Wednesday, March 9, 2011

3G in Mumbai - high prices sour the deal

Airtel finally rolled out their 3G services in Mumbai yesterday and a friend reported getting Vodafone 3G on his cell too. For most of us here, it has been a long and frustrating wait - BSNL users have been enjoying the facility across the country for the last 2-3 months. I think we  have been almost the large major city to get 3G. Of course, Reliance and MTNL have both offered it here for some time.

I have spent today comparing the tariffs of all major operators, and I am frankly a little disappointed. I did not expect unlimited plans given the amount of licence fees that operators have  paid for the spectrum. But I did expect better rates than what are on offer today.

There is a fair degree of parity in the pricing and plans offered by the operators in Mumbai so I am making some broad observations across the board. I do not have data for Vodafone as they are yet to put up the Mumbai tariffs on their website

1) Dearth of attractive prepaid packs

In an earlier post this month, I had mentioned that long duration (6 month/annual) prepaid plans provide a lot of economy in use, and allow you to plan and fine-tune your usage. Well, all the operators have prepaid 3G packs but they are both low volume and low validity (1 day to 30 days). And therefore they are not really economical - the best rate you will get is around Re 1 per MB. MTNL offers slightly better rates, but still with low validity/low volume. Clearly the packs are being offered only as samplers to give people a taste of 3G  rather than as a serious long term subscription option. Hopefully, this will change down the line.

2) Higher data usage is not discounted for postpaid users

Usually, if you are a heavy data user/subscribed to a high volume plan, additional data that you consume will be at a slightly lower rate. Have a look at the MTNL Triband Tariffs. For example, if I am on the MTNL plan Trib-49, I pay Rs. 49 and get 200 MB free per month - I have to pay for additional data usage at the rate of Re.1 per MB. But if I am on a high volume plan DSL-1199 where I get 7GB free data, I pay only 40 paise per MB for additional data usage. No such concession is made for 3G postpaid users. The overage charges are standard irrespective of usage. They vary across networks - for Reliance, the best rate is Rs. 10 per MB and for Airtel it is Rs. 7.5 per MB. What this also means, shockingly, is that post-paid users will be penalised steeply for any additional data consumption. MTNL does best on this front, offering a flat rate of 1p/10KB or Re.1 per MB for additional data consumption.

3) No distinction between tethering and non-tethering

It may be early days to think of this, but I notice that the plans offered by operators make no distinction between tethered use (as a modem to your PC) and untethered use (only on your phone or mobile device). Typically, I would expect the rate to be lower if you only plan to use 3G on your phone.

Also we have not yet seen attractive data plans for smartphones like iPhone and Blackberry or for tablets.

4) Fine print on roaming charges?

MTNL has clearly stated that rates are standard across own and roaming networks. Airtel on the other hand, says in the terms and conditions that roaming is possible only on the Airtel network and even then 'Free data usage available in 3G data pack not applicable while roaming. Browsing charges of 30p/20KB will apply." That means that on roaming you would pay upto Rs. 15 per MB.

5) Plans are not download friendly
When you see the tariffs and data volume caps, you realise that the 3G plans are simply not designed for people to freely download music, apps or videos on their phones. Of course, you could argue that a 3G connection is a secondary connection and there are reasonably priced broadband plans for heavy downloading. But smartphone platforms today encourage us to download apps - the experience cannot be delivered without apps. Data rates are currently so prohibitive, that you would have to think before downloading. 

My wishlist for 3G would be;
a) Decent prepaid packs of 20-30 GB with at least 6 month validity, with a pricing of Rs.100-150 per GB
b) Give the option of free/unlimited GPRS connectivity to all 3G post-paid customers, once their allotted volume of 3G download expires. Currently Airtel offers this but only on one Flexi-Shield plan. I would like to see this as a default across all the plans.
c) Operators should have tie-ups for all circles where they do not have the 3G licence to give seamless connectivity at the same rate. I thought that was the point of making us wait for so long - to get those tie ups in place! 
d) The current representation of data (Paise per KB) is extremely confusing to the customer, and there is no standardisation at all. Reliance says 2p/1 KB, Airtel says 15p/20KB etc. It's a headache for me as a consumer to compare them. I think TRAI should mandate that all operators display a standard rate per MB. That would make life easy for all of us.
e) Subscription products : The Indian telecom market continues to be closely controlled by the operator. I believe that operators can choose to offer us certain 3G services at subsidised rates through the walled garden/ VAS platform - streaming video, live TV etc. I think that such services should be made available on a subscription basis so that I can sample the best of 3G without paying a bomb as data charge. Cricket on mobile would be such a hit! 

