Betting on Data

Stepping onto the ferry from Vypeen Island, Krishnan Kutty realizes with a

start that he doesn’t have enough cash. But he has to get his weekly supplies,

and Vakkachen, his big supplier at the wholesale market at Ernakulam, won’t

give him credit. But wait. There’s an ATM on this boat. Kutty goes up, swipes

his SBI card. The CDMA network takes six seconds to carry the information from

his card in Cochin to the bank in Bombay. In a minute, Kutty heads back, Rs

4,000 in hand. But he’s lost his seat by then.

Some 1,400 km away, Rajinder is just completing a home delivery for Hindustan

Lever at Hiranandani Gardens, an upmarket housing complex in a Mumbai suburb.

The lady of the house doesn’t have cash handy. No problem; Raju takes out his

card machine, swipes her card and authenticates it online, and he’s off in a

minute. He, too, has a CDMA phone clipped on to the terminal.

A petrol station attendant on the Mumbai-Pune expressway accepts a credit card payment, using a mobile POS terminal connected over the Reliance CDMA network

With a half day of driving around Kolkata ahead of her, Roma Ghosh has called

in a new taxi service whose flyer she found in her newspaper last week. She

realizes she’s low on cash, so tells the driver to go to an ATM first. No

problem, the driver says, if you wanted cash to pay me, I take cards too. He has

an HDFC terminal with a CDMA phone.

There’s one thread common to all these. A CDMA phone and Reliance Infocomm’s

network.

While all the hype has centered around Reliance’s mobile voice services

phones and their spiraling subscriber base, the company has shown remarkable

innovation in developing a virgin market: data.

It’s the first mobile operator to take data seriously. While Airtel, Hutch,

et al will immediately counter this and claim to have data "available"

for over five years, India’s GSM operators either actively discouraged data

use through ridiculous pricing, or have simply not bothered. And it didn’t

help that their data service was mostly under 10 kbps.

The Infocomm Strategy



The most visible Reliance Infocomm offerings are the IndiaMobile and

IndiaPhone. Amidst GSM players’ protests about Reliance violating the letter

and spirit of TRAI regulations (the company started off with a license for WLL

"limited mobility", but essentially offered full mobility, with

roaming, after a fashion), IndiaMobile has succeeded in redrawing the map and

speed of cellular phone penetration in India.

The GTRAN card costs Rs 14,700, and plugs into your laptop to provide quick wireless Internet access at most places in India. The flimsy antenna gets in the way and carries no warranty, and the software has trouble with power management. But the card works well and connectivity is cheap–one of the three plans gives unlimited access for a flat Rs 500 a month (for 100 MB of data). The big plus over using a mobile phone: no cables, phone or charger to lug around. On the flip side: there’s no phone: it’s data only; and off-the-shelf sales and tech support, and information, is poor as of now. Connect speeds are better than dial-up PSTN, between 50 and 100 kbps at different times. Overall: Expensive to buy, cheap to use, invaluable for the mobile laptop user, and it has no competition.

At the beginning of this year, IndiaMobile had nearly 5.6 million

subscribers, while IndiaPhone (fixed wireless terminals) had over 290,000

subscribers, according to figures from the Association of Basic Telecom

Operators (ABTO). Clearly, Relaince hastened the emergence of the "unified

license" regime.

Apart from the enterprise apps, Reliance is gradually emerging as a major ISP

through its R Connect business (See sidebar: "Connect on the Go";

table: "What’s on the Reliance Menu")

The Money’s in Banking



Oka and his team are focusing on two volume applications from the wireless
stable: credit card point of sale (POS) authentication, and the wireless mobile

ATM. It has offered its wireless services to different banks, to let them set up

POS terminals–devices that read a card and obtain authorization from the bank–in

remote locations. These are places that were effectively beyond the reach of

credits cards so far, because the merchants would need to make a long-distance

call for authentication. Now, authentication happens in seconds, with a brief

connect that costs 40 paise.

Enterprises can use the Reliance fixed wireless terminal (FWT) device to

connect their PBX networks and data applications for low-cost countrywide

application deployment such as ATM connectivity, POS connectivity,

headquarter-to-branch connectivity, CRM applications and travel reservations

applications.

