Mobile operators complain that spectrum prices are too high in India. Of course, the government policy of releasing small chunks of scarce spectrum at irregular intervals and setting high reserve prices is faulty. But that has not prevented mobile operators from bidding huge, unviable amounts to corner that spectrum even if it has come at the cost of required investments in network expansion. Indeed, there are now demands that spectrum in 700MHz be released by the government for which there would presumably be a mad rush. Some industry insiders say that the leading operators would rather wait to invest in building networks in the more efficient 700 MHz spectrum than in 1800 and 2100 MHz. Naturally that begs the question why so much money was spent in acquiring the latter spectrum.

There can be no denying that a lot of spectrum in India remains underutilized by the defence and other government bodies. But it is also true that private mobile operators have been extremely inefficient in using the spectrum for which they have paid huge amounts. A recent audit by the Department of Telecommunications (DoT) has reportedly  shown that better optimization of the network could result in dramatic improvements in quality of service. It has also been found that operators have set aside spectrum for data capacity expansion at the expense of their voice quality. And then we have the spectacular case of spectrum inefficiency: an operator who acquired 20MHz of pan-India spectrum in 2010 for Rs 12840 crore has not launched services even five years later.

An additional issue that has prevented network roll-out, at least in some cases, is that of permissions for tower infrastructure. Recent push-back amongst municipal authorities in permitting cell-sites in dense urban locations coupled with unnecessary and unscientific scare-mongering about the impact of radiation have added to the problem. The government needs to create certain national guidelines for critical infrastructure like cell-sites and fiber networks. The ambitions of a Digital India cannot be held ransom to by local municipalities, building societies and activists.

The suggestion in the TRAI consultation paper that operators should not charge for calls that are dropped is welcome: why should customers pay for a service that they did not receive? Unfortunately, the devil would be in the detail of its implementation. Envisage a scenario of a customer of Operator A calling the customer of Operator B and the call drops in the 50^th second of a minute; how is it established which operator dropped the call? Should both operators not charge for that minute, in which case the more efficient operator would lose revenue due to the failure of the other? How do customers keep track of this? TRAI should provide clarification on the mechanisms for not charging and compensating customers for call drops.

The most important action, however, that the DoT and TRAI must take is to examine the real causes for the deterioration of voice networks in India by doing an actual technical audit of all the mobile networks. Instead of being pressured into giving out more spectrum to those who are seeking to corner it, they must ensure effective utilization of spectrum that has already been allocated. If commensurate capital expenditure in network expansion does not follow spectrum acquisition, then a question must be raised about the underlying strategic logic of such investment. Further, the TRAI must study if a few players are blocking effective competition by pricing spectrum out of reach of the others. Do customers really have competitive choice in terms of enough differences in service offerings, quality and prices between various operators? Are call-drops just a symptom of a bigger structural problem in the Indian telecom industry?

(Disclosure: I was associated very closely with the Tata group's telecom business for many years. I continue to remain engaged in advisory services (mostly, teaching/training) with the Tata group telecom companies and other mobile/tech companies.

Nearly two years ago while watching the Indian super-hero movie (Krrish 3), I couldn't help but feel sad that Bollywood movie-makers weren't thinking big enough. I had suggested that if 100-million middle class Indians spent $1 each, a movie could garner Rs 600 crore ($100 million then) -- at that time, Krrish 3 had become the second-highest grossing Indian movie with just Rs 250 crore.

This year, Baahubali crossed Rs 500 crore in India collections, the only movie to do so.  

Let's take this Rs 500 crore number. Assuming an average ticket price of Rs 100 (using a 25:75 split between multiplexes and single screen theatres), it means 50 million tickets sold. Anecdotal evidence (including my own behaviour) suggests that many people watched the movie 2-3 (or more) times. That would mean fewer than 50 million unique viewers, perhaps 30 million or so. Imagine... the most successful Indian movies have less than 3% market penetration! Even if we considered the 140 million cable/DTH (subscription TV) households as the addressable market based on affordability, we are looking at a 5% penetration.

On the other hand, in the US market, a highly successful movie like the Avengers grossed upwards of $600mn, translating into about 75 million tickets sold (at just over $8 per ticket). As such, the ticket numbers (75mn in USA vs. 50mn in India) don't look very different but given the vastly different denominators (population: 319mn vs. 1267mn), one would expect much larger numbers here. 

There are probably two major reasons why Indian movies have such low penetration:

1. Content is not universally acceptable. Even in a highly fragmented market such as cinema, it is tough to believe that the most successful product appeals to just 5% of the market. Different languages spoken in India adds to the challenge. Just 45% of the population knows Hindi, thus ruling out the most popular Bollywood movies to a majority of the market. 