I hope at least some of these get implemented in the days to come. 

I will be out for the next 4 days without access to mail, so I apologise in advance for not responding to your comments. Will be back with more posts next week!

What to do if your MTNL connection slows down

It's just over a year since I have taken a broadband connection with MTNL Mumbai and apart from the initial delay in installation, I am an extremely happy customer. Over the last 5 years, I have sampled several service providers across home and workplace - Tikona, Tata Indicom Broadband, Reliance Broadband, Airtel etc.

One of the first posts I made in this blog was about email as the best way to get customer complaints addressed compared to helpline. This holds especially true of MTNL also.

Recently my MTNL connection became painfully slow. I was getting a downstream rate of only 300 kbps as against 'upto 2 mbps' which was promised for my prepaid plan. Now this is what is put up on the MTNL site about speed that they offer;

"Extract of TRAI notification dated 6.10.2006 for QOS of Broadband Services - "keeping the reasonable loading level in intra-network links upto ISP Node, the benchmark has been prescribed that service providers shall ensure the speed of Broadband connection is greater than 80% of the subscribed speed".

I sent across a mail to MTNL citing the problem and received an acknowledgement that they would follow up. I also dropped into my local exchange to chat up and understand the reason for the problem. By luck, I found a very friendly officer who explained to me that speed is controlled (for Mumbai) from Prabhadevi exchange. The local exchange comes into the picture only if the line is unstable. 

However, he made a call himeslf to follow up on my complaint and asked me to check my speeds again in 2-3 hours time. I switched off my router and did the speedtest. As you can see, the speeds are back :) and it just took a few hours for them to fix it.

So if you have a genuine (Non-torrent related :) speed problem, I can tell you from my experience that MTNL does address it promptly. I have not had a speed issue with any of the private providers but each had a different problem (with Tata Indicom it was frequent downtime. With Reliance and Tikona it was billing. Airtel is very good but they do not have a broadband footprint where I live. Besides, MTNL prepaid rates give me one of the economical net connections around. I don't see myself switching to anyone else in the near future!

Sunday, March 6, 2011

Will India benefit from reduced iPad 1 prices?

Leading tech publications have reported that Apple is offering a partial refund of $100 to all people who purchased an iPad in the last 15 days leading up to the launch of iPad 2. (ie. after Feb 16th). Following suit, AT&T has also reduced the price of the older generation iPad by $100.

I wonder if this has any implication for India, where the older generation iPad was launched last month, in a price range of Rs.30,000-Rs.35,000. Assuming that Apple would want to clear its inventory, I hope that they offer the lowered prices here also. A Rs.5000 or more discount would make the latest toy a hugely attractive purchase. Every time I visit an Apple store, or a Croma, I see some besotted teenager playing on the iPad until dragged away reluctantly by their parents. I am sure that a lower price would go a long way to make parents re-consider buying one for their offspring (In India, we claim that kids influence tech purchases hugely, but I suspect that sometimes we just make them an excuse to acquire gadget that we ourselves secretly fancy. And kids are smart enough to be well aware of this.)

As I have  mentioned in the past, I believe that the tablet market will explode in India when the pricing approaches netbook levels (Rs.15-20,000) as in any case tablets will replace netbooks in the long run. Apple being Apple, can of course command a premium. But I would love to see a lower priced iPad. It might make me also re-consider and buy one!

Mobile advertising in India and the growth of Android

Last month Fortune reported Piper Jaffray's estimation that Android could generate $1 billion in advertising for Google. To quote the analyst, Gene Munster, "We believe Google's ARPU on Android was $5.90 in 2010. We believe Google's average revenue per search user was $18.85 in 2010 and average revenue per user for Google's advertising businesses in total was $25.77 in 2010."

While this puts Google's ARPU (average revenue per user) from mobiles significantly below PCs, Munster notes that the revenue per user for mobiles will soon go up to $10, and with increased app downloads from Android marketplace, in-app advertising will also add significantly to revenue. This is Google's business model and the very reason for existence of Android as an open source OS that does not directly benefit Google.

