Trends in telecom, acquisitions and more

Digit: There seems to be a resurgence of VoIP in the industry now WhatsApp has jumped on to the bandwagon as well. What are your thoughts on that? 

Nigel: If you think about it, VoIP’s been around for a decade. In fact, some of the first VoIP was launched in 2006 – it’s not a new phenomenon. Actually, in the west, VoIP has been utilized quite a lot for business over the last three to five years. Suddenly, these big tech giants think they’ve found the new great thing when it’s been around for ages. Particularly, when you’re looking at emerging markets, the focus with some of these goliaths is retention of consumers and subscribers that they’ve paid millions of dollars to acquire over the years. VoIP now allows these big players to entangle the customers more. 

If you actually review the way that people communicate via Facebook, WhatsApp, other messaging platforms, it’s been about replacing SMS over the last three to five years. But suddenly now people realise voice isn’t going away. When people start now to look at emerging markets, they realize that people still want to talk. If you look at the average small business operator, voice is still the way they do business and will continue to for many years to come. If you look at the average SMB (Small and Medium Business) here in India – maybe 50 million of them – you find a mobile number on their retail outlet. There’s no hashtag or mention of Twitter or Facebook, it’s all on voice. It’s the same in Africa, and generally across emerging markets in Asia, that trend is not going away. It just so happens that some of the big players have put a new spin on VoIP and voice when it’s been around for many years. New Call, through Vikas’s business have been around for long. Your VoIP platform has been around for how many years, Vikas? 

Vikas: From day one. Actually, we started as a VoIP company before we moved on to chat. If you look at the earliest release, it was a VoIP release on Symbian. 

Nigel: So it’s no surprise to New Call that these other players are extremely interested in VoIP. We’ve got one of the strongest VoIP players in the corridor between India and the GCC region – that’s Nimbuzz. And as Vikas just pointed out, it’s been around for years. 

Digit: What about the reports that say voice calling is not so popular amongst the youth as compared to texting? 

Nigel: What you’ve got to realise is that the early adopters of social messaging were the young, aspirational group comprising 14 to 25 year olds. What’s happened over time is that cohort of subscribers then influenced a whole new age group – the twenty-five to say fifty-five bracket coming in to social media for a long time. Those are the people that understand voice and what to communicate via voice. WhatsApp for instance have introduced their VoIP feature, Google has come up with Project Fi, which (in my opinion) is to entangle that customer base that’s more used to VoIP. Looking at the global trend in international VoIP calling, estimates suggest it’s going to grow to 1.8 trillion minutes a year in the next three to five years. So there’s no surprise that such a strategy is coming out from these players.

Nigel Eastwood, CEO, New Call Telecom
 

Vikas: On texting versus calling, the comparison is not between texting or calling. Texting is a more asynchronous activity and hence it’s done more. The whole deal is about voice getting away from GSM to VoIP. That is the bigger deal. 

Digit: This next question is for all three of you. What will be the top trends in telecom that will affect users in the near future, either positive or negative?

Sanjeev: Before I get into the trends questions, I’d like to add on something to your previous question about VoIP. One of the other drivers for VoIP is cellular networks moving to data networks. There’s an association of “free” with VoIP – be it things like Viber, Facetime and Tango – a lot of the drivers are also for people commercially, but the big additions or trends, like you asked – Video is going to be a massive driver now. That’s where the data networks, and WiFi, are going to be the big drivers. Not just in the west, but in emerging markets in a very big way, because the cost of operating a WiFi network is substantially less compared to cellular networks via 3G and 4G. With our big drive with Ozone we want to go after the 700 to 900 million people that don’t have access to the internet today, because they can’t afford 12 to 15 USD a month. So how do you get these guys on to the internet to access movies, music etc? That is by disruptive plays like WiFi which sits in an unlicensed band. So we don’t pay for spectrum, but we can deliver a service quality which is probably equal or better than the cellular networks today, because everybody uses WiFi. And the big driver, when you go back to when Steve Jobs launched the iPhone, and he launched FaceTime, his big spiraling platform was WiFi. And he publicly said it,‘Without WiFi, the iPhone would not have been successful.’ So cellular networks are moving from your traditional setup to now, data networks. A lot more can be done on data networks. Advertising is going to be another big driver. A lot of advertisers can get to publishers a lot easier now and do a lot of geocentric advertising. The whole angle of following consumers around, knowing their behavior, and then leading on to building a big data analytics engine is going to be the big driver now. Setting up a platform is very interesting for advertisers, a platform that is very useful for consumers. If I walked by my favorite store, and the store pushed me ads, I would be interested. If I get promotions for golfing, I want that type of stuff. I feel the big thing for us as a group with New Call is is to build one of the most sophisticated data analytics platforms that this country has seen with the combination of Nimbuzz, Ozone and the acquisitions we’re looking at. I think we will be far ahead of anyone else. 

