The global economic activity was at its peak in the last few years before the current economic crisis hit us. The businesses were expanding and there was a dearth of right skills leading to a situation where a number of companies were chasing fewer individuals but now the situation is just the reverse; there are more individuals chasing fewer jobs. There are more jobs vanishing in the thin air than getting created. Its not that there are no new jobs being created but there is a need to upgrade skills and develop competencies in the new areas. Business Week in its cover story on 30^th April came out with an astounding statistics – In the midst of the worst recession in a generation or more, with 13 million people unemployed in US, there are approximately 3 million jobs that employers are actively recruiting for but so far have been unable to fill. That’s more job openings than the entire population of Mississippi.

The current crisis is the worst that anyone of us has ever seen and we should be prepared for a long haul. All the players in the telecommunications industry are cutting jobs. The operators, vendors and the content owners are seeing reducing revenues and hence find the current manpower cost on their P&L as unsustainable. Though I do not have a count of the number of people who have lost their jobs in the telecommunications industry but my estimate is that is could be anywhere between 5-8% which is huge. At the same time, we find that the same companies that are reducing manpower are also hiring which looks surprising at first but if we analyze little deeper, we would realize that the companies are adding competencies that they lack today and are preparing themselves for the new emerging business models. IBM recently announced its intent to hire 4000 analytics, a skill that it wants to develop in-house. At the same time, some companies are also taking this crisis as an opportunity to replace their current high cost resources with young and low cost resources that can bring a fresh breath of air to the organizations. Where does this leave us as employees? Are we at the mercy of our employers and is there anything that we can do? I believe, there are many ways of fighting the current crisis some of which I am going to list below

1. Estimate the worth of your current skills – Professionals should continuously keep valuing their skills and monitor the rise or fall in the valuation. A good way of doing so could be by testing the job market once in a while even if you are not interested in a job change. It is just like the options valuations that the companies do for themselves. The purpose here is not to switch to a job that pays more but to find out if your skills are still relevant and valued by the companies
2. Benchmark the skills with future industry requirements – Visualize the future of the industry and try to predict the future business models in the telecom and adjacent industries (Well you need not predict but just read the predictions from Analysts and Bloggers!!!). Analyze the skills that would be required 3-5 years from now and then map the gaps between your current skills and the skills required in future. This would be like a mirror staring right in front of you and then there would be an urgent need to take corrective actions. The current crisis and lower level of activities could be a good time to upgrade your skills or take some time off to go back to the school. You may be tempted to figure out if your HR manager still has funds for training!!!
3. Join a company that values your skills the most – The telecom ecosystem is moving towards an open ecosystem. However, at the same time, the different players are moving across the value chain to garner higher share of the value chain. This means that the players moving across the value chain would need new skills that are presently not available in-house. This is an opportunity for a person to move from one set of players in the ecosystem to another. To illustrate this point further, recently a number of device vendors announced their intention to launch application stores which so far were within operator’s domain. Application store management skill could be quite common within the carrier domain but is uncommon with a device vendor and hence the device vendor will value that skill much more than a carrier. Similarly, a smaller start-up company sometimes is not able to attract good talent and hence values the scarce skills more than larger companies. If you have fairly good faith in the startup’s business model and its ability to through the current crisis, then do consider this option
4. Broad base your skills – Focus on a few skills that can be transferred across industries which would give better headroom for survival. Strategic Planning, business development, marketing, sales, etc. are a few functions that are similar across different industries and hence people with these skills have a lower risk as compared to people who are in technical functions. Getting a business degree, especially when you have been laid off may not be a bad idea
5. Develop new skills – The previous points were about enhancing your current skills but however, if you are in a role that has no future demand in any company or industry, it is better to look to develop new skills as the demand for your current skill is unlikely to come back even in future. Decide your future career based on the promise a career holds out for you just like a 19 year kid would do while deciding his career options
6. Build relationship – I cannot emphasize the importance of building relationships especially in such times of crisis. Referrals would become even bigger with companies looking to reduce their recruitment costs and improve the quality of talent they hire. Network with your alumni, ex-colleagues and others from your industry. Blogging could be another way of establishing yourself as an industry expert but be sure about this option as it exposes you to other industry experts.
7. Be open to moving across geographies – The telecommunications industry may not be growing in Europe and America but are certainly expanding in emerging markets like BRIC countries (Brazil, Russia, India and China), Africa, South East Asia, etc. If one is prepared to leave shores in search of opportunities abroad, then it would be worthwhile to explore options in the emerging markets. India is currently adding close to 12-15 mn new subscribers every month (almost twice the population of Australia – just to give a perspective, no offence meant). There are new operators who are planning to roll-out networks in the next couple of years and they are short of experienced people as they themselves have no experience in the telecom space. Greenfield project, challenging marketplace and cross-cultural challenges – recipe for a great learning experience. Even in good times, everybody wanted to have China or India on their resumes and now there is a good reason to do so. New operators are rolling out CDMA and GSM networks in Middle East and Africa as well. Let there not be any impediment to your mobility. Business Week claims that the recent housing bust has reduced the mobility of Americans and perhaps of the people in other parts of the world as well because people who own their own house do not want to leave their city
8. Fed up with Financial Crisis? Try Antarctica – There is no harm in taking a long break to decide on your priorities with a cool head and in the bargain do something that you wanted to do for long but never had time to do, i.e. pack your bags and go on a long vacation (please backpack to save money). But remember not to break the momentum!!!

