, Assam and North East can now avail 3G services. Similarly Airtel customers can now use 3G services in Haryana, Maharashtra, Goa, Kerala, MPCG (Madhya Pradesh, Chhattisgarh), Gujarat, Kolkata and UP (East). …

However, there will be no 3G service in Odisha from these operators as all three don't have 3G spectrum there. Airtel, Vodafone and Idea Cellular won 3G spectrum in 2010 auction. Airtel won 3G spectrum in 13 out of 22 telecom service area for Rs. 12,295.46, Vodafone in 9 for Rs 11,617.86 and Idea Cellular in 11 circles for Rs 5,768.59 crore.

Sanjeev Pennada
Systems and Finance

2013-2015

M2M-Application and Issues in India

Machine-to-Machine (M2M) communication refers to technologies which allow wireless and wired systems to communicate with other devices of the same ability.

According to GSMA, by 2020 global M2M connections are expected to reach 13 billion, with Asia Pacific accounting for 41% of the total connections driven by emerging markets.

Growth of 4G technology will drive M2M adoption with Telecom Operators expected to increase their CAGR by partnering with M2M service providers. Hence they are building partnership with M2M providers in specific vertical market sectors to improve their service portfolio. The Global Mobile M2M module market was worth $ 1.5bn in 2012 and it is expected to grow rapidly in the next fiscal year.

As India being the 3rd largest country in number of subscribers having broadband connections and 100% FDI in telecom sector, many foreign companies are ready to invest in M2M. In India M2M started taking a leap when Vodafone joined hands with Mahindra for Reva e20 car.

Operators M2M drivers:

·         New revenue opportunity :Offset revenue decline from legacy services and increase focus on data revenue

·         Competitive advantage :A key differentiator for operators in a highly competitive environment

·         Launch of 3G and 4G :Enables sophisticated service delivery that require increased bandwidth

Application of M2M:

Three verticals are viewed by operators as most promising to monetize M2M offerings

·         Transport and logistics: Fleet management, asset tracking, logistic planning and optimization for enterprises.

·         Utilities: Smart metering and smart grid initiatives in electricity, gas and water being pushed by government regulations.

·         Automotive: On-demand infotainment, safety and security services, remote vehicle diagnostics and usage based insurance for private individuals

Offerings by Telco:

1.       Vodafone- Recently Vodafone announced to buy Italy-based automotive security and telematics firm, Cobra Automotive Technologies. The acquisition of Cobra Automotive Technologies will help Vodafone make progress in connected technologies for automobiles. Also “Cyan”, System and software design company has signed a teaming agreement with Vodafone's M2M (Machine-to-Machine) team to create joint propositions, develop opportunities and submit proposals to customers to enable either party to address the smart metering market in India.

Some of the industries by Vodafone M2M are in

·         Automotive

·         Consumer Electronics

·         Energy and Utilities

·         Health

·         Manufacturing

·         Transport and Logistics

2.     AT &T

AT&T has partnered with

·         Jasper Wireless - to form AT&T Control Centre that helps companies manage large scale deployments

·         Axeda – to form AT&T Resource Centre to accelerate the development and deployment of M2M applications.

Some areas where AT&T provides its M2M capabilities to use are

·         Fleet and Asset Management

·         Vehicle Tracking

·         Smart Meters

·         Smart Grid

AT&T approach in India:

·         In May 2013, AT& T entered into an alliance with India-headquartered IT services company Wipro Technologies to develop M2M solutions for various industries.

·         In October 2013, Company announced a new global alliance with General Electric (GE). GE machines will use our network and cloud to help workers be more productive. Workers will be able to remotely track, monitor, record and operate GE machinery, virtually anywhere in the world.

·         In February 2014, AT&T announced a new global alliance with IBM that will focus on building new solutions for city governments, transportation officials and midsize utility companies. Cities can better evaluate patterns and trends to improve urban planning.

·         AT&T is interested in providing Heavy Equipment and Asset Tracking Project in Indian Market.

In India, except Vodafone all players are taking very slow steps for M2M deployment. Lot of players are in debt due to high spectrum bidding prices so they might take back seat for M2M will provide communication services only while System Integrators like TCS, Wipro may take lead.

Issues for M2M Deployment:

·         Bring Standards For M2M in line with global standards

·         Allocating Spectrum for M2M local area network Layer

·         Revisit National Numbering Plan to accommodate M2M

·         To ensure the Always on requirements – Inter-Operator Roaming and Inter-Network Mobility

·         To ensure Interoperability

·         Guidelines for Bundled Services

·         Address Privacy and Data Protection

·         Address KYC (know your customer) and customer traceability issues.