Nigel: I’ve jotted down the top ten things that I think are disrupting the whole ecosystem right now, particularly in the emerging markets. As we’ve seen in India, e-commerce or as i call it “the flipkart-ization of India” almost over the last two years has led to people finally have awakening to the idea of acquiring goods over the internet. That has led to a whole new range of business models – from furniture to lingerie . 

Digit: What are your thoughts on Myntra going only-app?

Nigel: It’s the way forward. Google changing their algorithms very recently were putting a big message out to the world that mobile is first. So it’s a shrewd move, it’s a little bit ahead of the pace of the wicket, but it will come. Generally, new businesses now primarily focus on mobile first. Maybe 6 to 12 months early but it’s making a lot of noise. So e-commerce really has been one of the big drivers for pushing the digitalisation of emerging markets much more quickly. Areas that I see are also committed to disrupt the traditional business models are banking, Fintech with the emergence of things around peer-to-peer lending and mobile wallets. Fintech has just started to take a good foothold across the world – so that’s one to watch.

Content, in all its forms, is now being driven more and more online. In the west we see lots of platforms really starting to challenge the big goliaths – the big cable operators. The Netflix model – the video on demand model is certainly the new trend moving. The millennial generation is not at all interested in set-top boxes traditionally to view content via satellite. These models will proliferate again. The process of consuming video data is now called “snacking”. So you take a little bit of data at home, you jump on the metro you view your favourite soap opera on the train for 15 minutes while you get to work, you get to office and at lunch and continue watching, it’s all synced. The viewing media has gone from 32 inches down to less than 10 inches. This model will be very dominant moving forward. 

Out of all of what’s happening in the digital world is our digital thumbprint. Things around Big Data, data security, national identification, all of these e-govt initiatives will start to create more jobs, more opportunities, as we move forward. Collaboration, the Dropbox-type interfaces is becoming more and more apparent as businesses seem to want to drive to more virtual operations so they’ll have virtual teams working in collaboration right across pan-India locations without having the cumbersome overheads of occupancy of offices. The home-working phenomenon is certainly there and the types of collaborative software that are coming out really help. We’ve seen big valuations over the last few months. 

If we look at India and the Modi government focusing on areas to really improve the lives of 800 million people from less well off bracket, e-healthcare and e-education are two big mighty subjects. Lots of entrepreneurs are innovating around these, and certainly there are several billion-dollar businesses that are sure to be created in the coming years. Finally, and particularly important for India is Utility Management and Machine-to-Machine communication. 

Demand side energy management is particularly important for markets that find it difficult to produce their own energy and have infrastructure problems to deliver energy. So machines like smart meters, for instance, help that whole industry tremendously. One key area of great focus is electricity abstraction in India. Smart metering takes care of that.

Digit: We remember speaking to a company called GramPower operating in Rajasthan recently who’ve gotten several villages off the grid and installed smart meters and you can pay by the rupee and even have a prepaid format for electricity payment.

Nigel: Yes you’re right. Now to answer your question fully, those are the top ten or maybe more positive things. The negative thing that kind of troubles me is around net neutrality. This whole issue has come to the forefront in the last few months or so in India. I’ve been very vocal about this from New Call’s perspective around how we view that in the global context. I look at the traditional telecom model, it’s got to change. 