Out of all the mobile OS platforms today, Android is poised for rapid growth owing to the huge manufacturer base and the inherent flexibility it offers to be deployed across a range of handsets. Today a Rs.6000 Micromax Andro and a Rs.35000 Dell Streak can both sport Android. This is the greatest strength of the platform and will be the key to its future success in India. Unless Android is available on truly budget handsets, its potential will remain stunted.

In case you are curious, the mobile advertising market in India is still very small - it is just Rs.100 crores (Rs.1 billion) according to this article on Rediff Business. Contrast this with the mainstream advertising which stood at nearly Rs.30,000 crore (USD 6.7 billion) in the period from June 2009-June 2010.

But mobile advertising is pegged to grow at 50-60% per annum. In a recent report, mobile media company BuzzCity rated India as the top mobile ad market in its network in Q42010, serving 4 million ad banners to Indian audiences in this period.

At 700 million + mobile subscribers, and growing, the captive audience base is huge. With 3G promising to bring in rich media and streaming content to our handsets, mobiles can actually compete with televisions as the first screen (arguably, many of us spend more time with our mobiles than watching TV). In fact, it has been proven that the advent of 3G has increased mobile ad spend across markets.

The only strike against mobile advertising is that we are worn out with all the telemarketing, unsolicited SMS etc. on our mobiles, most of which have continued even after the implementation of the DND (Do Not Disturb) registry. But on the other hand, if mobile advertising can subsidise paid apps and high quality content on the mobile, as long as it remains unobtrusive, I don't think anyone would be complaining. And I am sure that many advertisers would be keen to explore options given the steep mainstream media advertising rates.

If I were Google I would be quite excited with the prospects for mobile advertising in India. Maybe the company should take a cue from a certain prominent Southern politician who gives away free TV sets to his constituents (who will surely tune in to his family-run, vastly popular vernacular TV channel). He gets good karma and he gets eyeballs. Google, you wanna start giving away free Android handsets? You never know what could happen next...

Going prepaid pays

Every time I have taken a broadband connection, I have opted to go prepaid - first with Tata Indicom Broadband, then with MTNL, and most recently, with Reliance Net Connect. I would classify myself as a heavy user of the net, still I have found that the prepaid broadband plans of all these telcos have provided me with adequate bytes, and at a much lower price than a postpaid plan.

Just one disclaimer - heavy user, is not the same as heavy downloader :). I need the full bandwith of 2 mbps but I do not need unlimited GB for music/ movie downloads. In this context, prepaid plans work just fine.

Here are my examples of prepaid vs. post paid usage

I paid MTNL approximately Rs. 6000 per annum for 25 GB of data last year and the prepaid connection ran out exactly 10 days before the recharge was due. At Rs.500 per month, what I paid was equivalent to a basic broadband plan. Some months, I am continuously travelling, and I did not need to pay for *non-used* bandwith or rental in these months. Some months, my usage is extra heavy and I do not have to worry about that. As a bonus, for an entire year, I do not have to worry about paying bills on time. I have checked my usage online and figured that I use an average of 2-3 GB a month. Needless to say, I have  renewed the plan this year too.

2) Reliance Net Connect Plus
This is a company that is determined to extract a minimum ARPU #poundofflesh# from every user. I started out with a 10GB monthly data plan but soon figured that it was too steep for me at Rs.1200 per month. My usage of NetConnect is very light - one of the reasons for this is the extremely slow speeds, which are woefully short of 3.1 mbps promised.

I had two options at basic price - 512MB at Rs.499 per month or pre-paid Rs.3000 for 18 GB. Obviously the latter is a more attractive one, despite the added effort of converting it to a pre-paid connection.

3) Tata Indicom Broadband
I had a time-based high-speed plan which I have now discontinued. This plan made a lot of sense when I was still salaried. I got unlimited net access in office, so I only needed a few hours of access at nights or over weekends. This plan worked out to approximately Rs.5000 for 720 hours and it also lasted a year. If I renewed it on time, I could carry over unused hours.

My observation from all my examples is that prepaid plans with a higher validity (especially the 1 year plans) are extremely useful as they offer the economy of prepaid, combined with the convenience of not needing a sudden recharge. Also what you pay, is what you get - without the service tax and other hidden charges that mount up on monthly bills.