ICICI Bank already has a wireless ATM in Kochi and two in Mumbai using CDMA

phones. One ICICI mobile ATM was recently deployed outside the Wankhede Stadium

during the India-Australia one-day cricket match. Hindustan Lever is already

doing a pilot with Reliance for its home delivery boys, who are carrying

wireless POS terminals to swipe cards through. Some petrol pumps in the

Mumbai-Pune Expressway and one inside the Dhirubhai Ambani Knowledge City in

Navi Mumbai are also using wireless-linked POS terminals.

Reliance is using a mix of wireless for a rather extended last mile, and

fiber at the back end. The fiber is supported by microwave in remote areas where

fiber is not deployed–that’s almost 50 cities.

n ICICI has deployed mobile ATMs, and Reliance is into talks with HDFC, Bank of Punjab, SBI, Citibank and Venture Infotek for CDMA-based ATM and POS terminals c n ATMs can use a CDMA fixed wireless terminal at a third of the cost of a VSATs

Says Lalit Sawhney, VP of Reliance Infocomm’s enterprise

business unit: "Our tie-up with banks will mean a surge in credit card use,

and will allow banks to set up ATMs in places where lease lines are not

available."

Shopkeepers currently process card payments by swiping them

through POS terminals, which connect to a bank’s network access controller,

usually through a regular (PSTN) dial-up phone line. The controller switches the

transaction information to bank’s data center. The Reliance system will use

its CDMA network to connect the POS location directly to the bank’s data

center, skipping the PSTN connection and the network access controller. The

merchant saves on long distance charges, and the authentication quicker than

over dial-up.

Banks will also save on the cost of setting up network access

controllers in different cities, and they can easily deploy online POS terminals

nationwide, in the 1,100 cities covered by the Reliance CDMA network. Finally,

banks can offer true mobility to merchants through applications for traveling

salesmen, exhibition organizers, and broadcast fraud alerts, special scheme,

etc, over SMS to merchants.

Kishore Oka is confident that soon most banks would come

around to using CDMA-based ATMs. Sawhney says that it gives them tremendous cost

savings, primarily because CDMA is far cheaper than the VSATs currently in use

for ATMs. "Wireless will facilitate not only mobility, but also

reach," he says. And CDMA-based ATMs do not require WPC/SACFA approvals or

rooftop rights, unlike with VSATs.

No wonder, then, that SBI has launched a floating ATM on the

Jankar boat that ferries passengers and vehicles between Kochi, in Kerala, and

the Vypeen islands, linked by a Reliance FWT phone.

Paying Bills Online



There are other applications for FWT-based systems. Two that have already

rolled out are online bill payment, and online lottery. So far, Reliance

IndiaMobile phone bills can be paid online, using any Citibank-supported credit

card. In the first ten days, nearly Rs 12 lakh was paid through a thousand

online transactions. Punjab National Bank has already connected FWTs at small

extension counters for online bill payments, and Reliance is trying this out

with other banks.

The CDMA-based ATM and POS systems bypass the traditional links and switches, connecting the terminal directly to the bank’s data center

Sawhney says that data rides on multiple layers of security,

and the CDMA interface scrambles voice and data, "making interception

nearly impossible." There’s also secure socket layer (SSL) and 128-bit

encryption of all data, including customer data like PIN and credit card

numbers. A third level of security is the fact that IndiaMobile handsets are

hard-wired to communicate only with the Reliance Application Platform, which is

protected by firewalls and physical security at Reliance Infocomm data centers.

Betting on the Lottery



Reliance Infocomm is also selling wireless data connectivity to online

lottery companies across the country.






Online lotteries have not taken off in India because they do not tap the masses.
Reliance says its wireless data connectivity will let people in smaller towns

access lottery schemes. Sawhney says that online lotteries can pull in a

substantial chunk of the offline lottery business.

Reliance has also sold 2,000 FWTs to Dhoot Entertainment

Network, which conducts the V-1 online lottery operations. Already

three-quarters of Dhoot’s online lottery machines are connected through CDMA

technology.

Linking the Enterprise



New products and services in the pipeline: VPNs, closed user groups, data

connectivity and a "mobile office" service.

