Analyst Angle: Indian mobile sector faring forward, and well

Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry.
As I sit down to pen my thoughts about India – after having spent more than a month in the country, researching digital and financial inclusion issues, attending conferences, meeting mobile operators and their vendors, technology providers and federal policymakers – I cannot help but recall Walt Whitman’s lines: Do I contradict myself? Very well, then, I contradict myself. I am large, I contain multitudes.
This, because the first person, singular in Whitman’s celebrated ‘Song of Myself’ could well have been India. It is certainly large, contains multitudes and is full of contradictions. So much so, that whatever claim one can make about India, one finds that the reverse is very often equally true.
So, for instance, there is, simultaneously, massive affluence (in some instances, downright opulence) and rampant poverty, demonstrable technical prowess anchored in the cold rationality of IT and computing and a palpable spiritual undercurrent manifest in the display of deities in corporate offices, a huge (and growing) educated workforce and an equally huge (if declining) illiterate population.
The contradictions that mark India are never more evident than when one considers the country’s mobile sector. India is, without exception, the fastest- growing mobile market in the world in terms of mobile subscriptions –as well as subscribers, though not to the same extent – per month, yet one of the slowest when it comes to making policy with regard to the sector. The continued delay in the auction and allocation of 3G spectrum is a case in point.
An argumentative tradition
The 3G spectrum auction and allocation process is mired in all kinds of controversies – from allegations of ministerial misconduct and inter-ministerial disagreements over appropriate auction and allocation procedures to disputes over pricing and availability of spectrum slots. The net result is that, despite the industry’s standing demand for spectrum, the auction and allocation of 3G spectrum has been postponed now for the third time in 18 months.
According to the government’s current position, 3G spectrum will be auctioned in February and made available in August. Industry players are keeping their fingers crossed that the Department of Defense will be able to test and vacate the necessary spectrum in time.
The absence of a holistic, forward-looking technology and spectrum policy, however, represents only one set of policy challenges. Mobile operators and their surrogates are also seeking regulatory intervention and regulatory clarity on a number of other matters – from rationalization of spectrum fees and service licensing requirements to nationwide uniformity of rules pertaining to tower sharing and installation.
But those who fixate on these challenges often forget that in the interplay of technology, policy and markets, there is often a regulatory lag that sometimes holds things up. In India, the regulatory lag is somewhat compounded by endless, if thoughtful, policy debates that serve as a constant reminder of, what the economist Amartya Sen calls, the country’s “argumentative tradition.”
To India’s mobile industry players seeking to forge ahead in the pursuit of what they, undoubtedly, see as a just cause – of keeping the growth momentum, providing connectivity to the unconnected, etc. – the delays imposed by the country’s argumentative tradition understandably seem rather annoying. But, as Sen points out in his critique of T.S. Eliot – whose reading of the Indian epic, The Mahabharata, led him to write, “Not fare well, but fare forward, voyagers!” – there remains a powerful case to be made for “faring well,” and not merely “forward.”
M-finance and other initiatives
The financial regulator’s reluctance to let the mobile industry lead the dance on mobile finance serves to illustrate the point. The mobile industry, seeking to augment its declining voice and SMS revenues, has been eyeing mobile financial services as a major growth area. But it has been somewhat hamstrung by the financial regulator who insists that banks be a major part of the mobile finance equation. The legitimate desire to alleviate poverty cannot be justification for making public policy in a hurried manner without due consideration of issues pertaining to national security and the financial security of the individuals, says the regulator. Fare well, not merely forward.
Even the most cursory survey of the Indian mobile landscape leads one to conclude that the Indian mobile sector is poised to fare forward, and fare well – notwithstanding the current policy delays. There is an underlying vibrancy to the country and its mobile sector that lends great credence to the Wall Street Journal’s claim that this may well be India’s century.
I hope to elaborate on different aspects of India’s mobile industry – infrastructure, devices and services , its challenges and successes – in greater detail in my subsequent columns. Suffice to say here that there are several clusters of industry- and state-sponsored initiatives that bode tremendously well for the sector. One of the more interesting industry initiatives is the homegrown infrastructure vendors’ efforts to leverage the next phase of telecom industry growth (which is likely to see a cumulative investment of roughly $80 billion to $100 billion through 2015) to build a genuine domestic manufacturing base – one that goes beyond mere assembly and trading of imported components. The mobile sector alone is likely to spend more than $5 billion per year on network infrastructure as it seeks to double its installed base of roughly 500 million subscribers by 2015.
Likewise, there are various state-sponsored initiatives – most notably, the rather ambitious Unique Identity Number project led by the indefatigable former Infosys chief Nandan Nilekani – that seek to impose order on the seeming chaos of the mobile market and facilitate its growth. The unique identity number can be a major boost to mobile commerce and other mobile services, including those relating to banking, education, entertainment, health and governance.
Currently, many of these initiatives and pursuits are taking place in relative isolation, and seem rather disjointed. There is often the impression that various industry and policy actors, anchored in vastly different assumptions about the present and equally different visions of the future, are pulling in different directions.
If one focuses solely on the ostensibly contradictory vectors, and fails to appreciate the reach of Indian heterodoxy and India’s ability to accommodate contradictions, one is likely to miss something of major significance. Specifically that, together, they are all really pulling the sector and the country in the same direction – forward.
Dr. Shiv Bakhshi is a mobile industry analyst. He can reached at shiv@mobile perspectives. com