Bus. Std: Broadband Blueprint

My Business Standard column:

One of the most important documents for India’s digital future has barely been discussed in the media. What happens to the TRAI (Telecom Regulatory Authority of India) recommendations on broadband and internet (available at http://www.trai.gov.in) will have far-reaching implications for each of us in our personal and business lives, and we aren’t even engaged in the debate.

First questions. What broadband? Why broadband? How broadband? Broadband connectivity, as defined in the TRAI report, is always-on connectivity of 256 Kbps or higher. While one can argue about the connection speed, that is a big leap from what is advertised today (64-128 Kbps).

Broadband is the endgame for the computer, communications and consumer electronics industries. Besides making Internet access faster, broadband can make possible a wide variety of applications. For example, video-conferencing can connect far-flung offices and also enable distance education, telemedicine can bring medical attention to remote areas, video-on-demand can time-shift entertainment to suit our convenience, voice-over-IP can bring telephony costs down even further, multi-player online gaming can now become a reality, and enterprises can access business applications centrally.

The two most common modes of broadband access are xDSL and cable. DSL works on regular telephone lines, and is the most popular way to deliver broadband. Cable companies can also provide broadband by virtue of the fact that they too have a wired connection coming into homes and enterprises. Other possibilities for providing broadband are via satellite and through wireless technologies.

The problem in India, as we have all experienced, is connectivity. TRAI has estimated that bandwidth in India costs 1,200 times more than South Korea, which is the most wired nation today. The end result is few in India have experienced the world of broadband.

While there is a lot of talk about building out India’s infrastructure in terms of its roads, ports and airports, we also need to act rapidly to build out our digital infrastructure. From education to healthcare, and entertainment to ecommerce, the world of broadband can also lay the foundation for booting up the domestic IT industry and help improve productivity across India’s industrial sector.

This is the context of the TRAI recommendations. TRAI has sought to address 11 hurdles that hinder broadband growth in India: price, access to the customer (lack of access to the incumbents copper for DSL, low quality of cable TV infrastructure and lack of organisation, high costs for DTH and VSAT, policies preventing wireless solutions from spreading, clearances for right of way), costs of backhaul networks (lack of effective competition in the within city networks, high costs of international bandwidth, ineffective implementation of National Internet Exchange of India), fiscal policies (high taxes and duties, and lack of incentives for faster growth), and content and applications (lack of locally relevant content and absence of change agent to drive growth).

TRAI hopes that the implementation of its recommendations will boost the Internet subscriber from last year’s 4 million to 40 million by 2010, along with a hundred-fold increase in the broadband user base to 20 million.

One of the most important recommendations of TRAI is that of local loop unbundling. In simple words, it means that the incumbent telcos (BSNL and MTNL) need to open up access on their last mile to others for an appropriate fee. This way, others do not need to replicate what is an expensive last-mile infrastructure. While the concept is sound, this is a non-trivial decision for the government-owned telcos. The interests of a few are likely to supercede those of many.

What India needs is a complete unshackling of all regulation to ensure that every Indian household and enterprise has access to affordable broadband by 2010. We need to think 5-10x the estimates of TRAI. To make that happen, we need to think disruptively. India needs to become a hotbed for next-generation wireless and other technologies which can deliver broadband to homes and enterprises rapidly. It does not matter if others have done it or not. We need to lead the way. Just like South Korea did a few years ago.

Let us set a goal of providing a whole solution of hardware (access device), software, broadband connectivity and tech support for Rs 700 per user per month. Of this, broadband access (512 Kbps or higher) should cost no more than Rs 250 per month. Now, let us work backwards and figure out what we need to make this happen. If we can imagine 100 million users in five years, this is a market of Rs 30,000 crore per annum for broadband service providers to fight over. The world of commPuting as a utility would have arrived. For once, let us hope TRAI is wrong with their estimates.

Blended Times

Seth Godin has some thought-provoking comments:

In a connected world where people dont have letterhead, dont wear suits (dont even own suits) work out of tiny rented office suites (or their living room) have a simple website and buy only Adwords, have an answering machine not a PBX, dont have a receptionist or a sculpture out front in that world, how do we tell?

As weve stripped away a lot of the extraneous expenses and signaling mechanisms, are we in a race to the bottom (if bottom means raw, not bad)? I can no longer count on the best books coming from a major publisher, on the best articles being in the biggest magazines (in fact, I can assume that if its the cover story of a major magazine, its insipid). I can no longer assume that someone with a sketchy resume or a simple website isnt serious about what theyre up to

Welcome to the blended times. The moment when the big and small, the impermanent and the permanent, the accepted and the scammy meet. For a while, its going to be awfully confusing. Well get ripped off, waste time, become even more skeptical than ever before.

I have no certainty as to what the other side looks like, but Im pretty sure the winners are those that treated their customers and their constituents with respect and did it with honesty. Trust and respect are the two things we havent figured out a shortcut for.