2. Reach of cinemas is still very low. India has 9000 cinema screens, giving it a density of just 8 per a million population. On the other hand, the US has 117! Therefore, even if a good movie with universal appeal were to be made, access would still be a huge issue. Obviously, cable & satellite TV has much greater reach but far less monetization (on an average about Rs 50 crore per movie). Further, most Indian movies have also not been very creative or aggressive in the after-movie market of accessories, merchandising and digital content/games. 

On the first factor, Baahubali has made an interesting beginning* by releasing Hindi, Telugu, Tamil and Malayalam versions simultaneously, thus addressing over 60% of the market. Even the theme - an Indian super-hero movie on the lines of popular mythology / historical stories - probably had wider appeal. The cast included well-known stars from the southern states; if there had been a recognized Bollywood star, I guess the Hindi version would have done much better. This could hold the formula for future, large budget Indian movies: 

* Stories that can connect across cultural groups (fantasy / mythology / patriotism / kids)

* Dubbed simultaneously in all major languages (Hindi, Telugu, Tamil, Bengali, Marathi, Gujarati, Malayalam... would hit almost 75%)

* Multi-starrers with leading actors/actresses from various regions

On the second factor, it would be interesting to see if Baahubali can revive an interest (and value) of TV rights for a movie. There hasn't been much to see on the merchandising front too.

The profits from the first Baahubali should give its makers (and other producers) the confidence to push the boundaries next year. It would be exciting to see an Indian movie cross Rs 1000 crores ($150mn now) in revenues soon. There, that's the new target!

(* Other movies like Roja, Robot and Bombay were also released in multiple languages earlier. Baahubali is the only one amongst the all-time box office leaders.) 

It is college admission time and we are outraged (again) as various Indian colleges announce their cut-off levels. A few at the Delhi University are at 100% and most are above 90%. So we will rant for a while, and like our friend Ali Haider sang many years ago say, "Yahan ka system hi hai kharab!" 

Why is the cut-off at 98% or 100%? Obviously, these colleges have received applications from a sufficient number of students with those marks - else why would they create an artificial entry barrier. Earlier, these colleges didn't have such high thresholds for entry, as confirmed by a celebrity media anchor (rather modestly): 

Next on news today at 9: crazy cut offs. 98 per cent needed to get into a top Eco college. I certainly wouldn't have made it!

— Rajdeep Sardesai (@sardesairajdeep) June 25, 2015

So why have the cut-offs crept up? 

Maybe the kids are getting brighter - they have many more avenues to learn from and are therefore, smarter than ever before. Perhaps the exams are getting easier, in an attempt to make education easier and more inclusive. Whatever the reason might be, we now have a greater demand from youngsters who have scored high marks in their school exams and are seeking higher education amongst the top Indian colleges. 

How can a large and increasing demand be a problem? Under normal market circumstances, more demand is good. But in education, we don't have a normal market. While there are many colleges (supply), the problem is that there are just not enough good quality ones. Due to various regulations and controls, only the politically connected or the unscrupulous seem to be investing in expanding education facilities. The situation is so bad that many folks who have young children are wondering how much they have to save every month if they had to send their children for studies overseas.

Given that education is so fundamental to our thinking and the choices we make, I believe that no government - irrespective of ideology - will give up control . So is there no way out? 

The answer could be IIN. 

Is that a joke!? Wait, before you fall off your chair... here's what I mean... let us consider the IIN concept (as shown in the ads) - that you don't necessarily need to go to a formal college to learn the skills that are required to succeed in life. There are several, emerging options - many enabled by technology - which can substitute formal college education... it's just that you will not get the degree.

And it is the degree granting authority of the universities / colleges that give them the power, why they are in so much demand. The degree matters, partly for the social recognition (remember that photo with a funny hat and gown), but mostly because the job market demands a degree, creating yet another entry barrier. Rarely do you come across a job that is not qualified by the degree that is necessary for it. So you see that the limited or controlled access that begins at high school continues all the way to the job market.

But, WHAT IF, what if some large company came forward and said, you know what - these degrees don't matter much. Most of what you learn in college for 3-4 years is outdated or not connected to the job. We will test you on basic aptitude, specific skills and attitudes; we will anyway train you for a while to get you up to speed. WHAT IF a few other companies followed suit. WHAT IF the degree was no longer an entry barrier or gatekeeper to the job market. 

So here's my disruption scenario (and I wish Idea Cellular had actually, publicly played this out)... one or more corporates build institutes (or portals) of learning and certification but not degree granting. Anyone above a certain age is eligible to join based on an aptitude test, irrespective of how much they scored in any school exam (or whether they went to a school or not!). Since there is no degree, no government or university approval is required. They offer to hire all those who qualify through the programs. Soon, other corporates seeking to tap into this qualified talent pool would make competing offers to these students or set up their own such institutes. Or, as is more likely, entrepreneurs will create a mix of online/offline models of certification (think MOOC++) on the basis of demand from these corporates.