Rajiv Singh and Priya Mehra–members of Sawhney’s group–say

that the team is working on other applications which will sit on the mobile

intranet: mobile directory download, group/bulk SMS, office mail access, vehicle

tracking systems, sales force automation, payment/business transaction

applications. Some of these applications are already being tested in pilot

projects in organizations like HLL. The corporate security aspect has been

vetted by financial institutions like ICICI, HDFC, PNB and Citibank.

"We want to leverage different mobile apps to get a bigger share of the rising data ARPU pie" Kishore Oka, head-finance vertical, Reliance Infocomm "We have a three-pronged approach: target enterprises horizontally, focus on key vendors in the finance vertical, and roll out projects like auto-meter-reading for utilities" Lalit Sawhney, VP enterprise business unit, Reliance Infocomm

Large organizations like HLL, with large supply and

distribution chains, so far connected their entire stockists and distributors

over the Internet. However, the Reliance mobile intranet service "provides

a cheaper and more convenient alternative, making the supply chain more

efficient", Sawhney says.

Cheaper e-governance applications can also be developed. The

Tamil Nadu government reportedly wants to connect "fair price shops"

(ration shops). So does Gujarat: 10,000 such shops.

Is There Headroom?



If data usage really ramps up, and voice does too, what happens with network

availability if the Reliance network saturates? Especially with POS, ATM and

other critical applications?

Sawhney says that the network has the headroom for growth,

and Reliance has the resources for expansion.

That is very likely, but quality of service will be critical

in many of these applications. All it could take is some instances of an ATM or

credit card machine not responding, for people to believe that CDMA-linked

terminals aren’t as reliable as leased lines or VSATs.

But at the end of the day, the speed which this giant

corporation can move at is always amazing. It can ramp up from zero to a million

subscribers in a week. When faced with user and dealer backlash as happened with

the Dhirubai Ambani Pioneer scheme, it can step on the brakes and turn on a

dime. So even if the Indian telecom industry have taken eight years to figure

out that there’s something called wireless data, if one company can really

make it happen quickly, it’s probably Reliance.

So after all those SMS spoofs on marketing lines like "Kabhi

mobile, kabhi computer", it’s Reliance that’s likely to have the last

laugh.

With inputs from RAJNEESH

DE in Mumbai

Connect on the Go

With R Connect, Reliance Infocomm now runs one of the largest ISPs in India.

It has logged in close to 300,000 subscribers. Though the four metros, along

with Bangalore and Hyderabad, account for the largest number of subscribers of R

Connect, surprisingly, it is subscribers in the cow-belt states of UP, Bihar, MP

and Orissa (who tradition-ally suffer due to poor infrastructure) who have

clocked the highest Internet airtime on R Connect. Subscribers in these four

states have logged upwards of 400 minutes of R Connect per month on an average,

far higher than that in the metros or mini-metros.

Reliance Infocomm offers three packages, gold and silver for Internet access

through its CDMA mobile service on



R Connect which, respectively, cost Rs 1,000 per month and Rs 500 per month for
unlimited access but with download limits of 250 MB and 100 MB, respectively,

and a standard package at a monthly rental of Rs 200 and Rs 0.40 per minute

airtime charge.

The Internet access service can work through any one of the following

devices: R Connect data cable, the fixed wireless phone/fixed wireless terminal

(FWP/FWT), the PDA phone and the GTRAN data card.

Why did the GSM world ignore data?

As demand for voice in India is still high, we have not seriously looked at

data apps till now. And even within data, we focused more on consumer and less

on enterprise. For one thing, till the unified license regime came, we or other

GSM players were not even authorized to develop fixed wireless terminals or

fixed wireless phones. Now, we are evaluating data seriously.

Vikram Mehmi, CEO, IDEA cellular

It is not true that does not focus on mobile data apps. It’s

always been a major focus for us. Data has brought in significant parts of our

revenue, and with the roll-out of Edge very shortly, we will see more enhanced

revenues. We have always been active on the GPRS front. Moreover, if you look

worldwide, in mature markets you see data revenue being driven by SMS–which

forms a major plank for our data strategy.

Atul Bindal, Group chief marketing officer and director, Bharti Televentures

What’s the competition doing about data?



We have all the enterprise apps: mobile ATMs, POS terminals, and are talking to
banks for deployment. We probably started even before Reliance, but while they

are making a big noise even before commercial deployment, we will publicize this

only once the apps are commercially rolled out.

Senior Tata Indicom official