CEO CONCLAVE 2006: Regional Telecom Taking Flight

Day 1: Telecom Kings of SAARC

The Fifth CEO Conclave started to a packed house with CEOs of almost every
operator in the SAARC region attending it to make their voice count in the
regional gathering of the telecom industry. The SAARC report, which compiles all
that has happened in telecom, in all member countries, was also released by
Kanwalinder Singh, CEO, Qualcomm India and SAARC. The conclave also saw a
brainstorming session in the form of a CEO roundtable, where the panelists were
CEOs of various operators from the SAARC region.

The panelists included: AK Sinha, CMD, BSNL (the region's
largest telecom operator); Shuhei Anan, CEO, Sri Lanka telecom; Suren J
Amarasekera, CEO, Mobitel (GSM operator in Sri Lanka); Sultan Arfeen, chairman,
Instaphone (mobile operator from Pakistan); Kanwalinder Singh, CEO, Qualcomm
India; Jerry Huxtable managing director, Suntel; Nayeem Choudhury, chairman,
WorldTel Bangladesh; Rekha Jain, Professor, IIM-Ahmedabad, Waheed Ismail, CEO,
Dhiraagu, Maldives and Dr DPS Seth, former member of TRAI.

Starting the conclave, Pradeep Gupta, CMD, CyberMedia India Ltd
said, "We are one land mass and one people. But above all we share similar
challenges, the biggest of which is raising our economic status." He
pointed out that all the countries had unique strengths and unique lessons to
offer and, "Since telecom has been shown in numerous studies to have a
positive impact on a country's GDP we must leapfrog ourselves with learnings
from each other because all of us must aspire to give our citizens a better
life."

Kanwalinder Singh said that in many places operators start out
in areas with low ARPUs, however, they soon realize that telecom has elevated
the economy of their subscribers and hence lesser markets become more lucrative.
He suggested to operators that 3G technologies should not be reserved by them
for their best markets, but should be put in most of the markets that the telcos
operate in.

Speaking about next-generation networks AK Sinha said that
incumbent operators were facing stagnant markets, and were looking to NGNs as
their saviors. This trend of forcing content providers to stay only with one
service provider was counter-productive to the market at large, as the need of
the market is that more and more people should be encouraged to produce content
for as large a number as possible.

The CEO roundtable discussed various issues threadbare with many
participants taking contrary views, some even saying that a unified approach for
SAARC was not only difficult but also undesirable. However, the CEOs agreed that
there was need for greater cooperation. Rekha Jain pointed out that it is not
enough to have roaming facilities across the nations, but also to let the
services be available across borders, and that it is in the interest of the
operators to cooperate not only about voice services but also data services.
Singh reminded that GSM did not come about automatically, the operators had to
cooperate to make that happen.

Talking about NGNs, Mark Hanna said whether we are ready or not,
NGN is inevitable as manufacturers will stop supporting the traditional GSM
infrastructure in a few years.

Nayeem Chaudhury struck a cautionary note on the 'inevitable'
transition to NGNs, saying that all traditional infrastructure must be supported
by the manufacturers as long as they were in use, to enable operators to
leverage on the existing infrastructure as long as possible.

The path to new technologies is however unlikely to be rosy. As
Sultan Arfeen said, "deregulation means more, not less, regulation,"
as in the current telecom scenario in SAARC, a regulator needs to regulate many
more players than it had to earlier.

While Arfeen agreed with everybody that telecom in SAARC was
going through an exciting time, he again cautioned, "In a flood you can
also get carried away."

However, Shuhei Anan was positive about the region and said that
network wise we are in a better position than we have ever been. We have strong
capacities and the SAARC countries are connected to each other, something that
was only a dream in the earlier times. But Anan added that we should try to
develop the region as a whole. That is surely not an easy task, but he was
willing to share Sri Lanka's experience with the words, "Sri Lanka was
difficult to develop, but we did it."