Let’s look at what happened in the early 1800s in England where people were moving from transportation which was canal-barges to move coal around the country, to trains. Can we stop progress? No. Was there an uproar? People embraced change. It’s an unusual analogy, but, just like that, telecom companies in India and across the globe, need to embrace change. They have to embrace over-the-top services. They either have to acquire over-the-top services to complement their future roadmap, develop over-the-top services or, partner with OTT service providers, rather than trying to tinker around with a fundamental norm in the global marketplace of net neutrality. So, I think that is one negative side-effect of the emergence of the app era and digitalisation.

Digit: I’m not sure I understand your analogy because, what you spoke of is an entire paradigm shift in a technology. There was no way but to migrate to that other form. Here we’re talking about telcos giving preferential treatment to some entities, or some applications creating pathways that are better for certain kind of people.

Nigel: Well we’ve got 50 Million small to medium sized businesses in India. If we tinker with the issue of net neutrality, when will they ever get online? When will they have a voice? No. The Government needs to look in that segment of entrepreneurs in India that contributes over 50% of GDP today in India. We’ve got to look after them. Net Neutrality and tinkering with net neutrality will be fatal for that segment that really underpins 50 Million traditional SMBs. There’s hundreds of millions of entrepreneurs in India who will want to come online, at one point or other. It’s got to be fair and equitable to all. We can’t give preference to others that can afford to pay, in my opinion.

Vikas: What if I have one and only one important trend to highlight?

Digit: Sure go ahead.

Vikas: If you look at Nimbuzz, the thought process early on, was that people will use apps for two reasons – either the app saves time, or it saves money. So, VoIP saved a lot of money in international calling and now even in local calling. Then came chatting which morphed into messaging. It again, saved money to great extents. I think the apps which would start saving money or give you better data speed would be something that might come up. And right now, there would be businesses that would tinker with the overall data business that is being carried out in the country or anywhere in the world. 

Digit: In what way? Compressions?

Vikas: Compressions, sure compression is one of the things but the whole model is how data is sold. So, right now, it might look a little nebulous to you but in the next 6-10 months we’ll start seeing those kinds of businesses or applications. U.S. based FreedomPop is a good example, particularly in India’s case. For example right now, Ozone WiFi is one of the best, fastest and probably the cheapest data source available in the country. Now, you, as a user are given a 3G data pack which doesn’t really feel like 3G and at a certain rate which doesn’t feel like its cheap. And you have an alternative platform with very high speed but significantly cheaper – these two cannot co-exist. So, a disruption would come in. Now the disruption may be from industry or it may be the apps start forcing it in, just like it’s happening with VoIP. For me, it’s one of the big ideas for the coming year.

Sanjeev Bobby Sarin, Founder, Ozone

Sanjeev: Just to add to what Vikas has said, There’s also a new solution that we’re launching in India with a partner company around entertainment. I think even you mentioned a solution like that earlier. It’s about micro-caching content at locations. So imagine this scenario – you can go to a McDonald's, download a two and half hour movie – without any broadband costs. This would normally take you about 60-90 minutes at home and you still have to pay for your broadband cost. But here it would take you merely 5-10 minutes. So, these disruptive type of solutions coming into the market will be very very important in changing the trend. If you look at all of these things Nigel touched upon, such as e-health and everything else like that, what are they doing? It’s all about knocking the middle man out. Flipkart is the same thing. You know, a lot of travel solution companies are the same thing. It’s all about getting the seller close to the buyer without all these middlemen. And that’s what all these technologies are doing. Say a person in a remote village ailing from cancer has access to a top doctor at AIIMS through a technology medium, for a second opinion. So these type of technology advancements for India have to come, to save, improve and enhance lives of the poor population. Hence our combination of WiFi and lot of what Nimbuzz is doing is building solutions for the masses. 

Digit: What is your take on regulated markets like India. Is the TRAI’s framework supportive to new initiatives or is it a pain dealing with them?

