Convergence Plus
Saturday, March 23, 2019
Airtel, Idea move telecom tribunal against predatory pricing order

Airtel, Idea move telecom tribunal against predatory pricing orderBharti AirtelBSE -1.58 % and Idea CellularBSE -1.08 % have challenged the telecom regulator’s recent tariff order on predatory pricing in the telecom tribunal, setting the stage for another legal battle between India's older carriers and the sectoral watchdog who have been at loggerheads for more than a year now. India's first and third ranked telcos have argued that the February 16 order was unconstitutional as it prevented them from retaining customers and conducting business, people familiar with the matter told ET. They added that the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) will hear the pleas this week with Bharti Airtel’s plea likely to be heard on Monday.

An Idea Cellular spokesperson confirmed the legal step, but did not share details, while Bharti Airtel did not comment to an ET query seeking confirmation. The battle lines are now drawn starkly, with the Telecom Regulatory Authority of India (Trai) on one side and incumbent telcos on the other. India’s top three operators – Bharti Airtel, Vodafone India and Idea Cellular – contended the rules favoured new entrant Reliance Jio at their expense, allegations that Trai and Jio termed baseless. The regulator has, in fact, said the companies were free to move court to challenge the order.

On February 16, Trai issued a tariff order that mandated a new formula last month to identify predatory pricing and changed the definition of significant market player (SMP), giving pricing flexibility only to operators with less than 30% of the market’s subscribers or revenue. Earlier, the SMP parameters included volume of traffic, including data, and switching capacity, which have been dropped in the amended regulation.

Trai added that predatory pricing will be determined on a carrier’s average variable cost and that telcos cannot offer pricing packages to individual subscribers to retain them without offering all customers the same tariff plan. Due to change in definition of predatory pricing and in SMP, incumbents said they were straitjacketed to respond to below cost tariffs from competition without flouting the new rules.

Jio has 13-14% share of revenue and users, while Airtel and the Vodafone-Idea Cellular combine would each have over 30% revenue market share. Therefore, the new rules on predatory pricing favoured Reliance Jio Infocomm, Vodafone Group CEO Vittorio Colao said last week, adding that the order should be challenged in court. Vodafone’s India arm is close to completing its merger with Idea Cellular.

It's not yet clear if Vodafone has filed a legal challenge as well. The company didn't respond to an emailed query seeking comment. Bharti Airtel chairman Sunil Mittal said the regulator’s order did not leave any path save legal challenge for incumbents, as the order violated the right for entities like itself to do business which was enshrined in the Constitution, under Article 14.

“If you are my customer and I need to hold you back, then I must have the right to do so with whatever tools I have,” Mittal said.

However, Trai chairman RS Sharma said the companies would be within their rights to take a legal recourse to challenge its regulation in court, and called it the “appropriate forum” to do so.

“India is a free country and every individual, entity or company has the right to go to court and we have no issues, reservations or objections if the Cellular Operators Association of India (COAI) challenges our regulation in court since that is the appropriate forum to do so, and we welcome it.” (Source: Economic Times)
MWC2018: Closely watching implementation of SC ruling on privacy, says GSMA

MWC2018: Closely watching implementation of SC ruling on privacy, says GSMA"The Supreme Court ruling on privacy is an area that is going to be very closely watched. Historically, folks around privacy and data protection have come primarily from United States and European Union.

Barcelona: Indian government's move to implement the Supreme Court ruling on privacy is being closely watched as it is a subject where developed nations have taken lead and has significant bearing on security and trust of people on telecom services, a senior officer of global telecom body GSM Association said.

"The Supreme Court ruling on privacy is an area that is going to be very closely watched. Historically, folks around privacy and data protection have come primarily from United States and European Union. Its going to be very interesting to observe, how the government interprets the ruling of Supreme Court and how that will be manifested in data protection regulations," GSMA Asia Pacific Head Alasdair Grant told in an interview.

The Supreme Court in a judgement on August 24, 2017 declared right to privacy a fundamental right, a far-reaching verdict that could impact a range of life choices of Indians, including food habits and sexual orientation.

The government had constituted a 10-member committee in July 2017 to recommend a framework for securing personal data in the increasingly digitised economy as also address privacy concerns and build safeguards against data breaches. The panel has completed public consultation process. The recommendation of the committee will be used for framing data protection and privacy rules in India.

