Anybody tracking the Indian Telecommunications sector can say that Sunil Mittal lost sight of India when he went for acquisition in Africa and other countries as Indian market threw lots of surprises. Worst nightmare for Mittal is his entire Revenue model in Voice being under threat as Reliance Jio wants to offer FREE Voice Calls forever. Airtel is also severely lagging in offering huge Mobile Data Bundles compared to Jio. Airtel not only neglected but turned clod shoulders towards its DSL Broadband Subscribers for over a decade now – No F***ing innovative offerings nor upgrade in Infrastructure to offer higher speeds barring few areas of only Metro Cities [Forget Tier II and Tier III] where FTTH was laid.
To date, all the Indian telcos have had Continue reading Fixed / Mobile Convergence – Airtel Feels Heat before Jio FTTH Triple Play Launch
IAMAI (Internet and Mobile Association of India) recently estimated that the number of mobile internet users will likely reach 213mn by mid-2015 implying a 55% YoY growth.
In our recent interactions, most internet companies have indicated a sharp increase in share of mobile traffic over the last 12 months – e-tailers like Snapdeal have been indicating that over 50% of transactions are now happening over mobile compared to only 5% at the beginning of 2013, for app dominated businesses like Ola and Zomato 70-80% of traffic is Continue reading India Graduates to Rapidly Growing Internet / Digital Economies
Everybody is keen to make of Google’s FTTH initiative, with some believing the Google is serious about developing a local market development strategy that would be the basis for a more significant roll-out over time and with others believing the Google is simply attempting to spur greater competition and innovation by the incumbent broadband providers. Based on Google’s history with the wireless spectrum auctions, on the way in which Google has addressed its Fiber plans and based on the potential expense involved we get a sense to lean towards the argument in the latter camp.
We have already seen signs of competitor responses (e.g., recent reports that AT&T is contemplating offering 1GB broadband in Kansas City). Without including the economic benefits of its TV offering and without including the optionality that could come with owning the video and broadband pipe into the living room and on the (interactive) TV, the roll-out of Google Fiber (FTTH) to as much as 55% of the U.S. households that are viable targets could be done at least at a breakeven proposition if the company were successful in signing up 45-50% of the homes passed. Including the economics of TV service, which we believe is taken by many / most current Google Fiber customers, suggest breakeven could occur with 25-35% penetration.
A back-of-the-envelope analysis suggests that the costs for Google to provide service to this universe of 65mn U.S. households will be a whopping $90 Bn which is equivalent to 4 Years of the company’s operating profit assuming Ad dollars stick at the same run rate and don’t shift to competing platforms of Facebook and other platforms. Of course, these costs would be offset by the cash margin made on its monthly service fees that range between $70-120 per month – as well as any other revenue streams developed (e.g., advertising). Theoretically, with existing Google’s FTTH model, breakeven with an Internet broadband-only service would occur at ~45% homes passed penetration and breakeven with the TV service taken by half of those subscribed homes would occur at the 30-35% penetration level. This is without ascribing any value to the potential optionality from new revenue streams like interactive TV advertising. We are unsure what goes inside Googleplex but for sure it is an attractive proposition as the U.S Economics of Video consumption shifts from TV to IP based delivery and FTTH service providers can vie for a piece of this hot cake.
Google has never done things traditionally and has always had the Out of the Box Approach be it their Core Search, Advertising, IPO, Mobile OS, etc. The engineering giant recruits highest quality product engineers that fit the founders DNA which propagates down the hierarchy. I’d like to quickly demonstrate how Google’s Fiber Broadband in Kansas is ahead of its competitors in the US [ Indian Telecom / ISP companies don’t even want to compare themselves :-)]
Exploring Several Research Papers available on the Web, I believe Google Fiber network uses the WDM-PON architecture (wavelength division multiplexing passive optical networking) versus Continue reading How Google Fiber to the Home [FTTH] Broadband Demonstrates Innovation to ISPs and Telecom Companies