Is this feasible? I think so... there are many IT services companies which (each) hire thousands of "engineers" and then put them through months of training. What if TCS, Infosys and Wipro that hire over 50,000-70,000 freshers annually said that in 2016, 25% of our entry level hires will not require any degree, just the appropriate skills? I can tell you, just like the IIT coaching cottage industry bloomed, we will have private tutors, entrepreneurs and portals coaching young people for the job interviews. Five years ago, I wrote briefly about the need for corporates to do something about it... it's still not too late.

One might argue that this is a very materialistic view of education; there's more to it than just getting a job. True, and I am not asking that colleges and degrees be done away with. Just that for a majority of the student body, the primary purpose of education is to enable a livelihood. We need to ensure that their access to the job market through good quality education is not blocked because they haven't scored 98% or their parents cannot afford to send them overseas.

Following my earlier post on FoE, one question that remained unresolved in my mind: does FoE automatically granted everyone the freedom to insult. Rajeet raised a similar issue in his comments on that post. Here I try to (somewhat) address that question and also share some more ideas and information that I have come across.

It appears that the United States has taken an extreme position on free speech, through its interpretation of the First Amendment that there shall be no law abridging the freedom of speech. The US Supreme Court, in a landmark case in 1969, went so far as to permitting even "hate speech" as protected by Constitution unless it presented the possibility of "imminent lawless action." This formulation, referred to also as the Brandenburg test, looks for "imminence, intent and likelihood" of the speech leading to violence or violation of laws.

Another recent US Supreme Court judgement in Snyder vs. Phelps reaffirmed this "extreme" view on protecting speech, thereby enabling the Westboro Baptist Church to make offensive statements at a soldier's funeral... as long as it was speech in public interest, made at a public location. Essentially, as long as a particular speech is not personal in nature nor delivered to a "captive audience," the state has no right to prohibit it, subject to the Brandenburg test. In an earlier case, Cohen vs. California, the USSC struck down a law that tried to regulate content of speech, whereas the state may be within its right to determine conduct (timing, location, etc.) Even with regards to restrictions on conduct, the USSC had issues with a law that was "vague" and did not specify what citizens could do or not. They said that the words "offensive conduct" alone cannot "be said sufficiently to inform the ordinary person that distinctions between certain locations are thereby created." Justice John Marshall Harlan II famously wrote, in the context of a four-letter expletive in this case, that "one man's vulgarity is another's lyric."

Therefore, my understanding of the US position is that insulting a religion is permitted under FoE because it is a matter of public interest, but insulting someone personally - the fighting words doctrine - would not be protected speech.

So, should you punch someone in the face because he/she insulted you or your family? Clearly Pope Francis believes, yes, in spite of what Jesus suggested about turning the other cheek. Ironically (because of the context of the statement), another spiritual leader, Swami Vivekananda also expressed similar sentiments about what he would do in such a situation. Beyond the rhetoric, the legal position appears to be quite clear: a violent reaction to a verbal insult will put you on the wrong side of the law. So while one would have legal recourse against verbal abuse, particularly if it is threatening or defamatory in nature, giving it back in the same vein might be a more prudent response, if at all. The issue with laws that start encroaching on the verbal insult / abuse territory is that politicians / police officers / lawyers won't know when and where to stop. In fact, faced with (often silly) distorted implementations of the law against insulting, England recently removed the restrictions on using insulting language (unless it is specifically personal) in its Public Order Act.

Given how the US laws treat free speech, it is quite clear that freedom of expression is severely, and vaguely, restricted in India, because of the First Amendment (how ironic!) to its Constitution.

Just take another recent issue around the Censor Board... while its official name is the Central Board for Film Certification, it actually acts as a guardian of morality and a state-enabled filter for speech. Isn't it strange that a nation of such complexity, diversity and size has allowed a few people, sometimes with no appropriate qualification, to determine what movie content is officially available to be watched. Unfortunately, not only has it been taken for granted that censorship will exist, the new chief of CBFC wants to extend this policing to other forms of content. Incidentally, the US does not actually have a censor board equivalent... the closest they have is the Motion Picture Association of America (MPAA), which is a private trade body and administers the MPAA Ratings that are voluntary for film-makers to use.

Finally (for this post), I want to share this post by Nitin Pai which provides great clarity on the liberal nationalist position on free speech. Here's a portion that I found very interesting:

How much merit is there to the movement for a complete libertarian state where speech is truly free? Is it even possible?

There cannot be a complete libertarian state, as that is an oxymoron. A state involves a social contract where some liberties are traded away for the privilege of enjoying the rest of them. So we give up the right to violence to the state, so that we may enjoy the right to life, property, free speech and so on. 

A figure of merit, therefore, is how few of our liberties do we need to give up in order to enjoy the rest. North Koreans give up 90% of their liberties to enjoy the remaining 10%. North Americans give up 10% of their liberties to enjoy the 90%. I think India should aim to move towards the North American standard, rather than the North Korean standard.