Sanjeev: I think they’re also learning along the way. There are more challenges in India than other markets in terms of protecting the consumer, protecting connections and knowing what the consumer is doing. For example, in the US, McDonald's can provide their own WiFi without any validation checks. Starbucks does the same. In India, if you want to provide public WiFi you need an ISP license, you need to register the user’s mobile number and you also need to monitor the user’s activity and keep logs for five years. So, the security measures in India are a lot more stringent than they are in the West. If I were to ask myself “are the regulators doing what they should be doing?” I think they are. That makes life a little complex for us but after terrorism incidents in Mumbai such as when a terrorist sent a message from an open public network, I think they’re necessary. For two years after that incident, I had to fight an argument in the market that WiFi is not associated with terrorism! I think the regulators are learning fast, they are putting more checkpoints in place, but it’s healthy for the market. 

Nigel: I have a few comments around regulation. One of the key reasons why New Call is here, is because India is a regulated market. What we’ve seen in the UK through the years is that the regulator has created a very fair and competitive landscape in which even small businesses can create and sustain profitable business models. I was very encouraged to see very recently the new virtual network operator licence being talked about openly and hoped for it being ratified very very soon. So that whole framework of regulation, although burdensome (there is still lot of red tape and bureaucracy) is absolutely necessary. It gives that playing field that small businesses need and the whole market actually need to create something, that at the end of the day it is beneficial for the end consumer. So I am very supportive of the regulation.

Digit: This question is for Vikas. Can you tell us a bit about Hola? Is it a truecaller clone?

Vikas: I’ll repeat what I said when I was answering your first question: when we look at a certain category, specially from the smartphone perspective, it is all about the ease that you can give to the user or money saving. Last year around August, before New Call acquired Nimbuzz we were looking at various apps that were bubbling up in the various app stores. There was TrueCaller in the call management space but there were a few others as well. If you look at the top 100 apps in the communication category, you would find as many messaging apps as Nimbuzz as you would find call management apps. Many of them were amatuer attempts, but even then they were able to break high into the category overpowering many other established brands you would find in the category. We thought this is something that consumers are accepting and why part of it was a no-brainer. The reason was the market conditions, prepaid sim cards, people changing their numbers, do-not-call registries being lax and so on. So we said okay we can give a better perspective to this market than many of the existing apps. Your question was whether it is a copy of truecaller or not right? I would say that truecaller has been sitting on this oppurtunity for 6 years and not innovating. You know just like a limited set of functionalities and there never was a true competitor which is a better alternative for the consumer. And I think with Hola, we are trying to give the consumer that. With Hola you of course get spam blocking, caller identification, but now we are definitely localising the service. I’ll give you a very good example of how localisation works. So truecaller has been out for 6 years right? And they say that their biggest market is India. In fact their only market is India in terms of active users. When we talk about call blocking it’s about protecting the end user. And one of the biggest concern in the Indian market is that when you say you are protecting the people, you also have to protect against a lot of things that go around. In many cities, police have launched a safety app for females but nobody downloads them. They fizzle out over a period of time. So they came back to us and said why don’t you launch a feature in your app which will trigger an alert and can be used by people when somebody is being stalked or is in danger. So you would ask why would this work on this app even when it doesn’t work on the others. Simply because of the growth that Hola has seen. We started working on this application in August, and launched it in December’s first or second week. Half a year and it has crossed a million downloads already. We are getting 10,000 new installs daily. And we are getting close to 1.5 million daily sessions on the app. It’s a fast growing app because it not only gives you all the functionalities that are already available but also localises it. Download it and you will see yourself.

Digit: I am a little against these apps because of the privacy concerns. So do you guys follow the same model where your phonebook gets uploaded?

Vikas: For any kind of identification where there is not a standard database given by government or any other organisation, people need to help.

Digit: But most people don’t know that they are doing that inadvertently when they are installing these apps.

Vikas: See the only thing that a call management app does is, tells your number to somebody who is trying to call you. This is one feature of Truecaller that we haven’t given on Hola, one cannot put a number and search for the name. Now that’s a breach of privacy. If I want to get your number without you being any part of the communication, then that is a breach. 