"As licensed operators, we are subject to sector specific laws around data protection which means we are able to offer secure services that customers can trust," Grant said.

He said the rules will clarify the attributes of India's 12-digit unique identifier number Aadhaar and privacy issues around telecom subscribers.

GSMA is a global telecom operators' body and at present it is being chaired by Bharti Airtel Chairman Sunil Bharti Mittal.
"India's thinking around policy and regulation is observed closely both throughout Asia pacific and world...we see digital India programme has been very profound programme to sustain economic development," Grant said.

India at present is the second largest telecom services market in terms of subscriber base and largest in terms of mobile data usage.
Grant said that India is one of most rapidly growing country in the world.

"Almost 90 per cent of population have sim card but only approximately one quarter of population has mobile broadband. Which means that 30 per cent of mobile users have smartphone. The big socio-economic change for Indian citizen is (to) move from feature phone to smartphones. We are seeing with effective policy that is going to happen quickly. We feel there is need for more capacity, more 5G capacity," he said.

Talking about ease of doing business in India, Grant said GSMA is very hopeful that government will look at issues around cost of doing business under the new telecom policy in works specially spectrum price and high taxes being paid by the telecom operators.
"Spectrum is the life blood of the industry and the Internet in India is mobile . So, spectrum is life blood of mobile because the digital ecosystem is absolutely central to India's economic futures. Spectrum is critical path of India's national infrastructure," Grant said.
He said it is important that Indian government develops effective roadmap for the release of spectrum, in particular 5G spectrum.
"It is equally important that pricing of spectrum is rational. So that it allows for efficient infrastructure investment to promote financial health of industry. We are in midst of dramatic period of consolidation in the industry. Need for financially healthy industry is paramount," Grant added.

He also said that when GSMA talks about best practices for spectrum, it is not about favouring any particular operator or fighting for lowest possible price. "We are advocating for efficient pricing model," he said.

Telecom Minister Manoj Sinha, who was here to attend Mobile World Congress last week, said India will align with the world to enhance telecom footprint in the country and revenue generation will not be a priority for the government. (Source: ETtelecom)

India's media, entertainment sector to cross Rs 2-trillion-mark by 2020: Report

India's media, entertainment sector to cross Rs 2-trillion-mark by 2020: ReportThe media and entertainment industry is expected to cross the Rs 2 trillion-mark by 2020, growing at a CAGR of 11.6 per cent, says a report. The industry reached Rs 1.5 trillion in 2017, registering a growth of almost 13 per cent, according to the Ficci-EY report released today at the annual industry jamboree Ficci Frames here this evening.

The report pegs the industry to touch Rs 1.66 trillion this year. According to the report higher 2017 growth was led by digital, films, gaming and events.

"Digital subscription made a strong impact in 2017, with a growth of 50 per cent. As per our estimate, there are around 2 million paid digital subscribers across application providers, and between 1 and 1.5 million customers who have moved entirely to digital media consumption." By 2020, we expect 4 million digital-only consumers who, along with millions of other tactical and mass customers will generate subscription revenue of Rs 2,000 crore," the report said and attributed higher traction to availability of niche and global content, increased OTT-only content, sports and falling data charges.

The report notes that the digital infrastructure and payments are expected to grow the online gaming industry over two times from Rs 3,000 crore in 2017 to Rs 6,800 by 2020.

"Growth will be driven by real money and social gaming on mobile phones. This estimate assumes status quo on the current set of permissions and regulatory environment." The animation, post-production and VFX segments are expected to grow at a CAGR of 20 per cent till 2020 reaching Rs 11,400 crore, led by domestic films, TV and digital segments, as well as outsourcing by international studios, and more sequel-based action and animation films.

From traditional media side, TV continues to lead growing from Rs 59,400 crore to Rs 66,000 crore in 2017, up 11.2 per cent.
TV advertising grew to Rs 26,700 crore or 40 per cent of the total revenue, while distribution grew to Rs 39,300 crore, contributing 600 per cent of total revenue.

At a broadcaster level, however, subscription revenue (including international subscription) made up around 28 per cent of revenue.
The report estimates that while advertising is 41 per cent of industry revenue today and 72 per cent of broadcaster revenue, it would grow to 43 per cent of total revenues by 2020 and 75 per cent of broadcaster revenue.