AK Sinha was also optimistic about the future of NGNs in the
region, saying that he expected 40-50% of the 65 mn 3G lines (after BSNL awards
the tenders for the 3G lines) to be subscribed to in 2-3 years. On a SAARC-wide
level he said BSNL was in talks with all the major operators of the region. And
in response to the query that there was no roaming with Pakistan, he went on to
say that roaming agreements were commercial agreements, there were no regulatory
impediments to roaming agreements with any operator, and he could even sign the
agreement the very next day.

While the big operators of the region were rolling out big
expansion plans, it escaped nobody at the Conclave that the smaller countries of
the SAARC region were way ahead of their larger compatriots in terms of
teledensity. Waheed Ismail said that the spirit of SAARC was such that the big
players did not look to take advantage of their smaller compatriots. He also
added that smaller players gained immense advantages from associating with
larger players and was all praise for Maldivian companies associating with Sri
Lankan operators, and Reliance communications, as it allowed small players to
play on a regional level.

Executives of companies that are leading South Asia's telecom juggernaut, listening with rapt attention to the proceedings of the inaugural session of CEO Conclave

Jerry Huxtable was the one sounding a cautionary note saying it
was difficult to see how the region could develop as one unit, as all the
countries had different challenges. He pointed out that the customer does not
care about NGNs, he only cares about high speed services. And the region was
still at a point in evolution where it had far greater challenges to tackle than
the deployment of NGNs. He conceded that many regulatory solutions can be common
among the various countries, but no single solution will work for all.

Suren Amarsekera, although an operator, said that many content
providers in the region did not have access to large enough markets (in their
national markets) to find an economical scale of operations, and that operating
on a SAARC-wide level can give them that scale. The other burning need he
pointed out was the lowering of roaming tariff between SAARC countries.

DPS Seth said though the demand for NGN network and services was
picking up, the regulatory regime was lacking. He pointed out that despite all
the talk of 3G in India neither the QoS parameters nor the interconnect
parameters for 3G networks were still in place. Seth was sure that NGN would
roll, because if only one big operator rolled it out, the smaller operators
would be forced to take it up for survival. He was cautious on the hype about
WiMax. He said while the technology held great promise, it was still a couple of
years before it could deliver mobile broadband. Adding that the need for a
service was NOW, he pointed out that 3G had the capability to deliver on that
need today. Seth pointed out that talk of regional cooperation was fine, but it
must be preceded by a national debate in all the respective countries, and the
regional decisions should not be in dissonance with the international practices.

While operators and regulators on the panel raised the level of
debate to lofty ideals and policy decisions, the concerns of the audience
(consisting of CEOs and senior officials of telcos) were more routine. The main
queries were on better roaming facilities among the different SAARC countries.
Proof that what the telcos need to do is take care of the basic needs, because
while they are talking of offering new services and higher QoS, even the basic
need of being able to hold a conversation over 2G networks remains unfulfilled.

The CEO roundtable highlighted the main issues that would be
discussed over the next two days. The telecom kings of the SAARC have spoken,
over the next two days...

Day 2: The Generals Unveil Their Strategy

Honorable DM, Jayaratne, minister of Posts and Telecommunications,
Democratic Republic of Sri Lanka, lauded the efforts the Conclave members, who
are trying to improve cooperation on a B2B level. He said, "While
governments all over the world are trying to concentrate on cooperation, the CEO
Conclave moves beyond that and looks at how the industry players of the
different countries can come together and help each other to reach global levels
of scale and excellence." Regional cooperation within SAARC has so far
remained at a low level, especially when compared to some of the other regions
like NAFTA, EU, and the ASEAN. Lending weight to the minister's vision, almost
all the participants at the Conclave concurred that there was a huge untapped
opportunity for the South Asian countries to leverage from each other's unique
abilities. And if they did not, the region could loose its competitive advantage
and the business could move away to other regions.