There is a skill shift happening right there and right now. This requires training for us and our kids. The schools need to teach the skills that would meet the needs of the future and not just the needs of the past. This is good time to hone your skills in the emerging telecom areas like convergence, platform development, mobile services management, etc. When the economy starts to recover, then you would be in demand.

Request all the readers to add to the above list on how to avoid and survive the job loss

Surviving The Job Loss Video

http://www.youtube.com/watch?v=sk5vSkt7f1A

One of the most popular stories about mobile services that is doing rounds on the internet is about a Juniper report that predicts that Mobile Entertainment is going to be affected due to recession and the growth in next  five years would be half of what the earlier predictions were. Juniper estimates that the mobile entertainment is now going to increase by $13 billion against the earlier estimate of $ 26 billion. I differ from Juniper on recession as a reason for the slower growth in mobile entertainment.

In one of my earlier posts, My Predictions for Telecom Industry in 2009/2010, I had predicted that the mobile entertainment is likely to increase as it would be the cheapest source of entertainment. I stand by my prediction. Would you go out and spend $10 on a movie which would last two hours or rather spend a few dollars on a mobile game that you can play many times over.  Juniper is also saying that the mobile entertainment would grow but would grow at a slower pace. However, I do not agree that recession is a reason for slower growth. To my mind, Juniper was earlier too optimistic about the market place and hence had estimated the market growth wrongly to grow by $26 billion. In the last few months, all the analysts have realized that they had built up the unnecessary hype around the potential of many of the mobile services and now it’s a good time to do some reality check. It is not due to the recession that they are revising their forecasts but it is possible that they are correcting their previous wrong forecast.

The way the Telecom analysts are reacting is no different from other industry analysts. Even in real estate industry, if you pick up any pre-recession report, you would find ridiculously high levels of predictions on level real estate prices by end 2010. Equity analysts were busy outdoing each other in predicting the high levels of stock market index in the next 2-3 years. The same analysts are predicting doomsday. Goldman Sachs had predicted that oil would touch $200 in April, 2008 and within four months they came out with a new forecast of oil dipping to $25 levels. It is not surprising that both the predictions have not come true. We saw similar phenomena before the dot com bubble. The reason why analysts go wrong is because they just ride the wave. It is like every morning they see the direction of the wind that then decide the direction in which they would sail their boat

I do not solely blame the analysts for the way they predict the market. If they take a contrarian view to the industry expectations, their reports are dismissed as rubbish. The industry stalwarts look at the analysts to stamp their own views about the industry. They have already made up their minds on the investments that they would make in the company and then use the analyst reports to justify them. The same is true even in a downturn. In such a scenario, it is not fair to expect the analysts to come out with an objective report.