Yahoo, Oddpost and Rich Clients

Phil Wainewright provides the wide-angle view:

The simple reason why Yahoo! bought Oddpost is so that it can compete with Google Gmail. But notice how the competitive ground has subtly shifted here. It’s not merely a question of offering 1GB storage space (well actually Yahoo! will be offering 2GB, according to Oddpost) along with virus protection and spam filtering. The big deal now is having a slick user interface on your online service.

If Yahoo! buys Outpost to counter the competitive threat from Gmail, it signals that the mainstream market will be determined by whose application has the best browser-based interface (along with, behind the scenes, the best networked services infrastructure). An application that can only function outside of the browser suddenly becomes an irrelevance however superbly it performs.

The fact that Yahoo! has bought a browser-based Outlook clone illustrates how big the threat really is to Microsoft’s most lucrative products. These rich-client technologies significantly narrow the gap between browser-based applications and their desktop-based rivals. By simultaneously taking advantage of the unique advantages of being net-native such as efficiencies of scale for information aggregation and analysis they can combine a good-enough user experience with capabilities that simply aren’t available (except at second-hand) within a traditional desktop environment. That opens the way towards Windows-based Outlook becoming an unloved, legacy application and provides an opening for other good-enough alternatives to Word, Excel and Powerpoint to muscle their way in.

So Microsoft now faces a crucial decision. Does the company do likewise and bring out a rich-client interface for Hotmail so that its web-based email service begins to rival Gmail, Oddpost and, by implication, Outlook in functionality? Or does it continue to bury its head in the sand and put all its efforts into ensuring it delivers an all-new Windows architecture to a declining pool of desktop loyalists?

The more I think, the more I see the world ready for low-cost, zero-management thin clients. Running not just browsers, but “virtual desktops” over ubiquitous broadband connections.

Small Business Success…and Failure

WSJ has a special report on the successes and failures of small businesses. From the introduction:

Last year, the U.S. gave birth to over half a million new firms. Equally telling, nearly the same number of firms closed their doors in the same period. What this means is that however much we glorify and obsess over success in the workplace, the notion of failure must go hand in hand with it. And in each of these triumphs and tragedies are lessons that would benefit the next person to reach for the brass ring.

One of the crucial lessons is also one of the least obvious: “Success” in the small-business world isn’t always defined by the obvious standards — such as making the most money, getting big fast or even staying in the same type of business. There are more-subtle payoffs, including lifestyle choices and the karmic satisfaction of pursuing a dream — even if it ultimately doesn’t pan out. Interestingly, more than a quarter of small-business owners surveyed believed they were “successful” when they closed, according to a Small Business Administration Office of Advocacy report released last year.

On a practical level, the reasons some businesses stay open and others don’t can vary dramatically. But one study from the SBA suggests some common troubles, at least among those who file for bankruptcy. Highest on their list of woes: outside business conditions, such as higher rent or insurance premiums, new competition or declining real-estate values. Among other factors cited were problems with the Internal Revenue Service, loss of financing, creditor disputes, and personal troubles of the owner, such as illness or divorce.

While these are problems that can plague any size firm, “for small businesses, there is simply less margin for error,” says Dave Anderson, a leadership consultant in Agoura Hills, Calif., and recent author of “Up Your Business.”

However, at the end of the day, he suggests, the most important distinction between those who fail and succeed lies in the DNA of the original brainstorm. “To borrow a phrase: It’s the idea, stupid,” Mr. Hall says. “Did you have an idea that’s meaningfully unique?” He believes the most thriving entrepreneurs are the so-called American dreamers — the ones who see a void in American commerce and try to address it rather than haphazardly chasing any inspiration. For instance, the guy who can’t find a printer cartridge on a weekend and is moved to open an office-supply store; or the entrepreneur who goes to a dirty theme park and decides he can do better. That, Mr. Hall suggests, is where the Staples and Disneys of the world originate.

“Money isn’t the ultimate measure of their success” in the beginning, he says. “It’s the fulfillment of their goal.”

Enterprise Service Bus

News.com writes about IBM’s efforts in the ESB space:

The term ESB covers a loosely defined set of capabilities. ESBs are meant to lower the cost of sharing information in corporations–a perennial and expensive headache for many firms. Integration of business applications is the top challenge for companies hoping to improve their efficiency, according to a recent survey of CIOs at Fortune 500 companies conducted by MIT’s Sloan School of Management.

An airline, for instance, might need to move customer data from mainframe systems to a company Web site. It would usually have to rely on proprietary integration servers to wire business applications together and shuttle data around. An ESB, by contrast, is built around industry standards and tools, including Java and Web services protocols.

Research firm Gartner predicts that ESBs will supersede traditional communications middleware by 2007. However, the capabilities of ESBs right now are limited, compared to more mature integration products, analysts note. For example, ESBs can convert customer record formats between two packaged applications but cannot automate complex business workflows.

