“This is a golden time for Indian startups in telecom and mobile space," Dr V. Sridhar, Author, ‘The Telecom Revolution in India’
How favorable are policies in India for telecom/IT startups?
In general, setting up telecom/ IT companies for which no government licensing is required has been quite liberal inIndia. However, there is no seed fund for R&D startups in India. As an example, in countries such as Finland, there is a government set-up for venture funding of start-ups including space in tech parks. Though some of the academic institutes such as IIM-B have been nurturing startups in their entrepreneurship centres, the cases are few and far between.
Telecom policies and stipulations on issues such as SMS quotas and bans may come in the way of startups and other companies in the mobile marketing domain. How can such roadblocks be overcome?
I think we made breakthrough in the implementation of Telecom Commercial Communications Customer Preference (TCCP) Regulation. The National Do Not Call Registry is transparent and is a breakthrough in protecting customers’ individual preferences. The TCCP regulation is not applicable for transactional messages and hence does not affect entities that provide them. It is stringent on promotional messages. However, as we move towards wireless broadband, the firms should focus more their non-intrusive m-advertising targeted at smartphone users.
Telecom policy bottlenecks have slowed down the growth of 3G, Internet telephony, etc. How is this affecting Indian startups in this space?
Though limited amount of spectrum (2 × 5 MHz) has been assigned to the 3G operators, the services have not yet picked up in full scale due to less adoption. One possible explanation could be the lack of compelling 3G applications. However, recently the operators are seeing more traffic on their 3G networks. Compelling India sensitive (much like the hit Ring Back Tones) applications is the key for success of 3G adoption in India. Niche areas such as m-education and m-healthcare are areas the Indian start-ups need to focus, now that smartphone usage in India is showing almost exponential growth.
Yes, there are bottlenecks in unrestricted Internet Telephony. Though the regulator has been pushing for restrictions on Internet Telephony to be lifted for Internet Service Providers (ISP), it is yet to see the light of the day. However, the unified license for which guidelines have already been announced by TRAI (yet to be approved by the Telecom Commission, of DoT) clearly states unrestricted Internet Telephony for all unified licensees. The ISPs can then migrate their ISP license to unified license to provide unrestricted Internet Telephony.
It is time for unleashing the power of mobile broadband to the masses including low-cost Internet Telephony – operators’ nightmare as voice will become almost free!
Which countries have effective policies for telecom/IT innovations and manufacturing? What makes these policies effective?
Apart from countries such as US,UK and the European Union, it is worth mentioning China’s innovation policy and support for high tech manufacturing including telecom.
China’s foray into science and technology, though started a couple of decades, back attained its peak in early 2000, when a series of fiscal incentives were given to start-ups especially in the high tech sector; notable ones being the Spark program and the 863 (State’s High Tech Development Program). The business incubator programme in China has attracted many startups to set their centres in the 53 or so High Technology Development Zones in major cities including Beijing and Shanghai. The state support including financials in terms of interest free loans and long credit periods to telecom majors such as Huawei and ZTE is well known. The domestic standardisation effect inChinasaw the birth of TD-SCDMA and later TD-LTE as string contenders to WCDMA and FD-LTE technologies respectively being promoted by the Third Generation Partnership Project (3GPP).
What are your recommendations to the Indian government for making policy more innovation/startup friendly?
Today, we have just started seeing semblance of it in India. With the launch of Development Organisation of Standards for Telecom in India (DOSTI), set up with support from IITs, operators, network equipment makers and telecom software vendors, we have just started actively looking at promoting standards for telecom as applicable in India. On the manufacturing front, we are yet to see any action, though the recent Telecom Manufacturing Policy aims to achieve significant value-add from domestic manufacturing with preferential treatment to domestic equipment manufacturers in telecom projects.
Telecom is becoming more and more software centric. Much of the value-add comes from software and not form hardware. Hence instead of dissecting the manufacturing as software and hardware, the government should support software R&D. For example, today, the Department of Scientific and Industrial Relations (DSIR) does not even have a policy of recognising software as an R&D activity in their certified labs. Only hardware policy exists. This mindset has to change in the government so that software is also viewed as R&D oriented.
What are your recommendations to industry for becoming more innovation/startup friendly? (eg. better revenue share between operators and startups)
In telecom, we are entering the 3rd era (first one in 90s when we leapfrogged analog mobile into digital cellular; second in 2000 when we saw intense competition resulting in frugal innovation on many aspects of telecom including sachet pricing models) of broadband wireless. In this era, content and applications are the important drivers for adoption. This is a golden time for mobile start-ups inIndia. Operators also realise slowly that selling raw bandwidth is not enough. Content and applications are the necessary complements to bandwidth. Hence we will see revision of revenue sharing arrangements between operators and content providers. The days of 80:20 will yield to 40:60 soon!
What are your picks of the best telecom/IT/mobile startups that have emerged in India?
OnMobile and IMI Mobile for sure, as they provided a generic VAS platform for use by the telcos; however these firms need to change their platform strategy as we move to the 3rd era where Internet and Appstores provide generic platform features; proprietary platforms loose.
Hungama and IndiaGames for sure in the content side; IndiaGames developed the gaming industry in India and Hungama thrived on Indians’ appetite for entertainment.
Flipkart for sure as it is revolutionising the way e-commerce is being delivered; they need to move into the mobile space soon.
What are your predictions of what kinds of new telecom/IT/mobile startups will emerge in India in the coming 10 years?
In India, unlike in the developed countries, the IT enablement of many areas including public services are minimal and in some cases non-existent. For example, an application that provides me dynamic bus timings is of no use as the transport information system to capture bus locations does not exist! Hence start-ups should not just focus on building a web site or a mobile app; instead they should look at customers’ pain points in totality and provide an integrated solution. Working with operators, and bus operators (public or private) to provide bus tracking solutions as in the previous case is of value; not just the bus tracking app.
Lot of government services need the help and support of start-ups to mobile/ telecom enable them. I see huge opportunities in mobile/ telecom enabled public utility services.
What trends do you see in the rise of product startups in telecom/IT/mobile as compared to service startups?
Today, we see a number of product start-ups in India especially in the mobile app space. There are lot more companies developing apps for Windows, Android and Apple stores. One of the reasons for software products taking a back seat behind services is that it was risky to develop products for a distant market (i.e. US/ Europe). Today, thanks to the communication revolution, the distance between the producer (i.e India) and the overseas markets has shrunk. Moreover, thanks to economic development, there is a sizable domestic market as well. Indian start-ups should leverage on this domestic demand to build world class products as India gives the advantage of massive scale.
What advice do you have for aspiring entrepreneurs in telecom/IT/mobile space?
It is the golden time for entrepreneurs in telecom/IT space despite the policy hiccups that we are witnessing in the telecom sector. Broadband revolution (the 3rd era) has arrived and are waiting to take off. Leverage on the scale economies of domestic consumption as a test bed and build world class products!