Industry analysts have a role as a counterweight to the strategy departments of various companies. They are expected to take a dispassionate view of the industry. They need to invest money in primary and secondary research and should track the accuracy of their forecasts. Analysts should work on different scenarios and should refrain from making a catching headline to their research work by highlighting only a part of their scenario. No analyst firm can be accurate on 100% of its prediction but by doing so, it would build a huge reputation that would be difficult for any industry leader to ignore. It is a difficult task but this is what they are paid for!!!

The financial crisis that engulfed the world last year is now playing out in full proportions. This has spread to each industry and telecom industry is no exception. The impact of the recession in the western world and economic slowdown in the emerging countries is being felt in a big way by all the players in the ecosystem. It can be predicted that 2009-2010 will mark a very difficult and crucial period for the entire industry. This post is to analyze the impact of the crisis on each of the players and what can they do to minimize the impact

Carriers: It was earlier thought that the carriers would be spared from the impact of economic crisis. However, it is increasingly evident that they are indeed getting impacted due to restricted access to capital and consumers limiting their usage. In many emerging markets across Asia and Africa, the operators are small and dependant on the foreign capital to expand. The operators are constrained not only by the capital for investment but also by the lack of working capital. Lack of new investments is having an adverse impact on network coverage expansion. 3G auctions planned in many countries have also been shelved for fear of non participation by large operators. Investments in new technologies like LTE and WiMax are likely to be scaled down and I would not be surprised if many proposed installations of WiMax are permanently permanently after reviewing the business plans in light of current crisis. International long distance carriers are likely to see sharp fall in the traffic, due to lower IT spending and lower cross-country investments, which is unlikely to be compensated by the increase in traffic due to travel restrictions across the companies. The operators may resort to tariff reduction in a bid to increase the minutes of usage (MoU) but this would restrict their ability to offer flat data prices or other innovative data models. I foresee consolidation happening amongst carriers as the weaker ones bow out of the industry.

The operators would do well by concentrating on cost reduction initiatives. They may follow the initiatives of the Indian operators by adopting light-asset operation models, putting greater pressure on equipment vendors to adopt new models like managed service and capacity service. The carriers would do well by actively engaging in all kinds of infrastructure sharing opportunities. The cash rich operators may look for new M&A opportunities and cash strapped carriers will do well by limiting the handset subsidies. It is estimated that the industry spends over $50 billion in handset subsidies alone.

At least in the next three years, the traditional CAPEX will experience a CAGR of -3% to -4%, which forebodes a turning point for industry transformation. When revenue from voice services and traditional CAPEX cannot cover operators’ total cost of ownership (TCO), new services and new investment will become new opportunities and breakthrough points. New information consumption models, mobile broadband, and Internet applications will become the highlights of growth. This is the right time to evolve new business models to increase services consumption. Enhanced service consumption would ultimately benefit the carriers when the things start to improve. Operators can present mobile broadband as a viable alternative to fixed internet

Handset Vendors: Handset vendors were the first ones in the ecosystem to feel the pinch of the economic crisis. The replacement cycles lengthened which resulted in the lower replacement volumes and overall demand for new phones. At the same time, the device vendors witnessed heavy down-trading of devices by consumers leading to lower ASPs. The operators in the developed economies started to reduce the subsidy which also had an adverse impact on the value of the market size. The consumers on their part started to go for lower value contracts when their contracts were up for renewal and that lead to further erosion of device ASPs. Various device vendors and industry analysts have estimated the demand to be lower in 2009 by 5-10% over 2008.

Handset vendors need to focus on the costs and supply chain. Vendors may need to shift their high cost manufacturing units to locations where the cost of production is lower. New cross currency dynamics may also play a part in optimizing costs. They also need to rationalize the number of models to have better utilization of marketing monies. The emerging markets like India, China, Nigeria, etc. have been adding record subscriber additions which to a large extent are compensating the device vendors for loss of replacement volumes. The handset vendors should focus on value for money models and can learn from their experiences in emerging markets. I mean they can launch highly successful models of the developing countries in the developed markets and thereby increasing their market share as well as lower the cost of the model due to economies of scale. The handset vendors may also need to take a relook at their business models, partly due to the fact that carriers across the world are reducing subsidies and partly to emerge as end to end solutions player (e.g. RIM, Apple). The lower margins in the devices can be off-set with some of the services revenues if the solution is easy to use and relevant to consumer needs.

