The great Indian 3G auction

Government of India has settled for a reserve price of Rs.4040 crore for the long-overdue auction of third-generation (3G) spectrum. The minimum bid amount for pan-India spectrum is double of that recommended by the telecom department and aligns with the finance ministry's proposal, as the government tries to maximise the revenue it can earn from the auction. It has been decided that up to seven operators (with one slot being reserved for state-owned telcos BSNL & MTNL) will be allowed to offer 3G services across the country. The department of telecom (DoT) wanted a total of five operators. Executives with major telecom operators said the Cellular Operators Association of India (COAI) - the industry body representing companies that provide mobile services based on the GSM standard - would protest against the decision on the reserve price. Telcos are readying to lobby hard with the government to reduce the base price to at least Rs 3,540 crore per player, as most of them had factored this number in their calculations as both DoT and the finance ministry were close to reaching an agreement on this price. The government would get Rs 24,240 crore from auctioning 3G spectrum to six licencees. While the money would help the government lower the fiscal deficit, he added that the base price of Rs 4,040 crore would be on the higher side.

Is the Government killing the proverbial golden goose out here just to shore in money to lower fiscal deficits (Increased by the magnamity of populist policies)?

Telcos may restrict their 3G offerings to metros and category A circles which has a faster time to break even on investments
It will increase the entry barrier for operators
It will also increase the service costs for customers
It could restrict bidding to the six big Indian telecom operators
It will be quite difficult for new operators to participate in the auction, as they would need to invest an additional $1 billion for the 3G licences, over and above the investments they are making in rolling out their new 2G networks
The higher base price could lead to a scenario similar to Europe where telcos could not recover the costs they paid for 3G spectrum.
The higher the base price, the higher the tariffs, as telcos will have to make a business case of it

The government gains on two fronts: Increasing the Base reserve price by 500 crores per player (Rs.4040 crores against Rs.3540 crores) and increasing the number of operators from five to seven.

In a related development, GSM operators said the government must resolve all issues with allotting 2G spectrum before deciding on the 3G auction.The telecom ministry has decided that it will take a call on all issues related to second-generation spectrum - the airwaves on which all mobile services are offered at present, including the methodology for future allocations, the pricing for this scarce resource and the usage charges for utilising these airwaves only after the upcoming auction of 3G spectrum. Any ambiguity on issues related to 2G, especially in the current business and economic environment, could seriously dampen investor interest and adversely affect revenues that would be raised by the government through the auction process

Smartphones to replace Desktop Phones (North America) by 2011

Enterprises in North America will be supporting more mobile phones than desktop phones by 2011, according to Gartner, Inc. Gartner analysts said that although most users will still also have a desktop phone, mobile phones will become more prevalent and replace desktop voice hardware to become the primary device.

“The adoption and standardization of corporate liable mobile phones in the enterprise has been driven by the use of smartphones, wireless e-mail and the integration of these phones into IP telephony systems, while improved in-building coverage and lower mobile service costs have also played a part.,” said Phil Redman, research vice president at Gartner.

Mr. Redman said that as spending on mobile communications services grows, and soon overtakes that of wired voice services, enterprises will need to plan how they manage usage, support and costs. Although mobile hardware costs are generally less than desktops, mobile services can still cost five times more than an enterprise-wired call and this could represent a huge shift in budget for enterprise communications services.

A Movement called Twitter

For an internet portal just two years in existence, the amount of news that Twitter has been making is like nothing ever before in the history of communications. Sample this:

The micro-blogging site has featured in Time some days back
Oprah Winfrey is the latest celebrity tweeting on the already huge celebrity list of Twitter
Iranians turned to the service to protest the results of their presidential election and get the news out …
… if that wasn’t enough, the importance of the San Francisco-based startup was underlined by the US State Department, which asked Twitter to postpone a planned maintenance shutdown on Monday because of the situation in Iran.
Reacting to the Iran situation, Twitter co-founder Biz Stone said, “It’s humbling to think that our two-year old company could be playing such a globally meaningful role that state officials find their way toward highlighting our significance.”
Access to the popular social networking service was blocked across mainland China on Tuesday afternoon, two days before the 20th anniversary of the bloody Tiananmen Square crackdown following calls for a re-evaluation of the protest movement that have been published on the Internet, and may have prompted the black-out
Twitter has been adding millions of users a month for the past several months and its website received 32.1 million unique visitors in April, according to comScore.
#cnnfail hashtag on Twitter, came out as a result of Twitter users venting out their frustration on CNN for not giving enough coverage to the Iran incident. CNN had to issue an official response to the allegations.

The actual number of users of the micro-blogging service is hard to figure since Twitter can be accessed using personal computers, mobile telephones and dozens of custom-built applications such as the popular Tweetdeck.
The Twitter co-founders have reportedly passed up offers running into the hundreds of millions of dollars for the service and have so far only unveiled vague plans to turn it into a money-making venture.
Fred Wilson, a venture capitalist whose firm Union Square Ventures is an investor in Twitter, made it clear at the Twitter conference in New York on Tuesday that he believes Twitter has a bright— and profitable — future.“Links are the currency of the Internet,” Wilson, who sits on Twitter’s board of directors, told the 140 Characters Conference.
“If you look at the power of Google, and why Google is currently the king of the Internet, it’s that Google drives more traffic to more places on the Internet than anybody else,” he said.
“Social media, particularly systems like Twitter and Facebook that are good at driving traffic out into the Internet the same way that Google does are very important and powerful economic forces,” Wilson said.“It’s a natural thing for services like Twitter and Facebook to eventually figure out how to inject some sort of a paid model into their systems.“It’s the obvious thing to do and if they don’t do it some one will figure out how to do it as a third-party application, and people are already doing it as third-party applications,” he said.
John Borthwick, whose company Betaworks is among the hundreds that have developed tools for Twitter, said it is this “incredibly vibrant ecosystem of applications” surrounding Twitter that is one of its strengths.
Jeff Pulver, organizer of the 140 Characters Conference, said it is too early to tell exactly where Twitter is going, but “I think what we’re experiencing is something that’s much bigger than all of us understand.We’re living in a time where access to information is available to anyone and everyone,” said Pulver, a web entrepreneur. “The advent of Twitter has democratized access to information to everyone.
“When more and more people have real-time information we’re going to see transformations happen that no one expected,” he said. “Businesses will fail, others will flourish and there will be billions of dollars of opportunity created.”

The impact that this 2 year old micro blogging site seems to have in real time world is scary and there is little wonder that Google wants to either buy out or partner Twitter. Twitter’s ascent would not leave Google very comfortable. Would it?

Reference: http://www.livemint.com/2009/06/17131454/From-Time-to-Oprah-to-Iran-Tw.html?h=B
http://www.livemint.com/2009/06/03121331/China-blocks-Twitter-ahead-of.html?d=2
http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/5351937/Google-chief-hints-at-partnership-with-Twitter.html
http://www.watblog.com/2009/06/18/the-iran-controversy-and-the-importance-of-social-media-communications/