Voices Saturday, June 14, 2014 - 05:30
Kautilya | The News Minute | June 14, 2014 | 02:40 pm IST  Follow @KautilyaGupta As the 2nd generation (2G) of the mobile phone technology was being engineered in the late 80s, the world took two different paths. The US industry favored CDMA, which while being more efficient, embedded the identity of the network operator in the handset. As a result, the customer was forced to purchase limited bureaucratically approved options from the operator. Also,with the price of a single handset being over thousand dollars, it was costly to move to another operator. This strategy of a lock-in was the primary reason behind the decision to bundle the devices with embedded identity. European mobile companies being laggards at that time, in the fashion of disruptors, wanted an “open” standard which didn’t shackle the device to the network operator. They introduced the concept of Subscriber Identity Module (SIM card). It meant that the devices were to be sold with a standard slot into which any network operator’s SIM card could be inserted. The GSM standard, though inferior in technical efficiency, went on to become the preferred standard in many parts of the world. Every technological market requires a specific set of skills and company culture to create the appropriate goods and services. Sometimes a value/skill is in conflict with the demands of certain markets which means a single firm is unable to compete effectively in all markets. Network operators are responsible for the ability to win spectrum auctions, lay down optical fibres cables, install towers, service the customers and respond to snooping requests by governments. Mobile phone device makers on the other side require the ability to build great hardware and software adopting the latest technologies. The two markets require a different outlook towards deployment of capital and hiring practices. For e.g., while network operators can hire unionized low skill labor for deploying infrastructure with a few quality engineers, the device makers can only do with highly skilled engineering staff with different workplace culture. This is the reason none of the network operators’, say AT&T or Airtel, website is as good as that of Google, Apple or Microsoft. The decoupling of device from operator is the main reason that rapid innovations happened (and continues to) in the mobile phone market. US market being predominantly CDMA, until recently, was significantly behind rest of the world in customer satisfaction until iPhone changed that (which was introduced and ran exclusively for 3 years on GSM networks). Closer home, we can remember the introduction of Reliance CDMA phones a decade ago with ultra low call rates and playing videos on the handsets (remember the technical efficiency of the CDMA talked about above). However, the Indian markets loved the rapid innovation brought in SIM-based GSM mobile phones which weren’t happening in Reliance provided devices. I hope that this long primer has convinced you that the decoupling of device from the network operator is a good thing for the customers. Let us now turn our attention to the other device that people interact with the most after their phones, i.e the television. With the goals to: ● improve quality of signals with digital transmission instead of traditional analog,● free up precious and revenue generating spectrum, and,● prevent theft of signals and underreporting of subscribers by local cable operators (LCOs), among others, the government of India kicked off the digitization process in Dec 2011 to be completed in 4-5 years (uncertain timeline just like the digitization process in rest of the world). The process while necessary has been marred with litigation, acrimony, lobbying by stakeholders with various interest groups, bureaucratic delays, price gouging by LCOs when the deadline for switch-over approaches et al. Par for the course in anything this complex but the change is good for everybody involved, except for the tax-dodging underreporting-subscribers local operators and their customers who stole the cable signals. However, one thing which has largely gone undiscussed in the media are the set top boxes themselves. Let us list the complaints around the box ● LCOs and other operators hike the price of the box when the region approaches the switch-over as everybody wakes up to the reality and rushes for purchases,● Quality of the boxes are low as in most cases it takes a whole minute for the set top box to start after the power to it is switched on,● The boxes cost thousands of rupees especially when you need features such as HD, ability to record shows, and,● Any breakdown in the box would result in a costly service experience by the operator. This is analogous to the CDMA standard described above. The customer is forced to purchase the boxes only from the cable operators (be it DTH or CAS-enabled wired cable). If you look carefully at your set-top box, it will have a slot in the front or back from which you can pull out a plastic card. This is the SIM card of the cable TV industry just like the SIM card of the mobile industry. The customers should be able to simply purchase this card and insert into any set top box purchased from the market and start watching. It would mean you could buy a set-top box from any company (say Google or Apple just like their mobile phone today) and be assured of high quality devices and support. The number of cable operators will always be limited due to nature of licensing restrictions so the decoupling will bring in much needed competition in the set top boxes. If TRAI wakes up and forces a standardization in set-top boxes and Cable TV SIMs (just like GSM standard for mobile phone devices and phone SIMs), it will a great benefit to the Indian consumer. It would mean: ● no more artificial shortages of the boxes,● reduction in prices with big improvements in quality,● innovation in features such as better remotes, and,● lower the cost of switching from one cable operator to another forcing them to improve their own game. Indians have always seen improvements in quality of the product and associated customer service when competition is brought in to a market. There will be significant opposition from current stakeholders to the idea because of entrenched interests. We will hear, as we usually do in such cases, that this cannot be done for such and such reasons. Thankfully, we will have the example of mobile phone industry to counter every argument. The opinions expressed in this articles are the personal opinions of the author. The News Minute is not responsible for the accuracy, completeness, suitability or validity of any information in this article. The information, facts or opinions appearing in this article do not reflect the views of The News Minute and The News Minute does not assume any liability on the same.
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