NFC Technology – A long, dusty road to travel

What is NFC?

NFC (Near Field Communication) is a wireless data transfer technology between two devices that are in a proximity of around 4 cm. NFC is a subset of RFID technology and is based on principles of electro-magnetic field that interact with each other at close distances. NFC was developed by NXP (Phillips) along with Sony. Any activity that calls for proximity of a card/tag and its reader can be made simpler with NFC. Examples include credit card payments, access card authorization & attendance tracking, smart tag reader etc.

NFC is implemented in applications like Google Wallet and ISIS, which are mobile wallet systems. It can also be used for keyless entry systems in offices, metro stations and even cars. Restaurant bills and movie tickets can be paid for at ease with just a tap. This method of communication is popularly called the “tap-and-pay”.

The intuitive interface, versatility, standardization, interoperability and inherent security make the NFC a promising technology.

NFC and telcos:

Telcos get value from two factors: First and foremost, providing a service that meets a customer need and provider value. Secondly, ways to monetize the experience—not by scraping money from the merchants, but by adding value to the ecosystems through relevant loyalty programs, enhanced offers and rewards. Telcos have the potential—not the guarantee, but to influence the buyer at a new and previously unattainable portion of the retail chain, which is when they've got their money in their hand and they're about to commit. A telecom carrier could interrupt a retail transaction with a notification informing the subscriber that a discount retailer sells the same product at a lower price. That discount retailer would, of course, pay the carrier for these interruptions.

The sunny, bright side:

The future of mobile payments is going to be heavily influenced by the near field communications (NFC) technology. Recently retailers have upgraded their POS terminals to support chip-based cards; a logical extension will be the introduction of NFC-based contactless payments support.

Mobile wallet services will be lucrative for telcos that generate new revenue streams by using their positions as intermediaries in retail transactions as a selling point with merchants and advertisers.

The gloomy, dark side:

Criminals are likely to abuse the tap-and-pay NFC technology used in mobile payment programs, or digital wallets. Because of its extreme ease of use, internal data can be leaked easily just by placing phones close to each other. A virus infected device can steal information from every other device that it comes in contact with. These security risks can be mitigated in the enterprise by a combination of tools, policies and training. These polices should be able to give the IT teams access to devices while minimizing liability, prioritizing data security and at the same time recognizing the needs and rights of employees.

Gartner forecasts that NFC will account for only about two percent of total transaction value in 2013 and five percent of the total transaction value in 2017, although growth is expected to increase somewhat from 2016 when the penetration of NFC mobile phones and contactless readers increases. Worldwide, people are not purchasing as much because the buying experience on mobile devices has yet to be optimized, according to Gartner. People are spending less via mobile devices than via online e-commerce services and at retail outlets.

The GSM Association, which also noted it was publishing new specifications for NFC handsets and SIMs, continues to be concerned about big smartphone platform players, such as Google, Blackberry and Microsoft, along with some large handset makers. It fears that these so-called over-the-top players, as well as some device makers, will use embedded secure chips in their NFC phones to store revenue-producing applications–applications that the telcos would like to see running on their services.

The only way for telcos to ward off threats from reduced revenues due to reduced m-commerce applications is to make joint ventures with the mobile wallet developers. These help the telcos to minimize competition from the likes of Google and other new m-commerce players.

Sandhya Vijayan

Class of 2015

100% FDI in Telecom – Is it a change for the Better?

During the last decade, foreign investment has rapidly increased in developing countries like India and enhanced the economic growth. To maintain balance between economic gains from foreign investment and national telecommunications sovereignty is a challenging task. Liberal foreign investment on telecommunications will promote more economic gains including new and improved telecommunication products and services with lower prices and additional investment in other industrial sectors. 

Reasons for Increasing FDI in Telecom

Indian Telecom industry is suffering from a debt burden. Banks have already lent so much that they cannot stomach lending more. Indian telecoms today owe around INR 185,000 Cr to Indian and foreign banks. The burden is despite the fact that India has one of the largest telecom subscriber bases – around 897 million. Raising the FDI cap is expected to turn around things for the industry. With FDI gates opened, the telecom sector can garner the much-needed additional funds in coming months. The fresh inflow of money and reduced burden on local entrepreneurs will help the industry provide better quality services as well as adoption of the latest technologies. The industry is likely to have further consolidation with foreign players, who may eye the smaller players in the country.

