An article in the Business Standard, yesterday, suggested that Google is considering participating in India’s wireless auction, and that it could bid for either the 3G or Broadband Wireless Access auction . The article was based on inputs “telecom industry sources”, there was no official confirmation or denial from Google. We’re awaiting a response as well, and according to our Google sources, there are no such plans.
However, I do hope that the Business Standard story is right, and Google does plan to get involved in the BWA auction, whether by themselves or with a partner. The BWA auction is an opportunity to get broadband right in India, and I think you need a long term play to make it succeed. You need three things – someone who understands that the value of incremental usage among consumers (hence a long term play), understands the Internet space and what consumers want, and has really deep pockets: companies like Google and Yahoo fit that bill.
I don’t think any of the telecom operators in India have the DNA of an Internet company to understand or perhaps consider driving usage, unless forced by government policy. Given that most of their resources and top management bandwidth is tied up in the battle over mobile voice, they don’t appear to be interested in broadband beyond a landgrab. One can’t really blame them because in the medium or even long term, the ROI in broadband just isn’t there. The ISPs are too small as well.
My conspiracy theory is that the only reason that the government in India didn’t open up the last mile access – currently BSNL and MTNLs mandate – is because they wanted to auction BWA spectrum and deploy the money raised elsewhere. At Rs. 1750 crores as the base price for the BWA spectrum (one potential bidder told me it’s ridiculously high) most ISPs are likely to pass much of the cost to the customer.
On the other hand, I have been concerned about the growing dominance of Google in India – it clearly dominates the tiny Indian Internet industry and its online advertising market, and most Internet businesses in the country are dependent on Google for sustenance, whether through organic or inorganic traffic from search. Stop SEM and see how traffic drops for most Internet companies in India. Google owns and operates the top 3 sites in India – Google, Orkut and YouTube. We’re in a situation where most online businesses in India aren’t competing with Google – only competing among themselves for leftovers – and innovation and funding might be stunted because of that.
Google has undoubtedly earned this dominance, and are doing their bit, along-with others, to grow the market, with investments in Indic language tools, programs in schools and even that Internet bus. But it isn’t enough. At just around 7 million broadband connections, and an online market that is probably (estimated) less than the Rs. 3500 crore base price for the 3G spectrum auction, there is much more to be done.
Google India can’t be content with a Rs. 400-450 crore (unconfirmed) topline. Though it may not appear worth it in the short or medium term, and Google probably wont bid for the auction, I think it should partner with a potential bidder: in order to grow its own business in the country, it has to grow the market…maybe even break this slow paced market. The ISPs wont be able to do it by themselves.
Update: just a thought: instead of involving themselves in an expensive auction, companies like Google, Yahoo can also look at partnering with ISPs, post-auctions – to subsidize broadband. There has to be content and education to drive the need for connectivity.














This website uses IntenseDebate comments, but they are not currently loaded because either your browser doesn't support JavaScript, or they didn't load fast enough.
13 Comments until now.
Well said Nikhil. Its a catch22 for us Indians for sure – Goog will bring the quality for sure. However, the arrogance and other baggage that comes with a de facto monopoly could be a huge price for us to pay. I hope something rises up to counter them.
FB will squash Orkut for sure, but that business has neither making serious cash. The key would be mobile and ensuring there are good competitors to Android and Google Voice.
If Google is really serious about bidding for it ( And my hunch is that it will) then we should be happy as it can really change the broadband landscape in India for sure.
Google won't do things traditionally. They want a pie of Network capacity to offer services like google voice and others. Mitigating from the Ad based model towards services and killer apps.
"On the other hand, I have been concerned about the growing dominance of Google in India "
- What an utterly stupid statement.
why do you think so?
"One can’t really blame them because in the medium or even long term, the ROI in broadband just isn’t there"
Why do you think so? Shouldnt it be the other way round? Voice ARPUs are dropping so fast, it should be data that will save the decline…
Besides, for most operators, the infra and backbone are already invested(and hence a sunk cost – whether voice or data)…
Because its such a daft remark to make. You have clearly no sense of technology history or development. Its always amusing to see folks like you with no qualifications or experience make such "deep" statements.
Stay grounded. Stay humble. Learn.
Bemused: Looks like you’re just trolling.
@ nikhil: I don't speak for Bemused, but here is my take on the following para:
"On the other hand, I have been concerned about the growing dominance of Google in India – it clearly dominates the tiny Indian Internet industry and its online advertising market… We’re in a situation where most online businesses in India aren’t competing with Google – only competing among themselves for leftovers – and innovation and funding might be stunted because of that."
Your argument seems to be that Google is a very big player – nearly a monopoly – and as so many smaller players are dependent on google at the present time, the size of Google endangers the industry.
1. The TMT industry is an extremely rapidly evolving industry, and no player has had a sustained advantage/monopoly in the industry that has caused any harm to the industry. Players such as IBM and Microsoft have been dominant in some spaces in the industry for some stretches of time, and in my POV, that hasn't done any harm whatsoever to the industry. Sustained advantage is very difficult to hold on to in any industry, and more specifically in the TMT verticals. Microsoft took over from IBM, Google is giving Microsoft some fierce competition. With so much convergence happening, who knows what the next killer app is?
2. Life is not a zero-sum game. Such markets exist where even a market share of less than 1% is profitable. Also, business models that lack innovation and are unable to build a strong following may struggle to obtain advertising-based revenues. We are seeing a lot of innnovation right now, in the ticketing space for example (redbus, bookmyshow, kyazoonga), or in the gaming space, and I frankly don't see funding getting stunted just because google is a very big player.
Offhand, I can think of the above reasons. Maybe you would like to expand upon your argument a bit more.
I think one needs to think beyond just funding. Google and companies in that ilk are the very infrastructure of the internet. If they monopolize we all lose.
For example, in 2006-07 all the online travel companies in India went on a spending spree but had no options when it came to search in India. The result? Huge CPC inflation on Goog leading finally to all of them pulling back to almost zero. No one gained fromthis exercise save Google. If Yahoo or Bing etc had been there, I know monies would have been spread and provided better ROI and more passing of value to consumers and better value creation throughout the ecosystem.
In this scenario, a strong Google could improve broadband quality but if left with no serious competition, we could see price inflation, lack of customer service (we all remember the arrogant Goog sales teams of 2005-07 in Mumbai and Delhi) etc.
Goog has a great culture of quality. They are also known to breed egos (Sukhinder, Deep Nishar, not-to-be named Mumbai sales guys etc) and have some people who believe they are better than they actually are. The concern is that in a service industry (broadband provision), tech superiority will only take u so far! Competition will be key.
Nikhil I agree with you,
Look at China, a local search engine site and a local auction site have given Google and Ebay run for their money. (Baidu and Taobao)
Indian companies needs to think big and invest for long term and not just fight for the remaining 1 %.
Google is most likely to invest in wireless semi-passively, merely to make it sure that mobile broadband networks are actually deployed, and that the equivalent of net neutrality is advanced in India. Such has been their strategy to date in the US with their postured bidding for US spectrum last year, as well as their investment in Clearwire. Google's interests are best served by enabling the proliferation of all broadband wireless networks worldwide, because those are the highways for the emerging augmented reality mobile advertising business.