As usual, I am learning more on this topic... please feel free to share your views and suggestions.

Freedom of Expression is being feverishly discussed and debated around the world, particularly in the context of the gruesome terrorist attack on Charlie Hebdo. In India, the discussion has taken the usual political connotations... and in all this freedom of expression, so much is being said that very little is being heard and understood. 

Here are some observations from my side... I am sharing these partly to clarify my own thoughts and partly in the hope that they will help some others in developing their point of view.

1. India does not really have FoE

While there is a lot of discussion around various people's tolerance levels for expression, FoE is not primarily about how each of us react to others' expression. FoE is foremost about how the state (government) treats expression by its citizens. Does it permit, nay encourage, individuals to express what they have in their minds? It appears that most countries / governments accept some form of restrictions on free speech, particularly around speech that harms or offends others. 

The issue in India is that the caveats on free speech give enough leeway to the government to act in a highly subjective manner:

These rights are limited so as not to affect:

• The integrity of India
• The security of the State
• Friendly relations with foreign States
• Public order
• Decency or morality
• Contempt of court
• Defamation or incitement to an offence

If there is one thing that must be debated, it is the First Amendment to the Constitution of India that added "reasonable restriction on freedom of speech" -- it has led to additions in the Indian Penal Code that ensure that true freedom of speech does not exist in India. Anything meaningful that you say will offend someone else and therefore, can give rise to a criminal offense.

The first amendment was brought about, soon after the founding fathers wrote the Constitution, because the then government was unable to silence a critical magazine. All subsequent governments have just enjoyed this cover without questioning it.

2. FoE is not a one-way street

It is amusing that most of us latch on to the FoE bandwagon when it suits us. If we believe in the absoluteness of this freedom, then we must be ready for its consequences. As I mentioned above, any meaningful opinion could offend somebody or the other. If I want to be able to express my views, I should be prepared that others may also say things that I might dislike. By the way, accepting FoE does not mean I have to agree with the content of what others say... this implies that I should be prepared for others to criticize me. 

Content creators like authors, painters, movie-makers, etc. seek absolute freedom to say what they want, however, they should then be ready to accept criticism, in whatever (legal) form it takes. If you are not ready to accept people protesting your content, calling you names or filing legal cases against you (not difficult, given point 1 above), then you should not exercise your freedom of expression. Strangely, journalists who believe in the God-given right to ask questions of anyone on any topic are the first to block others' freedom in asking questions or commenting on them. 

3. FoE is just an excuse 

Many folks asked if Charlie Hebdo should not have been so irreverent about Islam, particularly when they were aware of the violence threats. Why would you go and provoke somebody who has a different thought process / cultural background? 

To this, I will paraphrase something that I wrote during a Facebook discussion on the topic:

Take the "let's not provoke them since they don't like it" argument further ... those who are aggressive and violent will win; those who fear such violence will be silenced. Don't know how this will ever end well. 

Further, I don't think the jihadis really care about the cartoons or the "western" notion of FoE. They probably don't understand religion (else why would they kill other Muslims!?)... I think they just want to provoke everyone else into a "war"... Everytime something like this happens, a few people on the other side get pushed to an extreme, will call all Muslims names or make it tough for them; this provokes some of the moderate Muslims into extremism and creates a fresh source of recruits for the jihadis. It's just a power game... God / faith is just a potent fig-leaf. 

But the problem with becoming silent / withdrawing expression is that it doesn't matter, no? If the goal is to find some excuse for provocation, then it will be found, how much ever accommodating you are. If somebody wants to be aggrieved, they can bring anything up from anywhere / anytime.

In my earlier post, I shared how Uber, Ola and other similar service providers have the potential to disrupt the local travel market. I am a regular user of their services, as are many others with whom I engage online & offline. The benefits and potential are clear, yet some concerns persist. In particular, I worry that a western market approach to growth is being adopted by Uber/Ola. Let me explain.

In general, there are two major differences between developed markets like the US and emerging markets like India: one, weaker basic infrastructure, and two, insufficient skilled manpower. Infrastructure, in the context of Ola/Uber pertains not only to physical stuff like roads, public transit facilities, good quality taxis, etc. but also to related systems like traffic management, police and credit verification, licensing. By skills, I refer to trained drivers, customer service ethics, customer education, etc. When markets open up, like they did in the past decade in India, everyone goes after the gold rush... but, many hit the tripwires of inadequate infrastructure and skills. Telecom and financial services industries are good examples; other consumer services industries face similar risks.

Keeping the above in mind, here are a few suggestions for Ola/Uber; these are in two categories, the first are immediate fixes to improve customer experience and the second are to build sustainable businesses.