Digit: Is the option of delisting available?

Vikas: Yes. You can delist your number but if you are calling me then I have full right to know who is calling me. Either the government should provide a database like that. If there’s nothing like that then I need to know. That’s not a breach of privacy. That’s like my protection. 

Digit: It’s a chicken and egg conundrum actually.

Nigel: It really is! It really is!

Vikas Saxena, CEO, Nimbuzz

Vikas: Hola is in the top 30 apps when we haven’t even advertised one bit through media stories, we are working under the water right now to make it more and more potent. It’s already in the top 30 apps in the communications category which is the most sought after category on the playstore. I am very sure that we will reach top 10 by the end of this year and start beating the incumbent by the end of next year.

Digit: So my last question, what kind of acquisitions have you planned here?

Nigel: We’ve formed what I call “my digital life platform” which is a hybrid of social messaging, call management, VoIP, WiFi, all of that and also Big Data. So we have got the core platform now built. It’s all about augmenting the platform with complimentary acquisitions. So things around content, as Bobby pointed out quite rightly, are very interesting to us. Opportunities the Nimbuzz offering around financial technology are of great interest to us. After all, everything that is going through the platform creates some form of data footprint. So big data and data analytics are interesting to us as well. So no doubt that you will see over the next months, years, us acquiring more assets that compliment those areas of business.

Digit: Anything else you would like to tell to our readers?

Nigel: I think for any readers out there who are investors, not only have we been able to attract and acquire some fantastic businesses here in India, but we are attracting and hiring some superb talent. You know, we are getting lots of engineers now coming back out of Silicon Valley. They’ve seen the light, now when they are looking for the innovation and the next big thing, they are not looking west, they are looking east. They see the opportunities in the emerging market. Investors need to start looking east rather than looking around under every pebble in Silicon Valley. There’s rich opportunity here in India and that’s one key message I try and present when I am talking to financial audiences in Europe.

Vikas: I would like to add to one question you didn’t ask! “When will you see very large companies coming out of India?” – that was your question?

Digit: Yes we were running out of time.

Vikas: Right but I’d like to answer it. You are now seeing the early days of that happening. Engineering and product mindset was lacking in this country for a long period of time. We were largely a services-oriented company wherein we did work for clients. This mindset is now rapidly getting developed, both because of the successes that you see here, because success gives birth to success, and because a lot of people who lived in the Silicon Valley primarily are coming back to India and they are bringing their skillset with them. So these two or three big trends are coming together. First one is Venture Capitalism. Some people say it is just a bubble but it is available, earlier it wasn’t. Second, the number of users who will take your service fast has gone up. I have been in a company before Nimbuzz also. One of the big constraints you had with internet in 2006 was that when you launch a service it takes a lot of time to scale. By that time the employees lose interest, investors lose interest and so on. That has completely changed now. I gave you the example of Hola with 10,000 downloads a day, but there was a time when we didn’t do 10,000 downloads in 6 months. And third, like I said, product oriented mindset is coming in. This is the primordial soup – Market, capital, talent, everything is there.

Sanjeev: One last point I’d like to add is one thing the world always forgets is how do we get to the mass volumes of people in emerging markets. One of the key things I can confidently say, because of the discussions we have as a management team, is to how to address them. Rather than just focusing on people like you and me, we focus on the masses – you know the people who can really afford it. One of the big things is coming back to one of the question you asked, some of the acquisitions we were looking at includes incentivised advertising companies that incentivises you to come to our platform to download an app because you are going to get some top up on the back of it. They are the type of companies we are looking at to drive consumers to our platform because you get a lot more for it. You know we are working in an unlicensed band, we don’t pay for a large spectrum fee, but we can deliver a service greater or better than any other 3G and 4G technology at a cost level where they cannot match. So if you look at that underlying foundation, we can provide a lot more to the end consumer than they are getting today. 

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Siddharth Parwatay

Siddharth a.k.a. staticsid is a bigger geek than he'd like to admit. Sometimes even to himself. View Full Profile