IT's Happy to Help:Marten Pieters

Marten Pieters, MD & CEO, Vodafone Essar, says IT has helped the company serve more customers, conquer rural India, and make Vodafone India's second largest mobile service provider.

CIO: What do you think of the low tariff rates and telecom scams in India?

Marten Pieters: The telecom industry has done a lot for this country. The mobile industry has brought to India in 10 years what no other company, industry or government, has in a 100 years. Connectivity is so important not just for keeping in touch but also to stimulate business and drive the economy and democracy as a whole.

The uprising that we saw in Egypt would have never happened if social networking were not available at the scale that it is today. Mobile technology has a huge impact on the society and improves our quality of life.

But in India, the image of the industry has been tarnished by bad stories of scams and bribery. And at a time when India is in urgent need for massive investments in terms of infrastructure--not just in terms of roads etcetera, but in terms of communication infrastructure--the negativity that surrounds the telecom industry is not good news.

If the situation persists, it will only grow more and more difficult to put money into new development projects. Not many foreign investors are ready to put money into Indian telecom players nor are banks ready to provide financial backing except for the top players in the industry. The shareholders are also not ready to support new ventures in the telecom sector.

India needs to see this industry as an integral part of society and not as a cow to be milked dry.

CIO: Telecom is a tightly- regulated sector. How does IT help keep pace with dynamic norms?

Marten Pieters: Telecom in India is over-regulated and complicated. But being an MNC we have vowed to live acccording to the law of the land that we operate in. We have very strong systems that ensure that our people comply with all the mandates put forward by our regulatory department. We also indulge in periodical checks to ensure that everything is compliant

Also, our IT team helps us tackle regulations with respect to information security and the quality of equipment. This is important because there are heavy fines for non-compliance in these areas. Moreover, it also helps maintain transparency in our call charges. We take the help of IT to make sure that all this happens in more or less automated fashion.

CIO: How was your experience with MNP?

Marten Pieters: We always knew that while it is important, it is not a game changer. The Indian customer is quick to complain. While we acknowledge that the quality of service could be bettered, customers are always looking for a reason to jump operators. I haven't seen customers put so much energy into something that is essentially of very low value.

MNP for India was special from a customer perspective but the effects that were witnessed were similar to what has happened elsewhere. MNP is not something that has structurally changed our outlook to the market. It is not an acquisition tool for a service provider. It's there for the customer and gives him the option to change providers. It's a decision that is primarily driven by the level of service a customer receives in a particular location.

CIO: Once M&A regulations are eased, would Vodafone consider consolidation?

Marten Pieters: Consolidation within telecom in India depends largely on the sustainability of the smaller players. The question is also around the very idea of consolidation. The only reasons for telecom companies to merge would be either for customers or for spectrum. Acquiring a smaller player for its customers doesn't make sense because these are not loyal customers. They are there because of the low tariffs that smaller operators charge. When you raise tariffs you will lose them. Even otherwise smaller providers have very few customers to interest a bigger player.

In terms of spectrum, the money that has been invested by these operators for networks and the losses they have made so far will be an excess amount. And that we will have to compensate them for; it also doesn't justify the price of the spectrum they hold. There are very few good deals. Moreover, the existing M&A in the telecom norms are not stimulating to consolidation.

There is a limit of 40 percent market share either in terms of revenue or customer base in a circle on a telecom operator in India. Plans are afoot to reduce this to 30 percent. So a consolidation among the bigger players is not possible.

And a consolidation of smaller players doesn't really help because even together they are still only a very small percent of the market.

CIO: With limited spectrum, how are you ensuring quality with cost-effectiveness?

Marten Pieters: The lack of spectrum is the biggest issue we face. My colleagues in Germany have, on an average, 140 MHz of spectrum available whereas in India we are allotted just six to seven MHz of spectrum per operator. Operators in India serve at least 10 times more people per MHz of spectrum when compared with international cities like London.

In order to serve such a large customer base in India, we have different network topologies and we need to repeat the use of spectrum much more often than elsewhere. This necessitates more towers but they are costly and the general public is also worried about radiation. This may not be justified but these perceptions do exist.