Equipment Vendors: The equipments vendors would be under pressure due to reduced investment by operators. However, if they focus on the managed services, they can get additional recurring revenue streams that would make up for the lower spending on network. The equipment vendors should wear the consulting cap and develop a provocative point of view on critical issues (like mobile broadband) that would entice the customers into spending. The vendors should try to develop new business models based on revenue share rather than fixed costs where the payments are linked to the benefits that the customer gets from the solution.

Content and Application (C&A) Providers: In one of my previous posts, I had predicted that the mobile entertainment would increase in times of recession. I got many responses from the readers both for and against the argument. I still stand by it that if the content is really good and affordable, it could be the cheapest source of information and entertainment in such times. If there are applications that help in job search or skill enhancement, they are bound to find favor amongst consumers. Relevance and pricing would be the key. However, lack of available funding to finance the development of new applications, and faster migration to ad-funded services – would have an impact on revenue growth.

C&A providers need to take a hard look at their business models and need to incorporate new ways of reducing cost of ownership for the consumers. C&A providers can look at sachet model to offer content at affordable pricepoints or they can offer unlimited access to content for a fixed fee. With the launch of new application stores by Nokia, Samsung, Microsoft, etc. the content providers should focus on the new application stores to compensate for any loss on the operator portal.  The economic downturn will push operators to release their grasp on the mobile content industry and open-up mobile Internet. This would be a great opportunity for the content providers to increase their revenue share and offer content at affordable price.

In summary, it is clear from the above discussion that each of the players of the ecosystem would need to take a relook at their business models. The winners would be decided on the basis of the innovation that they can bring to their business models. The survival of organizations would not depend on how fit they are but how responsive are they to change.

There are many telecom companies around the world, read about Ehsan Bayat the head of Afghan Wireless.

If there has been a time for change in marketing, this is it.

“Achieving more with less” is the only marketing approach in the minds of CMOs across the globe. They all are seeking a wolverine that would help them reassure the maximum buck for their money. This is the time for the digital medium today!

In this environment digital space will be undergoing a rebirth of sorts. Most marketers will slash their marketing dollars; opportunity will have its doors wide open for digital space owners to go on a fierce onslaught of traditional media space. In these tough times not only will digital marketing survive, it may actually thrive during the lean times, continuing its inexorable theft of ad spends from traditional media tactics. The CMOs would need to believe that this medium is much more mature and proven.

The fact that digital marketing’s impact can be assessed almost real time and with limited investments will be its unique advantage. You don’t wait for a week to access TVRs, a click on Google analytics will tell you know how your consumers are interacting with your brand.

Well just like an Elizabeth Taylor marriage, Digital doesn’t require much long-term commitment!  Pay for Performance ads can go up and down on a daily basis.  Email and SMSs can be sent (or not sent) based on your dynamic marketing objectives. Even banner ads can usually be negotiated with an advantageous measurability clause. Try that with your favourite channel on TV or Press! Other than keeping your digital interface a web or wap page up to date, the only core digital tactics that require substantial ongoing effort are organic search optimization, and web site analytics and testing.

With diminished outbound marketing budgets, increasing revenue from current customers will be the focus, either through more frequent purchases, or larger ones. Digital marketing will be the perfect vehicle for communicating with customers and incentivising additional purchases. Customer life cycle marketing (persuasively combining email, IVR and text messaging) will gain favor as companies will strive to close a higher percentage lead closures.

The superior targeting ability of digital marketing will enable brands to focus their reduced marketing budgets solely on likely prospects. This will accelerate the trend toward use of behavioral targeting and retargeting in Digital ad placement. And the bonus will be very little financial waste associated with advertising to people who have no interest in a product or service. 