India has already entered the last leg of a three-staged launch into telecom orbit. After the investor sentiments in India’s burgeoning telecom sector had hit all time low on account of cancellation of 122 odd 2G licenses and regulatory uncertainties. Things have never really looked up in the earlier two legs—of 49 percent and 74 percent FDI caps respectively. Experts predict that there won’t be any major changes to India’s telecom sector on account of change in Foreign Direct Investment into telecoms service from the current level of 74% to 100%. 

The return on 3G investments has obviously been too small to be worthy of being an offsetting factor. It was only after the failed 2G auctions that the government realized the magnitude of industry’s problems. That however, has not helped the industry recover from debts, which has also kept the stock prices as well as overall valuations of major India-based telcos under much pressure. It is unlikely to see a significant lift-up, given that the new FDI norms could increase the near-term competitiveness in the industry without a level playing field being in place.

It won’t therefore be unreasonable to say that a full FDI in telecom may not be enough to improve the overall health of the sector at this juncture.

Major reasons for Foreign Investors not to invest in India :

Regressive Government Policies

The infamous Vodafone tax case is a perfect example depicting the flaw in government policies. The policies being changed as and when needed is the signal that went out to foreign investors. The government needs to bring more clarity in its policies in context to regulation, licensing and taxation. 

Corruption

The 2G scam is an example for corruption in Telecom sector in India. Licenses were distributed on first cum first serve basis, but more pertinently, shifted the dates of application, allowed the entry of many foreign players. That had brought in fresh investment in the telecom sector in India, but also led to hyper-competition, with prices falling drastically, and some telcos offering free minutes just to get consumers on board. The falling prices were beneficial from a common man’s perspective but the signal that went out to the foreign investors whatever the Government of India decides, it might not hold up in court. Many foreign investors burnt their hands in this process, and decided to withdraw their business from India. Spectrum allocations have to be made in more transparent manner.

Aggressive Regulatory Policy

The Government bodies and regulators have been hyperactive recently regarding 3G roaming pacts, Vodafone 2G licenses in India.

However, the government’s consent on 100 percent FDI in the Telecom sector has definitely raised hopes in terms of growth and jobs. But the total effect of this policy change is yet to emerge. To retain talent is the main concern as per Dr. Sandeep Gandhi, chief human resource officer, Aircel. One needs to have patience and passion for technology and innovation to have a long-term career in this sector as suggested by him.

Well considered steps taken today will have a long term effect on the Indian telecom sector. So even if 100 % FDI is approved immediate miracles may not be expected. 

Aditya Yerunkar

Class of 2015 

OTT and Telcos : A Road Ahead

How many of us send sms today? It seems to be a yesteryear mode of communication between people through mobile phone, gradually and slowly they have been almost completely replaced by applications like whats app, facebook, nimbuzz , hike, skype  etc. and causing revenue loss to telcos of about $32 billion in 2013 which is estimated by analyst group Ovum to go up to $82 billion in 2020. By using these applications people can send messages to each other at virtually no cost using data connection hence completely bypassing the billing system of telecom players and leading to hefty revenue loss to telcos but providing tremendous value to the end users. These applications are provided by OTT(Over The Top) players whose 62% board  members profile are focused on sales, marketing and strategy while just 12% on financial matters while in telcos, 58% board members have legal, financial  or technical background. Hence OTT’s are better innovators and aggressive in terms of marketing strategies and sales and thus have better customer engagement.

Now what are the possible options for telcos to salvage this revenue loss? One being that they can block these OTT players to use their data network , but this step would bring customer criticism as OTT’s are providing high benefits to end users and telcos would lose these customers to the telcos who haven’t blocked OTT’s leading to more revenue loss. More feasible options for telcos would be to look for alternative ways to increase revenue like by hiking data roaming charges or increasing charges of  data usage plans as OTT applications require data network to transmit messages .Another alternative can be to look for having partnerships with OTT players  for providing unlimited access to their data network in return of some fees .According to allot’s mobile trends report 26% operators already have this revenue sharing model in place. If we consider India companies like RCom, Aircel, Airtel, Tata Docomo have already collaborated with players like Whats app, nimbuzz and facebook. Many more operators are to follow the same suit while many telcos are mulling whether they should collaborate or compete with the OTT players as they believe these partnerships wont last long due to difference in opinions between telcos and OTT’s .Those who have decided to compete like Airtel who has recently launched HIKE for Indian customers has imitated service model adopted by OTT’s and has shown promise by increasing their subscribers base to 5 million in just 4 months after its launch making it one of the fastest growing apps globally.