·         Address Security and Lawful Interception for M2M

·         To have policy around Customers ethical Issues

·         Close coordination with relevant global organizations

From above issues it is clear that lot of work has to be done in this field. Government is taking rapidly steps with the formation of TSDSI "Telecommunications Standards Development Society, India"  which aims at developing and promoting India-specific requirements, standardizing solutions for meeting these requirements and contributing these to international standards, contributing to global standardization in the field of telecommunications, maintaining the technical standards and other deliverables of the organization, safe-guarding the related IPR, helping create manufacturing expertise in the country, providing leadership to the developing countries (such as in South Asia, South East Asia, Africa, Middle East, etc.) in terms of their telecommunications-related standardization needs.

So it is important to develop a clear framework to tackle these liabilities. Let’s hope all these steps will lead to fruitful output.

 Devendra Patil

Marketing and Finance

2013-2015

Recharging the Indian Telecom

The present conditions that the Indian telecom is going through, it appears nothing is going smooth for the industry. Licenses were cancelled, and operators were threatening to quit the market; taxation issues cropped up; ARPUs have been declining; broadband is not taking off; cell phone growth rate started falling so on and so forth. Unfortunately all of this is being magnified because of very negative sentiments building up in the regular industry fora, seminars, the business corridors, and therefore in media coverage. Everything seems to be on the decline, and it seems Indian telecom is a lost case. With this kind of constant negative atmosphere is perhaps also resulting in us not visualizing an even a better period that is waiting for us in coming times.

A new government taking charge opens a "policy window" to make course corrections and major shifts that will drive economic and social growth in the country, especially when the new government is the majority party (BJP) that is getting this opportunity, to put India in fast gear growth, after at least three decades. The country elected a new government this year, and Narendra Modi as its leader. Modi is perceived as a visionary leader with brilliant execution skills. All big ticket infrastructure projects will be monitored by PMO, including the ambitious National Optic Fibre Network roll out, that has not seen noticeable development, in spite of it being classified as a high priority project. Modi government is preparing to hit the ground running. A major restructuring is expected on the policy front and the ministry structure and operations. The Department of Telecom (DoT) has also presented its strategies to move ahead with issues related to spectrum auction and management, speeding up rural connectivity, rationalization of charges for telecom companies, and a new Bill to address the convergence in the IT, telecom and communications space. It will apparently replace existing regulations. Given the key role played by telecom, IT and communications in bringing about social transformation, all three are likely to be retained by the Prime Minister's office as it is or under a restructured single entity to derive efficiency and value from the convergence of these three domains.

Specifically because of the 2G scam, the industry's pace slowed down. It also left a deep mark in the minds of the world. Narendra Modi cites innovation in technology as the key behind becoming a super power. The Government should have focused in reducing imports of electronic goods and urged domestic manufactures to produce them. Proper rural telephony development is also important. India's ICT industry aggregates about US $150 bn in revenue which is about 10 percent of the country's GDP, and employs 35 lakh people. In addition, it generates indirect employment for approximately 100 lakh people. The major components are - IT/BPO exports, telecom services, telecom equipment and domestic IT.

CyberMedia Editors have outlined some 20 high impact initiatives that the new government led by Modi can achieve in the first 100 days of governance.

1.    Set up a government-industry high level ICT Task Force

Set up a government-industry ICT Task Force to evolve a structure for the growth of the industry and identify and remove all roadblocks, which will rejuvenate the industry and put it back on a fast-growth track.

2.    Set up an independent implementation agency for "National Electronics Mission"

ESDM needs to be recognized as a strategic sector for India. ESDM can create 28mn jobs if we focus on building a local manufacturing ecosystem serving the global market.

3.    Set up a National Institute for Assistive Technology to undertake R&D to ensure availability & affordability of quality assistive devices, aids & appliances for the disabled.

About 8% of India's population is disabled. The disabled are deprived of all opportunities for social and economic development.

4.    Announce the setting up of Entrepreneurship Hubs for electronic manufacturing and incubation centers for IP creation.

There is a need to create local fabless and start up culture by supporting entrepreneurship, innovation and rapid scaling up. The focus should be prioritized to promote global scale manufacturing and create an R&D culture to promote innovation.

5.    Fast track semiconductor projects for upward and downward innovation.

Promotion of innovation and intellectual property (IP) based manufacturing should take place. Investment in hardware engineering & semiconductor capabilities, which will create upward and downward innovation opportunities for IT Industry, should be actively encouraged.