It is also true that since we are pumping so many voice calls within so little spectrum, the quality is not great when compared to international standards. I believe that, as an industry, we need more spectrum. The sad part, however, is that there are 14 operators in the country but at least six to seven of them are not using the spectrum allotted to them.

These small operators put together account for less than 4 percent of the market but are still sitting on close to 24 MHz of spectrum to serve very few customers. We find ourselves in this position because the regulations have failed. I think that it is in everybody's interest that the operators that have the most customers are allotted maximum spectrum so that the quality can go up.

Moreover, in the rural areas there is a lacck of constant power. So all the towers in those areas need to be fueled by diesel generators and this makes the telecom industry one of the biggest consumers of diesel in the country.

CIO: What are the growth prospects of mobile Internet services in rural India?

Marten Pieters: We think that Internet access in the rural areas is an absolute must. Apart from the broadband facilities being driven by the government, we need to work on bringing broadband Internet to rural India. People in rural India need it more than the urban centers. For example, for entertainment in a city like Mumbai, people could go to a library, watch a movie, go to a book shop, or just hangout in a coffee shop or a pub with either a laptop or friends. In the rural areas, a person might have a radio or probably a TV. But even for TV they need power and uninterrupted power supply is still not available in many parts of the country. So from that perspective, Internet would open up a world of opportunity not only in terms of entertainment but also things like healthcare and education.

So, I personally believe that the Internet has a far higher value for people in rural India as compared to city dwellers.

How is IT helping capture this largely untapped market?

Marten Pieters: For the rural areas, we are looking to connect with content providers. We think it is important to provide the apps that drive education. We are trying to organize this content and package it to fit the various screen types in the right format.

We are also set to introduce the Webbox. A sleek QWERTY keyboard, the Webbox, with a built in data card, uses standard RCA connectors (a type of electrical connector commonly used to carry audio and video signals) to plug into TV sets and convert any standard domestic TV into an Internet portal. We will first make it available to schools and combine it as an education package so that schools can use it as a tool to get content from the Internet.

Another solution catering to the financial woes of rural workers employed in cities is mobile money transfer service. This is aimed at mobile customers who do not have a bank account and allows them to deposit and withdraw cash via local agents, and transfer money to other mobile phone users. In the absence of such a service, workers have to send money back to their families in rural areas through means which are often expensive or very risky.

CIO: What impact has 3G had on mobile Internet access in India?

Marten Pieters: The introduction of 3G is driving the adoption of Internet access in India far wider than before. The fixed line Internet penetration is far below par in India when compared with that of similarly placed countries. The fact that 3G allows Internet access on the move drives its usage.

There is also the influence of social media which was not prevalent five years ago. This directly drives mobile Internet adoption. We are also witnessing a new generation of smartphones and tablets and it is suddenly far easier to access the Internet.

In India, these advances come together as a perfect storm. We believe the price points are still too high for mass adoption and that these need to come down but many people are trying to locate the services they want and can afford. Earlier, people were looking for value in voice and SMS services and now they need to figure out the tariff plans for data and Internet services based on their needs. Price plans are typically related to the volume of data consumed and it is generally difficult for people to translate volume to a service. So it will take some time for them to come to terms with this shift.

CIO: What efforts are under way to encourage 3G adoption?

Marten Pieters: When we launched our 3G services we provided it at 2G rates for a month. This we reasoned would help people to get acquainted with the various services on offer. We also had super weeks that provided gaming, e-mail, movies and other services free for a week each. This was basically aimed at teaching people to use these services without the risk of encountering a bill shock.

We are also trying to ensure that customers have a good supply of terminals. Very few people have really good terminals that can use the goodies of 3G. I think that we also need to make it easy for our customers to access these services. For this, we are working with content providers to organize and package the offerings in an easily accessible manner. For example, when the Cricket World Cup was going on a lot of people utilized our mobile TV services.

Copyright © 2012 IDG Communications, Inc.

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