Looking at the success of some players like Airtel who have decided to compete by imitating service model others is also to adopt this model while many global players have decided to launch services on Rich Communicate Suite including Vodafone in Germany and Spain and TM mobile in Germany. RCS focuses on extending the communication options in mobile network beyond voice services and sms/mms services. They promise to provide peer-peer communication across parties .This is a move away from client-server paradigm used by OTT’s. This frees up both the users and developers alike in building future communication services, not being tied to single platform. The unique offering of RCS service model is that it provides guaranteed quality of service since it is offered over the managed IP network of the operators and hence is carrier grade. The model is however in early stages and would take time to develop in India.

Overall, OTT’s have thrown some serious challenges to telcos who are looking to get out of this trouble posed by OTT’s by imitating their models or by looking to provide better services in comparison to them. But looking at the past trends and because of the fact that OTT’s are better innovators they seem more likely in outwitting telcos who  seem to be short of ideas .Hence, best step which telcos can take is to have better partnership models with OTT’s who have a long road ahead of them.

Anuj Jain

Class of 2015

 
LTE: opportunities and impact on operators

About LTE:

LTE is an acronym for Long Term Evolution, it is a 4G wireless communications standard developed by the 3rd Generation Partnership Project (3GPP) that is designed to provide upto 10 times the speeds of 3G networks for mobile devices such as smartphones , tablets and wireless hotspots. 4G technologies are designed to provide IP-based voice, data and multimedia streaming at speeds of at least 100 Mbit/sec and up to as fast as 1 GBit/sec. It is basically dealing with much more high speed than one would have expected. For example: while downloading, a movie gets downloaded in just one second...that is the speed they are provided by the operators.

The first commercial LTE networks were launched by TeliaSonera in Norway and Sweden in December 2009; as of 2012, there were 117 commercial LTE networks in various stages of commercial service. But, the plan is for 130 LTE deployments by the end of 2013 or in start-ups of 2014.

Opportunities and Impact on Operators:

As per recent stats new Long Term Evolution (LTE) mobile phones and proclamations of unsurpassed network speeds, Mobile Network Operators (MNOs) are invested heavily in the role. As LTE will play in their future competitiveness. LTE network rollouts are underway at various stages in major U.S. and global markets, so as per this the time is now for MNOs to monetize these investments by delivering new, innovative advanced communications services alongside voice to enterprise end-users and consumers.

According to research firm Informa  70% of global operators believe 4G services should be launched everywhere by 2013. The sense of urgency is not simply perceived but very real, resulting from a small but closing window of opportunity for MNOs to be the provider of choice when it comes to delivering unified communications services – including mobile video calling, instant messaging and presence, and Web collaboration – to customers. Top players such as Apple and Google are chomping at the bit to seize mobile subscribers and revenues, while the increasingly mobile workforce now demands a consumer-grade communications experience that matches what they have come to expect on their tablet, iPhone, Android and BlackBerry devices.

The ability of MNOs to capitalize on this opportunity will go a long way toward shaping the future of mobile broadband communications, including but not limited to what services are available to enterprise end users and consumers, who delivers these services and, of course, what customers will have to pay for these services. A better word than capitalize is monetize. Mobile operators must start the process of monetizing LTE today.

In all markets, LTE subscribers used significantly more mobile data than 3G subscribers. Specifically, in Korea and Japan, markets often used as leading indicators of mobile trends. At the same time, decreases in relative Wi-Fi usage in all markets were also noted and Korea registered an absolute decrease. While Wi-Fi usage is still very significant, the data points to a possible trend towards a decrease in reliance, suggesting an opportunity for LTE operators. LTE operators' strategy to reset pricing plans during the transition to 4G appears to be working. Various survey by mobidia’s data shows significant decreases in unlimited plans and increases in larger-sized, volume-limited plans. As an example, only seven percent of LTE subscribers are using unlimited plans compared to 24 percent of 3G subscribers. Additionally, the percentage of subscribers on 2G or higher plans increased from only 10 percent of 3G subscribers to 62 percent of LTE subscribers. So, to conclude the impact is severe at present on operators but the future is hopeful and operators can invest in this technology.

Vivek Chaturvedi

Class of 2015

The Connected World

Over just a few decades, mobile communication has become one of the largest and most significant platforms, with six billion connections and transforming the way we communicate and access information, entertainment and the internet. Now, a new wave of connectivity is on the horizon where everyone and everything around us that might benefit from a wireless connection . We are about to see connected cars, buildings, medical monitors, TVs, game consoles and a whole range of connected consumer electronics and household appliances. Many of these will be connected wirelessly and intelligently, communicating and interacting with each other, thereby creating the connected life. Beyond connectivity, mobile operators will play a crucial role in working together with a range of industry partners in health, automotive, education, smart cities and a range of vertical industries to accelerate the launch of valuable connected services.

