The Hindu Business Line : ‘When 3G happens, an Indian chapter of YouTube will explode’

For D. Shivakumar, Managing Director of Nokia India, getting to Chennai, even for a brief visit, is always a homecoming. Having studied and worked in Chennai, he has a soft corner for the city, but given his busy schedule he finds he’s short of time to visit the old digs and dives of his growing up years. Recently in the city to speak at the 36th national convention of the All India Management Association, Shivakumar spoke passionately about the cutting-edge innovation that Nokia undertakes to stay ahead of consumer expectations.

“It could take more time to develop a new model, but only a few months to realise its full value,” he says of the rapid obsolescence the industry has to deal with. Shivakumar took time off after his talk for a brief interaction with BrandLine on a variety of issues. To emphasise his point that the mobile is emerging as a complete device for a variety of uses, including music, Shiv logs on to his N 97 mini series mobile (to be launched next month) to play a popular Eagles number, Tequila Sunrise, adding that there are over 300 songs on his music library. However, the MD of the largest MNC and mobile phone maker in the country himself doesn’t spend too much time on social networking sites through his mobile, given his schedules. Excerpts from the interview:

The mobility market is growing even more rapidly. What is the present market scenario?

The mobile market, from the subscriber point of view, has seen a huge number of operators coming in, 14 nationally, all put together, so the subscriber base is growing at about one million a month. One of the things we are seeing is consumers having 4-5 SIM cards as prices are falling and people are shopping around for the best deals. That’s what we are seeing. It continues to be one of the fastest growth markets in the world. We added more than a 100 million subscribers last year and expect to add a similar number this year. (The Indian market is at 450 million subscribers now.)

When 3G comes in, YouTube will have its biggest base in India. Because people will click, video anything and keep posting it. Today that’s the barrier, you don’t have 3G and the laptop penetration is very low. Tomorrow, when 3G services are here, an Indian version of YouTube will just explode; it will be a different world.

The recent government order to ban grey market phones, will it spur sales of legal handsets?

The government is doing the right thing by saying that a phone without an IMEI number shouldn’t be on any network and more than anything else, it’s a security risk, and a valid one. Moreover, most of these phones don’t meet the basic specifications in terms of radiation and health so the government needs to formulate policies where a basic minimum standard is delivered to the consumer and if that is not met, they should not be allowed for sale .

At the same time, while the government says it wants to combat the grey market, I think some of its policies go against it. Like taxation: one of the reasons that the telecom sector has flowered is the positive and proactive government taxation policies. They ensured that we were equated on global pricing by focusing only on import duty. Now, we are seeing, due to a deficit in the States, they are pushing up the price by adding more tax. Maharashtra and Madhya Pradesh have done that – raised taxes on phones from 4 per cent to 12.5 per cent and as a result of that sales in these two States have dropped by 50 per cent, so the rest is now met by the grey market. Now, grey comes with a huge security risk.

While the Maharashtra Government earned Rs 100 crore in octroi, now it’s losing this. It has increased VAT by three times, but not got three times more revenue by this hike, so it’s a self-defeating exercise. It’s very important that the tax conditions are conducive; it costs $1 to ship a phone from Europe, so when you have arbitrage opportunities, stocks will move all over the place. In Mumbai, there are outlets which actually put up boards which say ‘local sales and grey sales’. Gone are the days when government could have mechanisms to raid such places, it’s not possible now. So, that’s why good governance and good taxation structures are important for the long-term health of this industry.

What are the broad consumer trends that you are seeing?

One of the things we are seeing is that the cell phone is a ubiquitous device which is there with the consumer 24 x 7 as a result of which people expect to do more and more on the cell phone. For example, we are teaching people English through Nokia Lifetools, our education service. We are giving farmers information on crops, on prices at mandis, giving people astrology pointers, tips on how to prepare for exams.

In an experiment called ‘tap and pay’ in Bangalore, we have done away with the credit card. It is a three-way project between Vodafone, Citibank and us. So, the ten-digit credit card number is on your phone, and with a four digit password, you can pay with your phone. The phone is entering every single conceivable area in a consumer’s life. Take music; today more people consume music on the phone than a CD player or radio. Today more log on to the Net thanks to the mobile. In SEC A households, young people spend 42 minutes a day logging on to the Net from a laptop and spend 23 minutes a day logging on through a cell phone already, in their homes.

Young people today are living their lives online, 24 x 7, virtual and mobile. As a result of which you are getting more applications loaded on and people want to spend more of their idle time or secondary time on mobiles.

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‘When 3G happens, an Indian chapter of YouTube will explode’