Business Today Net Special

An Encounter With James Dodd

Dr James Dodd, the Chairman of European Telecommunications & Technology (ET&T) talks to Ashutosh Sinha about the plans of his company to enter the managed data services market in India. Go here to find out more about the man and the company.

Q. At what stage of telecom services does ET&T operate? Are you talking to telecom carriers in India?

James E. Dodd A. We are a data systems integrator. Our clientele includes big multinationals that often have requirements for hundreds of international data links. In Europe, our competitors are companies like Concert and Global One, AT&T in North America and VSNL in India. These organisations negotiate capacity with satellite and cable companies. We do that as an independent company, more cost-effectively and more efficiently than going to the big incumbents. Hence, we tend to get offers from big financial institutions, manufacturing companies, professional services firms and so on. Over the last two years, we have had a variety of European clients wanting to have data connectivity to India -- from banks to manufacturing companies. So far we have been providing the services in partnership with a local company, but now we feel that the time has come to start ET&T's office in India. We are now starting to get contracts from Indian companies like call centre operators and software companies who require connectivity to Europe and North America.

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When BT and AT&T formed Concert, it eliminated the choice that companies had for the managed data services market. We saw the opportunity in the liberalised telecom scenario to present the services in the manner in which big corporation are used to buying-single bill, single service level, and single contract.

Telecom carriers are now trying to position themselves as carriers of premium data. On the other hand, the cost of setting up a wireless network is going down steadily. In India, the customer does not seem to benefit from this. But the service providers are making money both ways.

Q. How can this cycle be broken?

A. It only breaks when there is a new entrant. The regulators have to play their roles, but they have to price the services sensibly so that the new entrants can still find the venture profitable. The way tariffs are managed is almost a way of managing growth and depends on spectrum allocation. In India, it is just a fact of life that the two operators managed to get the licence (for each circle). It is only when you have the third and the fourth operators that you have a taste of real competition. But in the US and Europe, operators are moving to data services as being primary. Several nations have deliberately liberalised the voice market, but not the data market.

Q. How long will it take the voice-centric market to move to being data-centric, so that a company like ET&T can have a bigger role?

A. In Europe, for example, we have the advantage of relatively low cost of bandwidth. Companies have also built significant fibre capacity, that has lowered the cost of bandwidth. Unfortunately, this has not happened in India. Some corporations are now demanding that they have a managed quality of service for voice, data, and virtual private network and other services. That is somewhat the role ET&T plays, riding on the back of the liberalised market. In the US, the data usage is crossing over voice. If the average phone line was used for five minutes a day, we credit the voice with the 64 KBPS channel for that period. On the other hand, let's say the average Internet usage is 30 minutes per session and PC penetration is 10 per cent, the Internet traffic can just be sloshed around like water while the voice takes some part of the time on the network. IP flows down the lowest cost channels wherever possible.

In Europe, we have also seen huge issues about 3G. In Holland, police are investigating some allegations of corruption. Other companies are debt-ridden because of high cost of licence. If and when 3G actually happens, it would spell a great opportunity for companies that make their money out of data services.

Q. What is the opportunity for a country like India where cellular operators have not yet made their money from the 2G licences?

A. The absence of telephones in large parts has helped India take a technological leap. The case is not alike with Europe. One of the reasons ET&T is here in India is to cater to the demand from software companies, which operate a variety of services to the North American and the European market. 3G was an attempt by the equipment manufacturers to spur another round of spending. The manufacturers have not yet managed to get GPRS data rates on the 2G networks. The companies themselves panicked into paying vast amounts as licence fees. Some of them now want to share 3G infrastructure. The others are trying their best to get off the hook.

With the overseas connectivity market set to be open in India next year, the cost of connectivity from India should get significantly lower too. Benefits are seen with just one new cable system (FLAG) entering the market, when VSNL slashed prices of the international private leased circuits by 70 per cent. Reducing their prices so quickly is very good for the market.

Our traditional business will be for the US multinationals operating in India. We are here to support the growth aspirations of the Indian companies. ET&T sits in that sort of strange space between the corporate customers and the traditional telephone companies. But we are not going for the mass market. To put it in perspective, we are only interested in providing connectivity for two places at data rates of 2MBPS and above.

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