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Jul 16, 2012, 08.18 AM IST
In his first-TV interview, Maxis Communications group CEO Sandip Das told CNBC TV18's Siddharth Zarabi that newspaper reports saying that they were exiting India are 'unfortunate.'
We are an extremely serious player. Maxis has been very bullish about India.
Q: The 3G and BWA play has been one of the other big overhangs for the sector, but not for your company. Telcos have invested lots of money, they satisfied their desire for spectrum to be market priced, but has it taken off at all because my belief is that it’s proving to be a drag on operators’ investments?
A: You are right in many ways, but I would not say that the intention was wrong. I think we may have been a little optimistic. I was one of the people who was a little cautious about it because we were really very enamored with the kind of things that 5 megahertz of 3G would do.
Q: But now you can’t do roaming at least?
A: Yes, which is again unfortunate because three companies can and we can’t. We are being penalised for following the law while others get away because there has been a time in the life of suit.
The issue is 5 megahertz is not an awful lot and I think we all have paid a lot of money for it. What has happened initially is that because of the high price of the licenses people were under the impression that they would get a premium on data prices. Networks have been patchy because they haven’t been equivalent to 2G, which has had years and years of investment and as a result people have not experienced anything extraordinary for them to pay these kinds of premium prices.
The penetration of handsets in 3G has been a bit tardy compared to the 2G, so the whole ecosystem has not evolved well enough for 3G to happen. Recently, we as a company equalize the pricing for 2G and 3G data and I think that was a very historic step. In the last eight weeks or so we have seen a surge in the usage.
Q: So your 8-week experience is good?
A: It’s been enormous, and I think that’s again encouraging us to actually augment some of our 3G networks. But I feel that with LTE coming in we will perhaps not make the same mistakes. I think for a number of operators, who were sort of seriously congested on the 2G network, used 3G as a spillover for voice.
But in our case, we have been fortunate that because we were new and some of our networks were not utilized. We have been able to dedicate 3G to actual data usage and that’s where our consumers are finding great experience. We will be rolling out our LTE network shortly and we are rolling out LTE networks in Malaysia simultaneously.
Q: Within all the confusing news that we are hearing on a daily basis, what are a couple of things that you feel are completely negative and would derail the growth of this sector going forward?
A: India has data potential and that is not in question; I don’t think anyone of us disputes the big potential that lies ahead of us. At this point of time I really don’t envy the government, it has a very difficult task. I know everybody is critical about it, but I think it’s a very difficult task. How do you equate history, future, get everybody onto the same plank and equate license fees and all that.
You need a goal to do a nationwide broadband, there has to be a vision statement saying we want to be 600 million or 700 million in 5-10 years, because it’s very critical for our economic growth. Countries are predicating the economic growth based on the influence that the telecom information highways will provide. Our world has changed, the amount of content you can put in now wide band and wireless is just enormous. It’s just like they say - the proverbial death of distances. So issues like sharing of spectrum, sharing of networks, making spectrum a technology agnostic are very critical.
A couple of years ago the prime spectrum was 900 megahertz for 2G. Then 1800 came for 2G, then 2.1 came for 3G, and now we have 2.3 TDD-LTE. But actually it started almost like a Wimax spectrum and BWA spectrum. Today, if all the countries in the world had an opportunity, they would rollback and start from 700 all over again. 700 would be LTE, 800 would be LTE, 2.1 and 2.6 would be LTE. So actually the entire lot is a data spectrum and then you would say why do you care whether something is CDMA, GSM, 2G, or 3G.
Q: But that can’t clearly happen in India?
A: It is something that is plaguing the whole world. If you look at a place like Malaysia for example we have had the similar situation where we were talking of 900 refarming and giving it to people who didn’t have it. Suddenly the people who had 1800 were saying that they could be the first to launch LTE. So suddenly 1800 has become a powerful force.
That’s why I was saying that this is a problem that that’s going to happen. Across the world infrastructure manufacturers are going to be plagued with how to find compatibility between spectrums, because tomorrow if you bring out a 2.3 megahertz phone, it has to be compatible on 2.1. If tomorrow you go out and give out 700 megahertz on FDD, it has to work on that. So you are talking about phones, which are across protocol. Which is why, if you remember four years ago in Barcelona when we had the entire GSMA conference, the biggest thing that they were discussing is how to produce a common charger for all phones.
Q: While the world is thinking of common charges, we are still thinking of so many other things?
Q: We are in the midst of the Supreme Court of India possibly reconsidering several aspects with regards to auctioning all natural resources, although it seems that spectrum will continue to be auctioned. Do you think the way the recommendations have come and the level of reserve price that is being suggested would prove to be a dampener for industry investments in the long run?
A: Dampener is perhaps a close word. I think today the largest issue is that while all the other regulatory reforms etc are happening, the question is at what price. One of the reasons why our telecom has been a phenomenal success is because it was one of the few markets in the world where people first went and fixed the customer price and then in a sense reworked their business cases. They knew that over a horizon of ten-twenty years, once the demand grows, they will make the money. It was an economy of scale.
Everybody doubted whether we would ever have a one cent business or a half a cent business, but we did it. Today my incremental ARPUs for people coming in is Rs 50. So that is how low it has got.
Q: But Malaysia it is perhaps USD 30-50.
A: Yes, Malaysia is another story. Maxis’ postpaid customers are USD 30 and prepaid is USD 10, that would have been a great model for us to look at this kind of pricing.
May 23 2013, 16:33
- in Asian markets
May 23 2013, 09:33
- in Technicals