Rather than create a separate ESB product that only supports Java and Web services protocols, as originally planned, IBM will augment its existing products with support for newer standards, such as Web services transactions and reliable messaging. This evolutionary approach will allow customers to continue using what they have while moving toward newer, more cost-effective ESB features, said Bob Sutor, IBM’s director of WebSphere infrastructure.

Open-Source WiFi for Rural Communities

ZDNet writes about a group called Informal:

Informal claims its wireless roadshow is an attempt to empower non-governmental organisations (NGOs) in the developing world to own, operate and grow their own Internet infrastructure using wireless technology such as mesh networking. The aim is to allow remote communities in developing countries without traditional telecoms infrastructure to communicate more effectively.

Informal plans to use emerging wireless mesh technology to create cheap, robust connections in remote areas that do not have an established telecoms infrastructure. Each device on a mesh network receives and transmits its own traffic, while acting as a router for other devices; intelligence in each device allows it to automatically configure an efficient network, and to adjust if, for example, a node becomes overloaded or unavailable. The advantages include ease of set-up, the ability to spread wireless access over a wide area from a single central wired connection, and the inherent toughness of such networks.

Key to the Informal project is the development of a blueprint for a low-cost, wireless, rugged computing device which Informal will encourage the NGOs to develop and build. The so-called Autonokit will essentially be a low-cost computer that can work on non-standard power sources such as solar, wind, micro-hydro or even bicycle power.

The Autonokit will run an open-source Linux or BSD distribution optimised for networking and auto configuration. It will be equipped with a 12V battery in case of power cuts, low wind or a fuel shortage.

TECH TALK: Tech Trends: The Next Wave

It would have been hard to imagine people buying jewelry online. Yet, according to Business Week, this is just what is happening as a new wave of transformation impacts industries:

Jewelry e-tailers are the leading players in the Web’s second act. Selling diamonds, double-strand pearl necklaces, sterling silver bangle bracelets, and more, online jewelers made up about $2 billion of the industry’s $45 billion in U.S. revenues last year. Startups such as Blue Nile, Ice.com, Diamond.com, and now Amazon.com are textbook cases of how the Web fundamentally undercuts traditional ways of doing business. The secret? Knock out the middlemen and expensive stores to lower costs, then slash prices. Amazon.com Inc. for example, is betting it can make money on 15% markups instead of the industry’s usual 60% to 100%. Amazon charges $1,000 for a pair of oval emerald and diamond earrings that it gets from a supplier for $850. Traditional jewelers typically charge $1,700. “We believe over time customers figure these things out,” says Thomas J. Szkutak, Amazon’s chief financial officer.

The diamond market is where changes are happening first, and Blue Nile is the leader there. The five-year-old Seattle company has become the eighth-largest specialty jeweler in the U.S. Last year, sales jumped 79%, to $128.9 million, and net income hit $27 million. Selling diamonds for up to 35% less than rivals, Blue Nile is not just profitable — it has higher margins than No. 1 chain Zale Corp.

Blue Nile packs a punch by streamlining a famously byzantine business. It has just 115 full-time staffers and a 10,000-square-foot warehouse. To sell $129 million worth of jewelry, a chain would need 116 stores and more than 900 workers, estimates analyst Ken Gassman of Rapaport Research. Blue Nile also bypasses the industry’s tangled supply chain, where a stone can pass through five or more middlemen before reaching a retailer. Instead, Blue Nile deals directly with major suppliers through its own network online.

To get to where they are, the Net upstarts had to defy conventional wisdom that diamonds couldn’t be sold online. The companies solved this problem by giving people the same information a jewelry expert would give them. They dish up educational guides in plain English and independent quality ratings for every stone. For example, a customer at Diamond.com can pore over the rating scales for cut, clarity, and color, pick out a one-carat stone with the preferred criteria — and then shop around for a better price. These resources are now standard practice, as is a 30-day money-back guarantee.

Self-Service Web

What can small businesses and retailers do to leverage the Internet and the presence of their customers online? Craig Danuloff writes about the emergence of the self-service web and what businesses need to do:

The brief history of the internet is that people are getting more and more comfortable making increasingly complex buying decisions entirely based on a web-based interaction. Several years ago, the argument went, books and CDs were the first ecommerce success stories because people knew what they were buying so the ‘trust’ hurdle was low. It took a few years for online clothing and financial transactions to take off. Today there is virtually nothing that isn’t sold online – and in substantial quantities.

If your business isn’t finding customers making purchase decisions based solely on interactions with your web site, then your web site needs more work. The first step: ask your sales people to list the most common initial questions and issues that customers bring when they first make contact. Take a look at your site and see if the answers to these questions are already there and need improvement, or (as is more likely) these issues aren’t yet addressed online. Improve the site to cover this ground, and re-poll the sales people in a few weeks. Repeat this cycle until the first thing your sales people hear when they pick up the phone is “I’d like to place an order”.

Then move ordering online…

Tomorrow: The Enablers

Continue reading