Still there are over 30 per cent households which are yet to get television screens, while the households with TV sets touched 183 million in 2017, up 3.5 per cent over 2016.

The print media accounted for the second largest share of the ad pie, growing at 3 per cent to reach Rs 30,300 crore in 2017 and is estimated to clip at an overall CAGR of around 7 per cent till 2020 with vernacular at 8-9 per cent and English slightly slower.
"This growth is expected despite FDI limit remaining unchanged at 26 per cent, and 5 per cent GST on advertising revenue of the print industry for the first time," it notes.

The print industry saw some degrowth in English language advertising and moderate growth in the Hindi and regional language segments.

"But this was compensated by growth in subscription revenue as print increased its reader base and, in some cases, cover prices.
This year promises to be better, with growth expected at around 10 per cent, given that there are five state elections, as well as the run up to the general elections next year" it says.

While magazines contributed 4.3 per cent of the total print segment, the segment has been largely flat with not many significant new launches in 2017.

The radio segment grew around 6.5 per cent in 2017, on the back of the lingering effect of demonetisation and GST.
For the digital media, mobile is paving the way to success for video on demand services, as around 40 per cent of total mobile traffic came from video consumption in 2015 and it expects this to touch 72 per cent by 2020.

As many as 250 million people viewed videos online in 2017, a growth of 64 per cent over 2016.
"Video viewing audience is expected to record a CAGR of over 13 per cent and by 2020, India is expected to become the second largest video-viewing audience globally with around 500 million, from 250 million in 2017".

Digital advertising contributed 17 per cent of the total ad pie in 2017 and it expects to touch 22 per cent by 2020. (Source: New Indian express)

Google, Facebook offensive pushes out fintech, e-commerce players in India

Google, Facebook offensive pushes out fintech, e-commerce players in IndiaWhile Google has market capitalisation of almost $753 billion and Facebook commands one of $515 billion, it is the wealth of user data they have that one fears

In the fight between information technology, fintech and e-commerce firms in India and Google and Facebook, the global giants seem to be winning hands down. It is becoming a matter of survival for these sectoral ones, as one-stop solutions such as business listings, travel bookings, money transfers and financial services are available on both platforms and these firms rely on Google and Facebook to promote their services.Google has in the past two years systematically got into a host of sectors and businesses.

Starting from listings where it competes with firms such as Just Dial and Zomato. Google Tez competes with mobile wallets such as Paytm. And, most recently, Google Flights has taken on MakeMyTrip, Yatra and others in the travel sites segment. Facebook is launching its own wallet via WhatsApp Pay. It also has its own e-commerce arm and plans to bring more services.According to experts, Google has been placing its sponsored flights unit prominently on a search result page, pushing down travel sites such as MakeMyTrip, Cleartrip and Yatra in favour of Google’s own specialised search service, Flights. Players in other sectors have raised similar issues.While Google has market capitalisation of almost $753 billion and Facebook commands one of $515 billion, it is the wealth of user data they have that one fears.

Many believe it is this data that gives them the power to create a monopoly on almost everything under the sun.“The kind of data they generate on individuals, they can tailor that to offer a wide range of products and services. Their algorithm is such that they push options to people. That information can be marketed, which they are currently doing. In Europe, we are seeing authorities taking notice of this and taking measures to curb their powers. We also need to take significant regulatory action.

The Competition Commission of India and the government need pro-actively work on it, so that sector players are not pushed out and a monopoly not created,” said Arvind Singhal, chairman and managing director, Technopak.Recently, Vijay Shekhar Sharma, founder of Paytm, the country’s biggest mobile wallet and financial services firm, in an interview with Business Standard actually said: “I believe Facebook is the most evil company in the world. Earlier, they tried to dupe the country with what called free internet. Now, they are flouting all guidelines and rules and bringing out an app that does not need three-step authentication to make online and mobile payments.”This was in response to chat messenger WhatsApp launching its WhatsApp Pay wallet, for a beta test without the complete authentication process mandated by National Payments Council of India.According to experts, WhatsApp has already started WhatsApp for Business. From getting e-ticketing, delivery updates from online marketplaces, paying utility bills, buying financial services to even booking a plumber, the app is rapidly adding a host of products to its platform."Critics contend this is not a protectionist attitude.