Speaking on regulatory strategies for 3G in the region, Amit
Ahuja of TCS said that the need to regulate a 3G market was even more pertinent
because the number of players would increase exponentially compared to a market
that is based on 2G technologies. At the very outset it will absorb the voice,
mobile, and broadband services and content providers. And the nature of 3G is
such that even the manufacturers will have to be regulated, as is already being
done with the regulators mandate that manufacturers have to do local
manufacturing. But in 3G, the regulator may even have to demand the
manufacturers to make handsets that are uniquely suited to the needs of the
national or regional markets. And above all, regulation must be such that it
encourages investments in the networks and the market. According to Ahuja, the
objective of regulation should be that, after spectrum has been allocated, how
can this precious resource be managed to provide customers the best possible QoS.

While the Conclave sat down to discuss next-generation networks,
SP Jerath of KT Corp India said that he could not get any examples from Korea
because the country had moved beyond NGNs, to the era of ubiquitous networks on
which all services can be provided everywhere. For the players from South Asia,
however, NGN is still a goal to be achieved and V Ravishankar, COO, VSNL Lanka,
said the region is equipping itself with huge capacities and the geography is
being propelled towards NGN by all the stakeholders. SD Saxena, director
finance, BSNL, too spoke of the Korean example but only to highlight that the
Korean success exists because it adopted the best available technology at the
right time, and that BSNL was also committed to deploying NGNs in India as soon
as possible. Favoring a replacement scenario over hybrid solutions he said,
"The sooner you throw out the old technology the better it is," and
added that replacement cost of the network is now more attractive than
maintenance cost of old technologies. He countered the view that rural masses
had no use for high technology: "you give technology to the deprived
people, and many of them will come out with innovative applications," many
of which can be replicated in other markets.

However, many operators in the region continue with the view
that 3G applications were not for all applications. Mark Hanna, CEO, Wataniya
said that 3G was being implemented in the capital of Maldives initially as the
other regions are too remote and low income to make deployment viable.

SD Saxena cited BSNL's example, saying that when they rolled
out a GSM network in the smaller cities of India nobody thought it would be
profitable, but the demand was so high that the company found it difficult to
satisfy it. For 3G also, he said, there was enough technology and applications
(like telemedicine, e-Gov, agriculture) to make it, "doable now".

As the representative of the largest telecom operator of the
region, Saxena also proposed that all calls in the SAARC region should be billed
as local calls.

Citing problems in implementation, Sultan Arfeen, chairman,
Instaphone said that though the region was on the verge of rolling out 3G
networks, very few regulators had come out with any clear directives on what was
to be allowed to operators, and what would be their terms of license. In the
absence of clear policies, investment in the sector was getting hampered, he
added.

Arfeen also ruffled the feathers of many content providers and
broadcasters saying that entertainment was unlikely to be the killer app for 3G.
So, the service and content providers should concentrate on applications that
allow people to do more with the help of technology, citing applications like
fleet management and management of courier movement.

Suren Amarsekera, CEO Mobitel too sounded concerned about the
huge investments required for 3G saying infrastructure sharing had gone as far
as it could have, now his company needed to look beyond. The new areas to
explore would be cheaper infrastructure, not only to buy but also to maintain.
So, the availability of infrastructure that did not require AC or had low power
demand are what need to be explored to reduce the cost of networks.

	 Â
Sultan Arfeen, chairman, Instaphone speaking with Kanwalinder Singh, CEO, Qualcomm India, as Naved Khan, director, Bharti Airtel and Pradeep Gupta, CMD, CyberMedia look on. Instaphone is in the middle of migrating its network from TDMA to CDMA		Anil Garg, Chief Technology Officer, SET India asking the panelists for clarifications

Irfan Wahab Khan, EVP, corporate and regulatory affairs, Telenor
said, Telenor had no pressing demand for spectrum, 3G applications were still
few so he would rather wait out for the data market to develop before deploying
3G. Joe of SPAN networks, Australia sounded the disruptive note in the
conference saying that voice is and will continue to be the killer application
for a long time to come. And the way forward for the customer was not 3G but
cheap voice through SIP and IP telephony-like applications. He even went on to
say that if the telcos did not move fast enough to embrace these new
technologies, small companies like SPAN could wipe them out and that already in
Australia, his company had become a headache for Telstra.

