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Gupshup CEO Beerud Sheth On Telco Regulators, Policy Intent vs Execution & Others


Along with Olacabs CEO Bhavish Aggarwal, Gupshup co-founder & CEO Beerud Sheth also spoke about his experience in dealing with regulators in the extremely dynamic telecom segment and the difference in the intent and the actual execution of policies, at a session moderated by Manish Sabharwal, co-founder and chairman, TeamLease Services, in the recently concluded Nasscom Product Conclave 2013.

Sheth said the regulator issues they face are acts of both omission and commission of new policies. “Sometimes the regulators doesn’t fully understand the issues or in certain cases, they understand the issues and have good intentions but are misguided in their implementation, confusing the cause and the effect and not realizing the implications.”

“For instance, they raised the prices of messages to curb spam. While spam prevention is a good policy, raising prices is always a bad idea in the ecosystem”. He also cited the example of email where there are better ways of solving spam through spam filters rather than charging a rate to reduce spam.

On Transactional & Promotional Messages

On the flip side, Sheth said the regulator sometimes introduces policies but there is no enforcement around it. “For example, they created a separation between transactional messages which are the good messages and promotional messages which are bad messages but who defines these, where do you draw the line, how do you draw the line, and who enforces this policy if somebody sends bad messages through good channels”. He pointed out that initially there was no one who was responsible for enforcing this policy since it was supposed to be self-reporting, which failed. Following this, the government said the operators are responsible for enforcing this which enabled telcos to do ‘mischief’.

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He also pointed out that regulators currently look at commercial content only in black and white, when there are shades of grey. “They’ll say all commercial messages are bad, when the reality is all technologies depends on commercial content. The Internet wouldn’t exist if you couldn’t do commerce or email or so on. The issue is not with commercial content, rather with solicited versus unsolicited content. There is a right technical smart way of solving issues but sometimes the regulators go for the quick solutions because its either politically expedient or they want to be seen doing something even if its a half baked solution.”

On Retroactive Policies: Another problem Gupshup faces are policies which are rolled out by regulators with immediate effect or even worse, with retroactive effect, which Sheth says, causes a lot of disruptions for the company since they will have to educate customers and employees overnight.

On dealing with regulations

Sheth said there has been a learning curve in terms of dealing with regulations, after he relocated back to India three years ago. “In hindsight, a naive expectation is that people will always do the right thing or things that are in the public interest and a good idea will win out, but a lot of that is clearly not true”.

He also said these regulations have the potential to make or break the destiny in India. “If Gupshup was operating in the US, it (dealing with government regulations) would take a lot less portion of my time than it is in India”.

Citing an example, he said while the regulator were mulling over what to do with Interconnect changes, some telcos started calculating their own numbers and levying a certain rate. As a result, the unit cost of SMS increased 10x overnight. “You can try transmitting some of it onto your customers but you are bound to long term contracts, you have a organization that’s used to selling at a certain price point, you have the rate cards in the market and you have a reseller channel.”

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He pointed out that there has been around six to seven fairly dramatic disruptions in the telecom industry in the last two years and a lot of entrepreneurial energy goes into just adjusting to the new normal and by the time they adjust, it shifts again.”We finally got good at adjusting to it, where at the end of it, we started gaining market share, gaining new customers and retaining a few customers, partly because of how we dealt with this disruptions”.

Following Global Standards

Sheth said most of the telecom issues in the country are essentially global issues, where there are plenty of global precedent available. “In fact, it would be good if we followed more of global standards in global perspective. For instance, a lot of Internet or email regulations in the US is not even government driven. ICANN draws up a lot of rules on what’s good and what’s bad”.

He also said Industry self regulation is much better than government regulations, especially when it comes to brand new technologies and when they are breaking new ground, since the industry is in a much better position to handle this, rather than the government.

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