Behavioral targeting will mine a user’s web page visits and search terms to serve relevant ads. If a prospect reads several pages on Yahoo! about a brand and does a search on Google using a related term, an ad for the brands dealers could be served up just in time. Further, offering niche coupons sweeten the deal.

Re targeting would take the concept one step further, enabling companies to advertise only to people who have visited their web site previously without interacting with its online purchase page or lead tracking module. With average conversion rates hovering around 1-2%, this would be an ideal way to reach the other 98% that have taken the time to visit the brands site but haven’t yet converted.

Additionally, search marketing will continue to expand since it is the only tactic (other than Yellow Pages) that puts the marketer in the middle of the consumer’s purchase psychology funnel.

Finally the Numbers Don’t Lie!

The Orwellian nature of the Internet, Digital marketing offers superior measurability and trackability in comparison to traditional media. This is of course due to the fact that every mouse click is tracked, usually anonymously.

When implemented correctly, banner ads, organic search, paid search, blogs and social media, email, lifecycle marketing and all other Digital marketing tactics provide a user by user scoreboard that can be utilized to ascertain precise return on investment metrics for each campaign.

Aren’t this big enough reasons for brands to make a shift in their marketing plans.

Today for a change I am not going to write on Telecom. Rather, I would touch upon a subject that is very topical and is of interest to everyone across industries. It is the economy that is being discussed in all social forums, blogs, office water coolers, parties and anywhere where two or more people meet. I am not going to make a forecast or analyze the current situation but would focus on the lead indicators that would indicate any upturn in the economy.

There are many indicators that give us sense on the state of the economy. Unemployment, business investment, GDP growth are all lag indicators which are not pointers to the future of the economy. We end up focusing on the lag indicators as they are easily available and measurable. Unfortunately, the media carries stories about these indicators and we are not able to predict both the uptrend and downtrend in the economy. For example the US economy was in recession since last quarter of 2007 but we got to know about the condition of the economy as late as September 2008. Similarly, I am sure we will not be able to identify the uptrend if we continue to focus on the lag indicators. But the problem is that the lead indicators are far fewer and difficult to measure. Few consider consumer sentiments as a lead indicator but I think the sentiments are based on the lag indicators and hence are not the right measures. I have identified two lead indicators which are not only measurable but are also very pertinent in the current situation.

Baltic Dry Index (BDI)

BDI provides “an assessment of the price of moving the major raw materials by sea. Taking in 26 shipping routes measured on a time charter and voyage basis, the index covers Handymax, Panamax, and Capesize dry bulk carriers carrying a range of commodities including coal, iron ore and grain”. The supply of cargo ships is generally both tight and inelastic — it takes two years to build a new ship, and ships are too expensive to take out of circulation the way airlines park unneeded jets in the California desert. So marginal increases in demand can push the index higher quickly, and marginal demand decreases can cause the index to fall rapidly. Thus the index indirectly measures global supply and demand for the commodities shipped aboard dry bulk carriers. Because dry bulk primarily consists of materials that function as raw material inputs to the production of intermediate or finished goods, such as concrete, electricity, steel, and food, the index is also seen as an efficient economic indicator of future economic growth and production

On 20 May 2008 the index reached its record high level of 11,793 points but hit a low of 663 points on 5 December 2008. These low rates move dangerously close to the combined operating costs of vessels, fuel, and crews. The fall was due to subdued commodity demand on lower production activity but it was compounded by lack of credit that resulted in reduction of Letter of Credits (essentially banks had lost faith on each other. BDI is the perfect lead indicator of increased or reduced physical activity especially in case of an uptrend. The index is available at Bloomberg L.P [quote]. BDI has now started to move up and has now crossed 1000 points but still far away from its record highs.