6.    Improve poor financial health of the telecom industry

Introduce a flat Spectrum Usage Charge (SUC) of 1%; redefine "Adjusted Gross Revenue" to include only mobile telecom related income, and allow license fee & SUC to be set off against service tax. Also reduce USOF levy by 1%. To increase availability of commercial debt, a telecom finance corporation needs to be set up especially since the banking sector has reached its sectoral limits as far as telecom industry is concerned.

7.    Relax the FDI policy for e-commerce

The current FDI policy does not allow any investment in the on-line B2C segment. This move has either prevented foreign capital or has prompted complex legal and organizational structures by domestic companies to access foreign funds and expertise. It can also make Indian SME's globally competitive thereby increasing exports.

8.    Remove license fees, entry fee, bank guarantees and other conditions on ISPs.

Broadband access directly impacts growth, and affects education, healthcare, entertainment, productivity and rural inclusion. A 10% increase in Broadband results in increase of 1% in GDP. With less than 1.5% penetration, India lags other developing economies. To achieve greater broadband penetration, license fee, entry fee, bank guarantees and other conditions should be removed for ISPs on pure Broadband till 600 million connections are reached.

9.    Rural Broadband Access - Fibre to the villages

National Optic Fiber Network project should be evaluated and a set time frame for its implementation and roll out should be defined and implementation monitored by the PMO. Fibre on ground is key to ensuring high speed Broadband access across the nation.

10. Promote local manufacturing

Address disabilities faced by local manufacturers against finished product imports by granting deemed export benefits to local manufacturers. To promote global scale manufacturing, offer "throughput based" incentives to counter disabilities of local manufacturing against cheaper imports, as "CAPEX based" incentives are not attracting global players.

11. Create a multi-stakeholder framework for Internet governance

A multi-stakeholder framework for Internet governance should be created including government, business, civil society, academia, media, etc.

12. Recall retrospective taxation

Retrospective taxation creates major uncertainties in the business environment and is a significant disincentive for companies who wish to do business in India. This should be recalled.

13. Implement GST and abolish VAT

Implementation of GST has been pending for a long time now. Although the industry has been waiting for its roll out, nothing seems to be moving on this front. Hence, a definitive time frame for the implementation of GST should be announced.

14. Extend SEZ benefits to start-ups and smaller exporters

SEZ benefits should be extended to start-ups and smaller exporters or section 10A/10B should be reintroduced for 5 more years.

15. Amend Section 56 (2) (vii b) to accept valuation in start-ups when registered Angel Networks invest.

Entrepreneurship is the life-blood for a nation's progress as it unleashes innovation, fuels growth and creates jobs. The tech sector provides exciting opportunities and is one where India has special advantages. Section 56 (2) (vii b) of the Finance Act of 2013 has created a tax on start-ups when Angels invest (based on Fair Market Value) severely impacting the ecosystem. This needs to be corrected immediately at least for investments by known Angel Networks in India.

16. Drive Digital Literacy

Digital revolution currently reaches less than a quarter of India's population. It is essential to extend this immediately to at least half the population. This would benefit industry and small business in rural and semi-urban parts of the country, and help people derive benefits from government programs in employment, education, healthcare, nutrition and financial services. It is also necessary to strengthen the education and skills sector so that direct and indirect employment of 10-20 lakh jobs can be created every year.

17. Use technology to create transparency in Governance

A national open data policy should be created ensuring government departments make non-sensitive datasets available to the general public, which will ensure success for Government's pilot data.gov.in project.

18. Incentivize m-Governance Apps

Announce incentives to promote mobile app development for various government programs to be delivered to citizens, especially in rural areas, with a focus on healthcare, education, and public services in local languages.

19. Liberalize Higher Education

By 2020, the world will face a shortage of 56 mn workers. Given our demographic - with 54 percent of our population below the age of 25 - India, with 47 mn excess in the working age group, is ideally suited to address this global scarcity. This opportunity can transform India into a global talent repository and a knowledge superpower, provided our higher education system is reformed, and soon.

20. Fast track policy on Spectrum trading

Spectrum is a national asset on which the digital economy is getting built. Majority of this resource is lying unutilized or underutilized with various government agencies in all bands (e.g. 2100 MHz, 1900 MHz, 1800 MHz, 800 MHz, 700 MHz and 450 MHz). Provide a clear roadmap of spectrum availability in the future and fast track the policy on Spectrum trading and sharing.


Aditya Yerunkar
Systems and Finance
2013 2015