Mobile networks play a pivotal role in the development of the connected life providing a scalable, standardized global platform to support the growing demand for intelligent, secure connectivity. New connected wireless devices are set to surpass the number of mobile handsets over the coming decade and create significant new business opportunities for mobile operators, vendors and industry partners. Machine research estimates that by 2017, there will be over 10 billion cellular connections . Almost half the population of the earth now uses mobile communications.

A billion mobile subscribers were added in the last 4 years to leave the total standing at 3.2 billion. There are still many adults and young people who would appreciate the social and economic benefits of mobile technology but are unable to access it, highlighting a huge opportunity for future growth and a challenge to all players in the industry ecosystem to expand the scope of products and services to tap this demand. Despite challenging economic headwinds in many regions, the market is expected to grow even more strongly on the dimension of connections over the next five years, with 3 billion additional connections expected to be added between 2012 and 2017, a growth rate of 7.6% p.a. Given this dynamism, it is no surprise that the mobile industry makes a substantial economic contribution, with mobile operators alone expected to contribute 1.4% to global GDP in 2012 and their revenues expected to grow at a robust 2.3% p.a. to reach US$1.1 trillion by 2017.

Mobile infrastructure is now as important to a country’s economy as its energy grid or transportation network – it is a key enabling infrastructure that drives and supports growth in the wider economy. The high level of investment is needed to continue the development of this infrastructure so that capacity can be built to meet the ever growing demand and so that new services can be launched which bring greater benefits to the wider economy . Emerging markets are the major engines of mobile connection and subscriber growth – in particular Asia Pacific will add nearly half of all new connections between now and 2017 (1.4 billion) .

Network operators are continuing to develop strong value propositions to deliver new and innovative services to users. As technology continues to evolve, so the mobile ecosystem has built new business models to deliver new services in communications and adjacent services. Mobile remains a vibrant and evolving industry constantly finding new ways to inter-connect the user’s world in spheres such as automotive, utilities, health and education, and new ways to manage financial transactions. In emerging markets, growth will be driven by the increased penetration of smart phones, while in developed markets it will be driven by both greater Smartphone adoption and increased download speeds made possible by new technology such as 4G .The mobile industry has always made a significant contribution to public funding. By 2017, its contribution to public funding is projected to be US$550 billion – as a result of spectrum fees as well as direct and indirect taxes. It is important that this level of financial commitment should be structured in a fair and predictable manner, in order to protect growth and employment.

As quoted by Douglas Adams “First we thought the PC was a calculator. Then we found out how to turn numbers into letters with ASCII — and we thought it was a typewriter. Then we discovered graphics, and we thought it was a television. With the World Wide Web, we've realized it's a brochure.”  but before you become too entranced with gorgeous gadgets and mesmerizing video displays, let me remind you that information is not knowledge, knowledge is not wisdom, and wisdom is not foresight. Each grows out of the other, and we need them all. Today our very survival depends on our ability to stay awake, to adjust to new ideas, to remain vigilant and to face the challenge of change. The large house in which we live demands that we transform this world-wide neighborhood into a world – wide brotherhood. Together we must learn to live as brothers or together we will be forced to perish as fools.

Aditya Basu

Class of 2014

Transformation of OSS/BSS architecture

Traditional Architecture Of OSS/ BSS

 The term OSS describes "network systems" dealing with the telecom network itself and supporting processes such as maintaining network inventory, provisioning services, configuring network components, and managing faults. The term BSS typically refers to "business systems" dealing with customers and the supporting processes such as taking orders, processing bills, and collecting payments etc. Originally, these were mainframe-based, stand- alone systems designed to support telecom company’s staff members in their daily jobs.These systems used to be very complex and tightly coupled with each other. A small change in one system could affect all the interfacing systems.

In today’s scenario the next - generation service providers are required to manage a much more complex set of products and services in a dynamic and competitive marketplace. These systems ultimately help in enabling next-generation service providers to reduce costs, provide superior customer service and accelerate their time to market for new products and services.

                                        

Limitations of traditional OSS/BSS Architecture

The traditional OSS/BSS architecture includes custom development of integration code which is inadequate in satisfying the requirements of telecom service providers. Integrating systems when multiple TSP’s collaborate is also a challenge.  Common problems in traditional OSS/BSS architecture are:

•         Point to point integration

: OSS/BSS architecture involves integration with multiple external systems. For example, changes made into CRM system by CSR needs to updated into billing system automatically. This requires a number of interfaces between these external systems so that they can talk to each other. Such an approach is time consuming and integration is fragile. Furthermore, the integration does not offer end-to -end process picture that is essential to structure and reduce integration complexity.