Case-Shiller Index (CSI)

The current crisis has its seeds in the housing bubble of United States. Since the problem started with the housing sector, the economy is unlikely to see an uptrend till the housing sector stabilizes. Stabilization of the housing sector in the US would also imply that the balance sheets of the banks will also find stability on account of sub-prime assets. Hence, I have selected the Case-Shiller Index (CSI) as one of the lead indicators. The Case-Shiller Home Price Indices [S&P] are quarterly nominal house price indices for the United States. The indices are calculated from data on repeat sales of single family homes, an approach, developed by economists Chip Case, Robert Shiller and Allan Weiss. The indices are normalized to have a value of 100 in the first quarter of 2000. The indices are calculated monthly by Fiserv, Inc.- the company that owns and maintains the index and is published with a two month lag on the last Tuesday of every month. Many would argue that his is a lag indicator. It may be a lag indicator in most of the situations but in the present situation, it is very much a lead indicator. Stabilization in the housing prices would signal to other industries that the worst is over. The national index attained its all-time high of 189.93 in 2006 Q2, and has declined in every subsequent quarter to date. This means that the condition of the economy had started to deteriorate much before September, 2008. On December 30, 2008, the index recorded its largest year over year drop.

There may be many more lead indicators which might be relevant in today’s scenario. I would request the readers of this blog to add their lead indicators in the comments section so that we can prepare a comprehensive list of such indicators which would benefit everybody.

The mobile subscriptions at the end of 2008 were 3.9 billion (penetration of 59%) are likely to cross 4 billion sometime in April-May’09. This means that the majority of the world’s population is already a mobile user. However, the real picture is missed in the averages. Many developing countries still have mobile penetration of less than 50%, e.g. India (30%), China (47%), Cambodia (26%), and Africa (39%). The subscriber base is expected to cross 5 billion by 2011. Majority of the next billion subscribers are likely from India, Africa and China.

There have been many studies conducted in various countries across the globe that show that increasing mobile penetration has a positive impact on the GDP growth of the country. This impact may be twice as large in developing countries as in developed countries

McKinsey in its research to assess the economic impact of the wireless sector in the countries of India, China and Philippines estimates that the indirect impact of wireless is at least three times the direct benefits. According to McKinsey, the total economic impact of wireless as the sum of three elements: the direct impact from mobile operators, the indirect impact from other companies in the wireless business system (hardware and software vendors, handset vendors, and so on), and a second form of indirect impact: the surplus enjoyed by end users. It estimated that by increasing penetration by 10% in China and India would produce tremendous end-user value of at least $10 billion, equivalent to an incremental 0.38%-to-0.61% contribution to GDP.

Vodafone (2005) reported that, in a typical developing country, an increase of 10 mobile phones per 100 people boosts GDP growth by 0.6% (based on research in Africa in 2004). Deloitte in its report ‘Global Mobile Tax Review 2006-2007’ estimates that with every 10% increase in mobile penetration, the GDP growth increases by 1.2%

A yet to be released study ‘India: The impact of mobile phones,’ conducted by the Indian Council for Research on International Economic Relations (ICRIER), shows that Indian states with 10% higher mobile phone penetration will enjoy 1.2% higher annual average growth rate than those with a lower teledensity. However, the study reveals that the real benefits of telecommunications only start when a region passes a threshold penetration rate of about 25%.

The quantum of economic impact may vary across various studies, though the consensus is that with every 10% increase in mobile penetration, the GDP growth increases by 1%. However, what is important is to understand the various benefits and what can the Government do to ensure that the benefits do trickle down to the lowest strata of the society.