Customer Experience Fixes

1. Fix your location tracking

A typical use case... I'm in a meeting and about 10-15 minutes before it ends, I go to the Ola app and order a cab. Since the app works quite well, it's a matter of a few seconds and I get it done without much distraction. However, in a couple of minutes, the driver calls because he wants to know where exactly I am and/or where I want to go. Obviously the phone is on silent and I have no way of answering the call. He calls a few times and often, does not move from his current location till I have called back and confirmed the pick-up. 

Even if I were not in a meeting, I may not want to have that conversation... the reason I am using a mobile app is because it is easy and super quick. Why would you spoil that with the follow-up call? The driver should reach the pick-up point based on the GPS / location from the app. Many drivers have complained to me that they don't get a clear location or a route map on the app. Similarly, the driver tracking on the customer app is often delayed or inaccurate... in my experience, Uber has the best, real-time tracking, Ola is accurate but not real-time and Meru has the worst location tracking.

This tweet from Bhatnaturally summarizes the problem:

Hi @Olacabs in your 'reason for cancellation' option in the app, please add 'Driver clueless about pick up location despite GPS' as option

— bhatnaturally  (@bhatnaturally) January 15, 2015

2. Penalize errant drivers

The other day, a cab showed up as being 5 minutes away - it was less than a kilometer from my place. I ordered it and went down immediately since I was in a hurry. Ten minutes later, there was no sign of him, so I called his mobile. He answered disinterestedly and said that he was in the queue to fill CNG, so it would take him 15-20 minutes to reach. I asked him why he was showing up online if he was not able to respond to a request... he kind of murmured that that's how it was, and asked me to cancel the booking! 

In order to increase the availability of the cabs, the service providers (Ola/Uber) give them a bonus for being online for a certain time daily or weekly... I believe Uber's incentive kicks in at 12 hours per day. Therefore, many of the drivers keep their apps turned on even when they are unavailable to respond to a request. They are willing to take the chance of turning away a customer in order to add to punch in more hours. Also, some drivers refuse to show up when they realize that the destination is not very attractive to them.

Such behavior by drivers defeats the core value proposition of convenience and availability. Not all service providers capture this information (e.g. reason for canceling a confirmed booking); even those that capture it, are they taking prompt action? If a driver refuses a ride - without a legitimate reason, he should perhaps be blacklisted for the day (or more)... 

Don't let your core value proposition be diluted.

3. Set an example on the roads

Sometime ago, I was in one of the cabs going to the airport at night. The driver's mobile phone rang and he looked at the screen to check who was calling. Just at that moment, the car ahead of him braked suddenly because an auto came in its way. Since my driver's eyes had moved away from the road, his reaction was a second late and the cab hit the car in front of it. Luckily, there wasn't much damage and we moved on, but there is no doubt that accidents are waiting to happen on the road if you lose focus.

While there has been much discussion on improving security / transparency through better verification of drivers, an equally important expectation from Ola/Uber is that they would follow safe traffic practices. No mobile phone while driving, following speed limits, obeying traffic lights, using a seat belt, using turn indicators while shifting lanes / turning... these have to become standard driving practice. If Ola/Uber cannot have better driving practices than the regular taxis, autos and buses, then what's the point?

Make safe driving a standard practice. Specifically seek customer feedback about it.

Building the Business

This is where Uber / Ola will have to customize their business model for Indian (and other similar markets) context. Yes, they are aggregators / marketing agents that are connecting drivers and commuters... but that is not sufficient. They need to consider investing significant resources towards capability development, even if it means moving (slightly) away from an asset-light model. All the private equity funding need not go in discounting fares / price wars... there is no brand creation due to lower prices. I have three different apps that I check every time I need a vehicle - price is no longer the choice factor; it is availability. And if there are two different cabs available at similar times, I choose the operator whose vehicles are cleaner, drivers appear to better behaved and GPS works better. If you want the customer to consistently choose you over the others (i.e. create competitive advantage), price is not going be the primary factor. Here are a few things that could help build a brand:

1. Invest in driver training

Over the last few months I have encountered at least a hundred different drivers in Mumbai and spoken with many of them. Apart from an  induction program that many of them had attended, there was no other training mentioned. Wouldn't the drivers be able to better represent your brand if they were trained in customer service, communication, driving skills, routes & places of interest, etc.? Take the latter item, for instance. Quite a few of the drivers (in Mumbai) that I met have migrated here because of the increasing demand - their knowledge of many suburbs and roads is quite weak. As a passenger, I shouldn't be expected to guide the driver to my destination. A few times when I got distracted on the phone, I would find that we were on the wrong road or flyover... 

Customer engagement or experience in this business has three major touch points - the booking app (automated), driver and billing (automated). The only possible opportunity for differentiation is in the human, driver interface. 