However, the rest of the participants held the view that future
technologies will be data centric. Amitabh Singhal, founder member ISPAI said,
"We will shift from selling minutes to selling Mbs."

Continuing with the 3G, Sultan Arfeen said that technology is
progressing to wipe out spectrum paucity problems. Even if that does not happen
fast enough, governments can mandate that holders of spectrum vacate frequencies
that can be better utilized to reach the national objective of reaching mobile
infrastructure to the masses.

On what the service providers could do to cooperate with each
other while all of them were rolling out their own networks, Jon Earley, CTO
Wataniya Telecom said that it would be a good idea to standardize the products
and services in the region, so that outsourcing could become easy.

Abhay Savargaonkar, head 3G, Bharti Airtel, said that at least
for the consumer, it would be a good idea to explore advertising driven models,
but also added that these models were some time away.

When the content providers sat down to discuss their issues,
they took pains to show just how great an opportunity the mobile VAS opportunity
was, although most of the examples they cited were centered around SMS apps
about Indian reality TV shows.

On the wired side of content too they said that the cost of
broadband was a big hindrance. Anil Garg, CTO, Sony Entertainment regretted that
it was still cheaper for a consumer to buy a DVD rather than download a movie
from the Internet. But there seems to be little respite for the consumer as
according to Arun Gupta, CEO Mauj, advertising driven models are still a few
years away because the critical mass of consumers had not been reached.

Ishwar Jha, however, pointed out an important sociological
transformation that will promote mobile VAS. He said that entertainment was
increasingly becoming a personal experience rather than a community experience.
And that the user experience with VAS was not comparable to that with TV, and
that is what is holding it back.

Viren Popli, VP, STAR India said that today every TV broadcaster
is contemplating how to compete with the Internet. However, he also said that
while for TV viewers there is a huge ecosystem to produce the content, even some
of the good service providers have only five content providers. It is this lack
of ecosystem that is the limiting factor for VAS. All, therefore, must look to
build the ecosystem, independent of telecom operators.

Vipen Malhotra, president, AryaOmnitalk said that the most
important factor for success of VAS in south Asia is that it should be simple
and easy to use. The huge revenue share demanded by the operators came in for
flak again with Malhotra pointing out that NTT DoCoMo charged only 9% from the
content providers (and still made huge money from VAS) and in India the CP would
be lucky to retain 25%.

Besides an ecosystem, the lack of compatibility test in India
was also hampering the CPs, said Ajay Vaishnavi, CEO, CellNext. And that in some
cases the QoS was in such a deplorable condition that even some of the SMS
applications did not function properly. He pointed out that the enterprise space
can give a big boost to VAS, but low QoS was what was holding it away from the
enterprises.

Dr DPS Seth, former member of TRAI said that current 2G
technologies held very little hope for the content providers. It is only when
the technologies enable a richer content that a viable ecosystem and business
models can be developed.

There was a very lively discussion on how the region can
leverage the outsourcing opportunity. Disaster recovery came to be discussed as
an important application where DR centers could be located in the South Asian
countries, as in many disasters, entire countries can be affected.

Raman Roy, chairman, Quattro however rued that despite the
immense opportunities that existed in the region, simple things like the
inability to freely avail a visa, was killing this opportunity. He was sure that
cooperation among the different countries will happen despite the governments'
support, but said that government help could speed up the cooperation.

Almost all the outsourcers from the different countries said
that they did not look to compete with India, as the scale of Indian operations
was just too large compared to any of them. However, they said that some of the
opportunity could spill over in the region and that this relationship would be
beneficial to India as well as the other countries.

Eric Selvadurai said that while others cannot match India's
scale, the opportunity was there for all players in the region because all the
players had unique strengths-Sri Lanka had F&A capabilities, Bangladesh
could do back office for hospitality businesses.

Dev Priya, head of Sri Lanka and Trivandrum of Office Tiger said
that the clients who were already working with the BPOs in India, could be
migrated to the South Asian countries and this would benefit India, the new
destination, as well as the entire region. Reducing red tape and allowing freer
movement of people would be the first step in that direction, he said.