Benefits of increased mobile penetration:
Productivity gains to individuals: Much has already been written and estimated about the productivity gains from use or mobile telephones. Productivity gains are on account of higher efficiency or more business/work to the users. The savings can be quantified in terms of time and money saved due to avoidance of travel. However, it is difficult to say how much addition business can be attributed to the use of mobile phones
Productivity gains to businesses: Mobile phones enable faster and more efficient decision making, improved logistics, etc. They also double up as productivity tools like Sales Force Automation, ERP data input devices, etc. No wonder the businesses (large and small) were the first to adopt the mobile phones
Inclusive financial services: The mobile phones out number the bank accounts by a large distance. Mobile phones can double up as bank accounts. Mobile technology has the potential to expand the reach of financial services to the poor. Branchless banking using mobile phones and a network of third-party agents (e.g. post offices, small retailers) can reduce the two biggest costs associated with providing financial services: building and maintaining a physical presence, and handling small transactions. A new area of interest is micro-finance which has been made popular by Gramin Bank. Micro-finance using mobile phones can greatly reduce the cost of funds to a financial institution
Remittance: Remittances play an important role in the development of a developing country. Mobile phones can play an important role in this market by making it quick, cheap and easy to transfer funds. Currently, sending funds through traditional money transfer operators such as Western Union and MoneyGram is expensive, with fees as high as $16 to send $100.19 Poor migrants send small amounts of money, so these fees are very regressive. In the Philippines, wireless providers like Smart Communications allow Filipinos working overseas to send money home in minutes with a text message for a fraction of the cost of money transfer operators
Empowerment of poor: Bringing easy and affordable access to telecommunications services to rural families will increase access to education and health services, and provide a forum for interaction with government services. Governments across the world are likely to look at mobile industry to fulfill its basic responsibility. M-Governance would also help reduce the corruption as middlemen would not be required for information from government departments
Women empowerment and security: A mobile device is a security device for most women in a developing nation. Women feel more secure at night if they have a mobile phone with them. A country develops faster if its women folks feel more librated and empowered to take decisions about their kids and family. Mobile is their window to the outside world. Many women would get the first experience of internet on their mobile. The knowledge would ultimately unshackle them, liberate them and help them take informed and confident decisions
Emergency situations: There is a more likelihood of an emergency situation in developing nation than a developed country. The emergency response infrastructure is also lacking in developing country. The mobile phones cut down the time to mobilize response teams
Foreign Direct Investment: Willams (2005), The Relationship between Mobile Telecommunications Infrastructure and FDI in Africa study shows that the FDI tends to be higher in countries where the mobile penetration is higher

It is difficult to quantify most of the benefits that accrue to the consumers of telecommunications. However, one thing is certain that the consumers find the mobile services useful and therefore are willing to spend a significant portion of their income on telecommunications. In all developing countries, the average spent on telecommunications is 2% of monthly expenditure. In a sample of Indian villages, the average was 3% of household income. In Chile poor people spend more of their incomes on telecommunications than on water, and even the average household spends more on telecom than on water and electricity combined. Income elasticities are also high: one study in India found a 1% rise in household income almost doubled demand for telecommunications in 2003

What can the Government do?
Government has a significant role in development of any industry and telecom industry is no different. The list below are some of the options before the Governments:
* Ensure that taxes on the industry are reasonable and not disproportionate
* Digitize information in the government departments
* Provide subsidy on M-Governance application development
* Ensure that the ecosystem works in a way that the operators do not have the monopoly over services like education, M-Governance, healthcare, etc. There needs to be a complete collaboration in the efforts of operators, handset vendors and VAS providers. Government should ensure that the applications are available in the handsets and the h

andset vendors are a part of the revenue share (or share of subsidy)
* Subsidize or encourage rural coverage

Telecom industry is considered to be immune to the economic conditions to a large extent. In fact, it is said that the ARPU should increase as the subscribers will talk more than travel. We have observed that the subscriber addition has not come down (in fact it has increased in the last few months). Will it be fair to assume that there has been no impact of slowdown on the Telecom industry?

I believe that the credit crunch is hitting the telecom industry which will ultimately impact the subscriber addition and quality of service in the long run. The new operators have not even placed the equipment order and are still banking on arranging money from stake sale. Companies like Unitech and Swan that managed to sell the stake are not sure when the money would arrive. This has certainly impacted the new network roll-out.

Independent tower companies are facing the heat in terms of liquidity crunch and low occupancy. They are forced to abandon the roll-out plans or tie up with the hived off tower companies of the telecom players. The existing operators have also scaled down the roll-out.

The impact of the slower network roll-out would be felt in next 6-9 months when the capacity utilization would start to hit the ceiling, the quality of service would deteriorate.

However, the credit crunch could be a boon for the 3G tariffs. With the foreign players staying away from the auctions, the other players are also not expected to be aggressive in bidding. This would mean lower 3G tariffs.

Would like to get comments from the readers on their views of the impact of economic slowdown on the telecom sector in India.