2. Complement the fleet

I get a sense that the Ola/Uber encourage a wide distribution of the cabs across major locations to ensure availability; however, at the end of the day, the vehicle owner/driver will try be located at obvious demand points. Hotelling's law would suggest that there would be a concentration of cabs in some locations during peak hours and none at other locations. Imagine the customer at this other location unable to find a cab for 15 or 20 minutes - that's not the experience you want to provide. At the same time, you cannot force the drivers to go to these other locations where they may nor may not find any customer. 

Therefore, an option for Ola/Uber could be to invest in their own complementary fleet of vehicles to fill the network gaps. Of course, they have to be careful not to cannibalize business from their partners, and use their vehicles as queue busters. In addition, these vehicles could be used for training and demonstration purposes. Another idea could be to have these as high-end vehicles that are occasionally sent to frequent customers as "free upgrades" (similar to the Uber India launch strategy of using Audis and Mercs). Once the network is stable, these vehicles can be moved to other upcoming locations.

3. Think about your enablers

The other day, I was in an Ola cab and at the destination, the driver tried to end the trip. The mobile signal was probably poor, and it took a couple of minutes for the trip summary to show up (zero bill because I had enough money in the pre-paid wallet). While two minutes may not be much, it is surely an irritant if you are running late or the cab is awkwardly parked on the road. [The Uber model of compulsorily using a wallet avoids this issue.] Similarly, another driver complained - at the end of the journey - that the mobile phone or network had failed en-route and therefore, he needed to estimate the fare using Google Maps route distance.

If you want to build a sustainable business, you have to think far beyond the contours of your current business scope. What could derail you? For instance, good quality mobile data networks are critical to Uber/Ola, as they are to several other new businesses. Without a data network, the measurement, billing and payment aspect of the drive would fall apart. Without good quality / efficient cars and roads, your cost structure could take a hit. I am not suggesting that Uber/Ola should become mobile operators or auto manufacturers, but they should surely work towards building alliances & capabilities to ensure that the supporting eco-system remains vibrant and competitive. 

I am confident that many of the teething issues that Ola/Uber/Meru face would soon be overcome... local transport / conveyance in the second half of this decade will be far superior to what we have ever experienced.

Do you have any other suggestions... please feel free to share them in your comments below.

During the last three months, I have almost stopped driving for intra-city (Mumbai) travel. In particular, I don't take my car out when I am alone and traveling for work-related meetings. Being driven helps me gain that extra 30-60 minutes to prepare for a meeting or to respond to missed calls / emails after a meeting. It also helps that I can save 10-15 minutes in not having to look for some place to park. And I have email invoices that I can use for expense reimbursement or management without having to keep tab.

Yes, I have discovered the benefits of Uber and OlaCabs. 

Not only do I have a chauffeured vehicle when I need it but I often spend less than if I used my own car. With the frequent discounts and offers (thanks to private equity funding!), I can get a car on demand at about Rs 15 per kilometre... my own car costs me Rs 12 to 15 / km for fuel, it would be much more. Things can't be better!

There is obviously some sort of a break-even point here, of owning a car and hiring a driver vs. using services like Ola/Uber. Consider a typical use case: drive 25km daily to office and back, plus 20km every weekend for shopping / entertainment... that's 630km per month. Fuel cost for a mid-size car would be Rs 5-7 per km but a driver's salary at Rs 6000-8000 adds Rs 9-12 per km. Therefore, the marginal cost of using a vehicle would be at least Rs 15 per km. So, even if you own a car, and you want to be driven, unless you use it for 700-1000km every month, it would make sense to use a Uber/Ola like service.

I have not done the supply-side economics yet... from my conversations with the car drivers, it appears that they (the vehicle owners) are making good money. In fact, many of them are buying new cars so that they can add to their Ola/Uber fleet. But I have a sense that they are currently being subsidized by the service providers (trip bonus, being online for 12 hours bonus, etc.) I wonder if this is sustainable. 

Some more thoughts on the disruption that we are observing in the transportation / automobile industry (note, I am not referring to a "taxi service" market here).

Behaviour Shift

The value of Uber or Ola is not just that they are taking share away from traditional metered taxis but also expanding the market. They are essentially getting more people to use a "taxi service". If you had a car, you were earlier not a likely customer for the taxi market. But as I (anecdotally) demonstrated above - and I hear many of my colleagues/friends reinforce the point - non-users are being brought into the "taxi market". The initial discounts helped - for a while I was using Ola & Uber at prices lower than the regular yellow cabs. Now, prices have gone up, yet I am so used to the convenience that I am willing to pay even Rs 20 per km for the service. 

Also, while auto manufacturers need not worry as yet about lost sales, I would wager that, in metro markets which are also seeing improvement in public transit facilities, some impact would be felt soon.

They two key drivers (pun unintended) for the growth of Ola/Uber are:

1. Convenience - The ease of service discovery, purchase and consumption is a clear draw. The mobile apps are extremely easy to use and the payment mechanisms (using a pre-paid wallet) are highly convenient. Being able to track your driver and ride makes the process transparent. The invoices sent to your email are detailed and efficient. 