•         Tightly Coupled.

Business rules and integration logic is tightly coupled with software components and any change in business environment will require overhauling and rebuilding application. OSS/BSS system is not flexible to handle frequently changing business requirements like introduction to new policies and service offerings..

•         Integration with External Systems

 External systems have their legacy implementation technologies which make the interaction with them difficult and require huge development effort. Also, each external system understands its own set of data types, so a transformation model is also required to convert information from one system to another.

•         Complex Transaction Management

Any operation performed by end user appears to be a single transaction. But the corresponding changes needs to be committed to multiple systems. For example, creating an account involves creating an account in billing system, LDAP, CRM System.

Integration Architecture

Mobile services are becoming more and more diversified. They range from basic circuit switched voice service to packet switched data services with multitudes of applications, both in the network and the handset. The services may have complex pricing rules and they require correct settings in multiple independent network elements. Many services are provided by third parties, which are outside the control of network operators.

The integration enablers consist of the integration technology platform (OSS and IT middleware), with both generic framework and OSS/BSS-specific abstraction services, which are accessed through standard APIs when possible. The solution for the end-to-end automated fulfillment consists of the following components:

BSS layer:  A self service (web) portal, where the subscriber is able to manage his subscription and activate new services and deactivate unwanted ones, customer Relationship Management (CRM) system, order management, subscriber management, pricing and rating information and charging & billing system. All these are included in BSS.

OSS layer: Resource inventory management and service management in OSS would serve as an effective measure.

Shruti Bhardwaj

Class of 2014

Analysis for Telecom Service Industry (FY 2011-2012)

Indian Telecom Industry started in 1851 when the first operational land lines were laid by the government near Calcutta (seat of British power) and now driven by wireless revolution, the Indian telecom industry is one of the fastest growing in the world contributing to nearly 2% of the Indian GDP and it’s bound to increase considering huge potential of Indian Urban market and untapped rural market. Needless to say, it also has one of the lowest tariffs in the world enabled by the hyper-competition in the market.

However, over last few years, telecom sector has witnessed several setbacks in terms of various scams, cancellation of 2G licenses of many operators, unsuccessful launch of 3G (not so great customer database), uncertain policy etc.  Considering all these significant negatives, industry did not seem (and certainly is not!) in its healthy state.  And thus, it came as a big surprise when the Indian Telecom Industry actually grew by 7% in the last fiscal.

If you see an industry getting defeated, then you are certainly not looking at the Telecom!! Yes, the telecom service industry revenue went up from 1,71,347 Cr. to 1,82,459 Cr. in FY 2011-12 according to telecom journal Voice & Data. Various telecom services counted in the survey include cellular, fixed line, National Long Distance (NLD), International Long Distance (ILD), broadband and VSAT services. 

SOURCE: VOICE & DATA

1)    Cellular:  It grew by almost 17 % and contributed 65 % of the entire industry’s revenue. The total cellular subscriber base was increased by 117 million during last fiscal and three major players are Bharti Airtel, Vodafone and Idea according to the market share.

2)    Fixed, NLD & ILD: Fixed and NLD segment did not see any growth. People are going wireless and fixed line industry has seen dip in their revenue by almost 19%. Similarly, NLD segment has seen a dip of 15% perhaps because of the fact that tariff for local calls and long distance calls are almost identical. Amongst three, ILD segment has witnessed minuscule growth of 0.27 %. Amongst top 5 players in ILD segment, Tata Comm. grew by 20 % and Vodafone grew by 40 %.

3)    Broadband: Despite the popularity of the Internet in India, broadband segment has seen dip of 0.46 %. It should be noted that the Internet penetration in India is one of the lowest in the world and only accounts for 8-10% of the population compared to OECD counties, where avg. penetration rate is over 50%.

P.S. The Organisation for Economic Co-operation and Development (OECD) is an international economic organisation of 34 countries founded in 1961 to stimulate economic progress and world trade.

4) VSAT: The term VSAT is an acronym for Very Small Aperture Terminals. Any requirement for connectivity in remote areas where other technologies cannot provide services or where dedicated and uninterrupted data connectivity is required (like core banking facility and the involvement of financial transaction) then the answer lies with VSAT services. VAST industry in India saw the growth of 6 % in FY 11-12 and credit goes to the growing demand from banking industry.

The Indian telecom service industry is likely to sustain growth in next fiscal considering the rollout of 4G service by all major telecom players and shall emerge as one of the key sectors responsible for India’s economic growth. 

Kaushal Joshi

Class of 2014