I have saved at least Rs.6000-7000 per year on each broadband connection by opting for prepaid, rather than postpaid and that is not a small amount. 

As a next step, I am contemplating whether to switch to a prepaid mobile connection, but I have been hesitating to do this. Mainly because I use the phone so much, especially while roaming and I do not want to end up always having to do last minute online recharges. The highest value recharge voucher that Airtel offers is Rs.3000 and my monthly bill averages Rs.1500, going upto Rs.2000 when I am on roaming. Still after my analysis, I have come to the conclusion that prepaid options are always money saving and worth checking out!

Will 2011 be the year of mobile computing in India?

Two interesting pieces of news inspired this post.

Engadget reported IDC figures citing that in Q42010, smartphone shipments overtook PC shipments for the first time. Globally, approximately 100 million smartphones shipped in Q4 2010, as against 92 million PCs.

Secondly, Gizmodo pointed out that the  5 global best selling handsets in Q4 were all smartphones. (The Apple iPhone 4 tops the list, which also includes the iPhone 3GS and the Motorola Droid).

Analysts at Gartner and other companies have been predicting that the future of computing lies in handhelds like smartphones and tablets, rather than laptops or desktop PCs. In fact, Gartner has recently lowered their PC sales forecast for 2011 and 2012 based on the consumer enthusiasm for tablets and smartphones. To quote George Shiffler, Research Director at Gartner, "..We now believe that consumers are not only likely to forgo additional mobile PC buys but are also likely to extend the lifetimes of the mobile PCs they retain as they adopt media tablets and other mobile PC alternatives as their primary mobile device". Basically, this does not mean that people have no further use for their PCs - it means that they will delay replacement purchases of PCs and instead invest in mobile handheld devices through which they will increasingly spend more time accessing the internet.

This infographic posted on Engadget (source : RBC Capital Markets) gives a different picture of the situation, showing that in a world with 5 billion mobile phones and more than 1 billion PCs, the smartphone and tablet numbers are still a drop  in the ocean. Definitely this perspective makes more sense for India, which is not yet a 'mature' market for either PCs or smartphones.

What is the future forecast for India in terms of mobile computing? Some figures at reveal that the notebook market in India is growing steadily while the desktop market has plateaued.

The graph below shows laptop/netbook sales have tripled over the last 4 years, touching 2.5 million units in 2010.

Notebook+netbook sales in India. Source :
In contrast, the desktop sales have remained more or less stagnant at 5 million units.

Desktop sales in India : source
So what would be the future trends for handhelds vs. PCs in India?

This study conducted by Intel-IMRB and published on Watblog) suggests that urban penetration of PCs is only 28 million.Rural penetration is likely to be much less.Therefore it seems logical that the number will increase, especially as laptop prices drop. Gartner reported that in Q4 2010, the Indian PC market grew at 16%, which is more than the global growth rate.

However, it is piquant to note that teledensity of mobile phones is 65% plus (700 million plus users) and and every month, we add more mobile users than the entire PC market! Therefore it seems more likely that the mobile phone (as opposed to the smartphone) will become the device of choice for internet access. Nowadays, even entry level handsets made by companies like Micromax or Karbonn, come equipped with browsers and GPRS/ 3G capabilities.

It should be noted that smartphones are growing in India. IDC India reports that 6 million smartphones were sold in 2010. This may be a drop in the ocean compared to the overall subscriber base, but still consider that more smartphones were sold last year than desktops! However, it is possible that smartphones may not grow at the dramatic pace that they have, say in the US. Operators in the US subsidise smartphones aggressively to tempt consumers, because they stand to benefit from the increased data usage on these devices.

In India, where phones are sold unlocked, the price gap between dumbphones and smartphones continues to be  huge, though brands like Micromax and Huawei have started to bridge it. But the presence of the world's leading smartphone brands continues to be miniscule; of the top 5 global handsets that I mentioned last year, 4 are not even launched yet in India!

So handhelds will power the internet revolution in India, but it will be sometime before smartphones and tablets become the next big thing. And Android should grow, but perhaps not the massive 615% growth we saw globally in 2010. India is still very much the market of Nokia, to an extent Samsung, and of course the cheap local brands. Let's see how that picture changes over the next few years!