2. Availability - The tip-off point for the new taxi services is their ready availability. A lot of local travel (except perhaps airport drops) is unplanned and subject to the vagaries of moving schedules. Earlier, the service providers required you to book a taxi at least an hour in advance and that restricted their appeal. Uber entered the Indian market with immediate availability and its competitors have followed suit. As the popularity of these services grows, more drivers are signing up, consequently, availability improves and therefore, more customers feel encouraged to use the service. There is a clear network effect at play here. 

There is another important factor at play here which relates to the business model of network aggregation. Uber/Ola are intermediaries that are enabling vehicle owners/drivers and commuters to discover and transact with each other. Their asset-light model has the ability to scale very fast (riding on others' capital investments); their focus remains on innovation and marketing.

Ben Thompson has this wonderful post at Stratecherry where he explains density and network effect as liquidity of the car service... he also uses this to describe why it might be a winner take all market. I am not sure if the Indian cities have reached that stage of maturity -- as long as there is scope for significant growth, I can see the opportunity for at least 2-3 players. My dipstick analysis reveals that most drivers are today exclusively working for a provider, except in the Prime (SUV/Innova) category where I have found a few drivers two-timing. Further, given the lack of existing (quality) infrastructure, Uber and others would need to (directly or indirectly) invest in adding more vehicles and drivers on the streets, thus preventing the creation of a virtual monopoly.

(By the way, these three factors -- Ease of Use, Density and Network Aggregation -- are applicable to many other industries. Financial services sector could surely learn a thing or two from them... given that the banking business is nothing but intermediating between savers / investors and borrowers / investees. The recent success of Lending Club provides an indication of the possible unraveling of the traditional banking models. It would be worthwhile thinking about other blue oceans that can be created by adopting these three factors.)

Even as Ola, Uber, Taxiforsure and others bring in huge investments in this space, they have a long way to go. They must not repeat the mistakes that many others have made in India before... chasing growth without creating infrastructure and skill foundations. In the follow-up post, I will share a few suggestions for Ola/Uber to improve customer experience and to build sustainable businesses.

As a corporate strategist, one of my biggest battles was to avoid the extremes of cynicism and idealism.

In every organization, you will find people who will put their hands up and say that nothing can be done. They will gladly recount all the problems and challenges but will not care to think about solutions. Moreover, they will work hard to dissuade anyone else who wishes to move forward. Often, they are charming and witty, with funny comments about the futility of doing anything. These guys are the most dangerous for any organisation, they suck all positive energy out of the system.

Not so dangerous, yet problematic for progress are the idealists. They are the dreamers who seek perfection everywhere. Every organisation has a few of them and they are surely needed. They set the bar high on what is needed to be achieved. Where these guys go wrong (sometimes) is their belief that things must change immediately and anything otherwise is worth nothing. Instead of using their dreams to set direction for the future, they mope about the present and find fault with everything / everyone. Or they come up with crazy solutions to shake everything up ("let's fire everybody" "let's sell that business").

Both the cynics and the idealists are elitists on their respective high-horses, disregarding the reality of the rest of the organization that wants to patiently move forward. The reality of every organization is between "nothing can be done" and "everything should be perfect". A good leader will be guided by the idealist's dreams and will weed out the cynicism.

As we look around in India, ahead of the national elections, I see a lot of people undecided about what to do. As I wrote earlier, exercising the NOTA (till such time as it counts as a "vote") is a cop-out towards one of these two elitist extremes.

Let us all have fiercely ambitious dreams of what we want India to be like but let not cynicism or idealism cause us to separate ourselves from the reality of today.

A few weeks ago, I requested my Facebook friends to help me in drafting a manifesto of expectations. I wrote:

I am planning to write an economic manifesto (demand) from the next government. I would like to use that to evaluate/choose the national party that comes closest to what I care about. Obviously, it will be an economic right manifesto, and my sympathies are very clear. But I want to do this objectively so that it can help other like-minded (or undecided) people make their choice. If you'd like to collaborate on this, please let me know.

Many of us have already made up our minds about which party to vote for, but there are quite a few who appear (based on their public pronouncements at least) undecided. For the former group, this manifesto would be a way of putting pressure on the chosen party to take cognizance of our demands. For the latter group, this may be a way to evaluate the various options available. 

As I warned at the outset, this is an economically right manifesto. Also, please note that this is not a fully-baked document (some points have more detail than the others) and reflects the views of a few people who helped me in this effort. You are free to pick and choose topics from the below as your manifesto, or add new topics. Please share your feedback in the comments below so that I can update this post with more content.

Manifesto 2014

• Prohibit uncapped spending on any account.