Pradeep Mukherjee said that the region must leverage on the
advantages of the proximity to India. As an example, DR sites for Indian
operations could be located in neighboring countries.

Safir Adeni, CEO, Sitel was also of the view that the region
could collaborate to handle the global opportunity for handling English-language
calls. And with the rising attrition rates in India, the Indian operators could
look for desired skills in the SAARC countries. Aden also floated the idea of
regional outsourcing, saying that Indian operators could outsource customer
support of their growing telecom subscribers to the SAARC countries. He also
warned that if we don't approach these opportunities as a united block, other
regions like Eastern Europe were waiting to get their foot in the door, and the
opportunity could be lost not only to India but the entire region.

Shahid Azim, CEO Braintree however said that it is only natural
that the rest of the region will replicate the Indian experience.

Navaid Khan of Bharti Airtel floated the idea of a permanent
regional forum, to which each of the members could nominate a member. This
consortium would represent the interests of the members on a SAARC-wide level,
not only with the governments, but also in terms of exploring new business
opportunities.

Nagesh Kulkarni of Wipro Tech emphasized that the operators must
help each other with their capabilities.

The group also recognized that Indian companies were already
outsourcing to regions like Mexico, and that exploring outsourcing opportunities
in the region would be the job of this new regional business to business forum
that was being proposed. Eric Selvdrai said that once a client was satisfied
with a company, it will stick with it regardless of where the operations are
taken. It was also pointed out by the group that customers are increasingly
coming to India looking for innovative services, and that the socio economic
setup in India that promoted innovation was present in other South Asian
countries as well. In fact, Adini went to the extent of saying that
cultural-social similarity of the region is a big asset.

Day 3: Brainstorming Over NGNs and 3G

On the third and final day of the Conclave the panel brainstormed over the topic
"How SAARC countries can leverage from each other's strengths with
respect to NGN and 3G". The panel included DPS Seth, former CMD, BSNL; Omar
Haidar, CEO, Warid Telecom; Vikram Tiwathia, CIO, CII; Ruzan Khambatta, CEO,
E-com; NK Goyal, chairman emeritus, TEMA; Mohammad Nasih, telecom Authority of
Maldives and M Parthasarathy, VP (Operations) TTSL

Emphasizing on the opportunities, Nasih told that there is
willingness among operators, Governments, industry associations and also among
countries to lend a helping hand to each other. So the objective of fulfilling a
country's aspirations in terms of poverty alleviation and enhancing the
quality of life with the use of latest technologies in the SAARC region would
not be far from reach if initiatives are taken at the appropriate time. The
countries should co-operate with each other and make the highest of each other's
strengths. DPS Seth made a little change saying that 'we should not just
leverage from each other's strengths but from weaknesses too'. He said each
country has its own strengths and weaknesses. Bangladesh has been extremely
innovative, Sri Lanka is way ahead in adopting new technology, Maldives has the
highest tele-density in the region, Nepal is picking up the speed despite the
tough terrain, Pakistan is very fast in changing its regulatory policies in
order to suit the industry, and India has the highest number of telephone
subscribers.

Many countries in the developed world have adopted NGN but it is
being talked about in the SAARC region in the last two-three years. The main
hindrance in adopting this technology is the lack of awareness. The policy
makers are unaware of the benefits and its outcomes. What they think of NGN is
more investment. But its outputs and benefits have never been discussed in a
broad way. BT's example was cited, which is investing $1 bn every year to
shift to NGN and the result is clear. Taking a cue from Pakistan, the panel
emphasized on conducive regulatory policies that would help operators to be more
open towards investment as well as to experiment with new technologies like 3G
and NGN.

To make this Conclave a success, Tiwathia suggested an industry
association that could include operators, various regional industry associations
and regulators that would act not only on regional level but on SAARC level
also. This association would help partners in providing the much needed
technology, infrastructure and technical manpower.

Alok Singh and Gyan
Ranjan Swain

vadmail@cybermedia.co.in