“India is an open country. Most of the major firms are owned by Chinese, Japanese or American companies. It is not about India versus global players. Global players such as Google should not misuse their monopoly status. They should not put their reference on top or take undue advantage,” said Murugavel Janakiraman, founder and chief executive, His company took on Google and this later led to CCI imposing a Rs 1.36-billion fine on the latter for 'search bias' and abuse of a dominant position. (Source: Business Standard)

Foxconn's Nokia factory talks may bear fruit

Foxconn's Nokia factory talks may bear fruitFoxconn Technology is in an advanced stage of talks with the Tamil Nadu government to resolve a Rs21,000-crore tax dispute, which could help revive the Nokia mobile manufacturing plant in the state and provide employment to thousands. The Taiwanese company has taken a significant step already in this direction, buying some machines from the plant earlier this year. A senior state official said Foxconn was keen to revive the plant, which is lying defunct for more than three years now. The state government held several rounds of discussions with the company, which now needs to bring in a formal proposal, the official added.

Once the company makes an application, the state would approach the Centre to lift an asset freeze on the plant and facilitate the revival of the factory which at its peak employed some 12,000 people and produced more than 100 million handsets a year. At the time, it was the world’s largest facility for the then mobile handset market leader Nokia, and was a showcase for India’s manufacturing capabilities.

“Foxconn’s India arm is talking to their headquarters to get internal clearances, and once they give a formal proposal, we may move the department of revenue, Government of India, to at least release the plant for their operations,” the official said. “They are keen, because they’re a neighbour and they know the local ecosystem, workers, etc., and our only agenda right now is to make sure that the machinery and building that is lying vacant, gets utilised again,” he said.

Foxconn has a phone manufacturing facility at Sri City, Andhra Pradesh, located on the border of Tamil Nadu’s capital, Chennai. It employs around 6,000 people there and produces handsets for the likes of Xiaomi, Nokia and Gionee.

The world’s largest contract manufacturer, which is also the biggest contract manufacturer for phones in India, did not respond to ET’s request for comment. But a person familiar with the discussions at the company said “the plan is to go further in this direction".

Another person said Rising Star Mobile India, through which Foxconn runs its India manufacturing operations, bought machinery from the Nokia plant — shut in late 2014 — for an undisclosed amount after the Finnish company got permissions from the Central income tax authorities, as well as the Madras and Delhi high courts to sell those. It required the permission as there is a freeze on the assets due to the unresolved tax case.

"Earlier this year, Nokia engaged with a buyer interested in purchasing production machinery,” a Nokia spokesperson said. “Subsequently, we worked with the respective authorities and secured the necessary permissions for executing the sale of those specific production machinery."

Nokia has been trying to revive the plant for years and had even closed in on the Essar Group as a potential buyer two years ago. But the ongoing tax case thwarted the sale. The factory was then valued at Rs 360-415 crore. In fact, the tax dispute had kept the facility out of Nokia’s global deal four years ago to sell its handsets business to Microsoft.

"We remain open to discussions on the sale of the remaining assets including the Nokia building unit, and hope for similar support from the authorities should we find a suitable buyer," the Nokia spokesperson added.

Foxconn had earlier approached the state and Central governments to take over and revive the plant, but with a condition that it should not be saddled with liabilities from the legal issues. The talks back then had fizzled out.

Industry insiders said the latest efforts for the plant's revival appeared to be on a more solid ground as it’s a win-win for both the state government and the company. Success will help the Tamil Nadu government — which has the backing of the Centre — to showcase this as a successful development and employment generation initiative for a state which has seen political turmoil over the past year.

Foxconn, on its part, has plans to aggressively expand its capacity in the country so that it can export from here. Reviving the Nokia plant will allow Foxconn to also restart its own unit in the same Nokia SEZ, which was a feeder to the now-idle main manufacturing facility, even as it explores other states including Uttar Pradesh and Maharashtra for expanding operations.
The plant’s revival will also aid in the government’s larger aim of producing 500 million phones a year by 2020 under the Make in India programme, and bring to a closure another chapter which — together with the Vodafone-India retrospective tax dispute — had hit India’s image as an investment destination. (Source: Times of India)

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