• Force the government to establish a priority order for expenses in the budget

• Prohibit fraudulent accounting by the government and force it to adhere to GAAP

• Ensure that government servant's salaries are costed correctly, including the full cost of pensions, accommodation and other perks. 

• Ensure that no government servant earns more than the median wage in the private sector for a similar function on a total comp basis. Offer government servants all cash packages (with monetized perks).

• Remove “Socialist” from the Preamble.

• Repeal the First Amendment regarding restrictions to freedom of speech. The only restriction should be regarding any incitement to violence and threat to national security (which should get covered under normal criminal codes)

• Provide validity to same-gender relationships and marriages. (may not require Constitutional amendment and just a change in CPC) 

• Introduce a Uniform Civil Code

• Treat all individuals equally before the law and not as members of groups

• Scrap the Directive Principles of State Policy

• Propose a realistic road-map (as envisaged by the founding fathers) towards ending of all reservations in Government education and jobs. No new reservations (particularly in private sector education or employment) to be introduced.

One of the question that I have heard on Twitter and elsewhere is regarding the importance of a stable government. It is quite clear that no political party or formation appears to be strong enough pan-India to expect a clear majority. In fact, in the last 30 years, it was only in 1984 on the back of a Congress sympathy wave that any single party had obtained a clear majority (INC: 404). The only other time somebody got close enough was in 1991 (INC: 244), again due to another sympathy wave. 

If a party/pre-poll alliance has 200-240 seats, they might hope to stitch together the support of a few other regional parties to get to the 272 majority mark. Any alliance that appears close enough will try and seek to inch closer - the request would be for a majority mandate in the name of stability. For the other groups that are unlikely to form a government by themselves, the strategy would be to gain as many seats as possible to prevent a stable majority government. In this election, as per most opinion polls and general perception, the BJP-led NDA is in the first category; the INC-led UPA, the rag-tag Third Front and the dark horse, AAP are in the latter group. 

For me, and most people I know, the debate was earlier simply between the UPA and the NDA. Now, after the Delhi elections, AAP has emerged as an option in several urban constituencies. There are broadly four types of people:

1. Clearly support UPA: Tough for me to articulate why, so let me share what the CEO of a media company has written on his Twitter bio: "A Congress supporter, primarily because of its right-of-center economic beliefs, its secular credentials, and the stature of its senior most leaders".

2. Clearly support NDA: Fond memories of 1999-2004 NDA rule; Enamoured by Modi and his Gujarat story; Economic right-wing/free market liberal; possibly an Internet Hindu / Right-winger

3. Clearly support AAP: Can't stand the INC or the BJP (the old world politics); want to participate in changing the face of Indian politics; economic right-of-center beliefs; anti-corruption

4. Undecided / Search for Perfection: Best described by this tweet: "i like the idea of kejriwal not the person, the idea of modi not the person. dont like the idea of rahul but like the person. now what to do"

(Note: these categories are not necessarily exhaustive nor are these descriptions universal of all such supporters... please feel free to suggest changes.)

In this post, I am not going to discuss the relative pros and cons of each of these formations. But the key question is this... should we seek to vote in a government that will remain stable for the next five years, or not? Irrespective of which party that is.

As I alluded to in my previous post, and described in greater detail earlier, five years can do a lot of good or damage to a country. Just a few years ago, India was the darling of global investors; all of us were taking 8-9% GDP growth rates as given and there was talk of double digit growth. We are now at half those levels. For a poor country like India, rapid growth is the only way to increase per-capita income levels. The question is simple: at a time when global and Indian investors are shying away from the Indian markets, domestic demand (our greatest strength) has slowed and demographics (our other so-called strength) could become a liability, can the country afford 1-3 years more of uncertainty?

One view, held mostly by Type 3 and 4 above, would say, Yes, it doesn't really matter. In the long run, what are a few years more. We cannot let the corruption-tainted UPA come back to power and surely don't want a divisive Modi-led government. I paraphrase the ending of this 2011 Outlook article: Nevertheless, India can survive poor governance for the next few years but what it cannot survive is [insert your cause/concern]. Even if the promise of high (..) growth is accepted at its face value, it is simply not worth risking the [inexperience / corruption / dictatorship / polarization]. 

The other view would say that it is already too late. Undoing the poor governance of the previous five years will take a few years of decisive action and it will take more than five years to recover lost ground. These views come from people who should know a thing or two about India's economic situation. The Economic Times wrote a few months ago: 

"In India, a potential additional source of uncertainty is the coming general election,'' said (Raghuram) Rajan in his foreword to the latest Financial Stability Report. "A stable new government would be positive for the economy." 

The same article goes on to say: 

"The negative outlook indicates that we may lower the rating to 'speculative' grade next year if the government that takes office after the general election does not appear capable of reversing India's low economic growth,'' Standard & Poor's, a rating company, said on November 7, reiterating its negative outlook.