The impact of Covid19 on an emerging market, Crocodile Dundee and other musings
By now, pretty much anyone reading this, regardless of your location, has been under some form of lockdown. Partial. Total. Local. The Covid19 pandemic doesn't discriminate but has put the global economy into a deep freeze. Prospects for the lockdown easing are vague and the outlook for the rest of 2020 is decidedly gloomy. There is plenty of analysis available from highly qualified economists and epidemiologists on the economic and public health impact, so this is not the place to try to emulate them. Rather, this post is meant to be a series of musings, observations and (hopefully informed) opinion on where we could be headed, at least from the perspective of my physical location in an emerging market.
But let me begin with an analogy. For reasons that are beyond the scope of this blog post, I was a huge fan of the Crocodile Dundee movies growing up. At the start of the sequel, the movie opens with Mick ‘Crocodile” Dundee is on a small boar in the middle of the Hudson River, “fishing”. He drops a stick of dynamite into the river and predictably, after a loud bang, a number of dead fish float up to the surface for him to scoop up as his daily catch. Fishing! Covid19 feels a bit like this scene…a few dead fish on the surface and the rest scurrying for cover, wondering when it will be safe enough to come out. Yes, I know it’s a flawed analogy, but I couldn’t lose an opportunity to mention Crocodile Dundee in the same breath as a pandemic and its impact on digital infrastructure and lifestyle.
The telecom networks are holding up. Just barely.
As a telecoms analyst, I would be remiss not to begin with the impact on and the performance of the telecom sector at large as well as in India, where I reside. The degrees have varied as well as the strategies applied for implementation but the net effect of all the lockdown has been to force people indoors, with little to do and a lot of time on their hands. Predictably, most people have gone online, in work from home (WFH) mode, in online classroom mode, or for casual browsing on steroids. There are several “Covid motivators” out there who have discovered hidden or latent baking, musical and other skills…you know who you are! The resulting Internet traffic spikes have been significant across the board, irrespective of region, country or even at a city level.
What has the experience been like in India? So far so good. The biggest concern was that India’s telecom networks, straining to maintain a modicum of quality at the best of times, have largely held up, either on their own merits or with luck, duct tape, and Superglue. India’s mobile operators, cable providers,0 and ISPs have been forced to trim customer care and other operations down to the bare minimum. Overall, they have managed, in conjunction with their network vendor partners, to keep the lights on. Payments have largely switched to online payment methods, either through net banking or through services like Paytm, PhonePe, and Mobikwik. Prepaid balance validity periods have been extended, as well as free incoming calling and a host of other benefits.
One of the biggest learnings from the lockdown is that all assumptions about traffic patterns and network planning go out the window. People are no longer mobile so their traffic will tend to skew towards “hotspots” and become more consistent throughout the day. That is, traffic becomes more “localized” and there are potentially several mobile cell sites that have seen dramatic increases in terms of capacity load and several that have seen decreases. Moreover, there is no “peak hour” traffic anymore…people are on all the time. Where possible, capacity has been increased at traffic hotspots to handle the surge in traffic. But without fresh (and even temporary) allocations of spectrum, it would not be possible to add capacity, especially in crowded urban areas. As a result, the telcos are certainly under strain and the impact can already be felt with reduced speeds and faint signals.
My primary number is with Airtel and I can only get mobile data when standing at the balcony window in my apartment in Mumbai. Under the circumstances, the only viable strategy in the short term is to offload traffic. A good case in point is Reliance Jio employing WiFi Calling. I have a secondary SIM card with Jio, taken to mitigate the previously mentioned coverage issues with Airtel. While there is no problem with coverage, Jio’s speeds have slowed to a fraction of previously available and advertised speeds. A clear issue for a company that promised its subscribers free voice calling for life and loads of free mobile data bundled into its plans. Moreover, virtually all my voice calls now go out over WiFi, a clear indication of the strain placed on Jio’s LTE networks.
Is 5G the answer? Sadly, not in the short term
So how do these telcos get more capacity in the short term? Ideally, there would be a lot more fixed broadband to the home, enterprise and small business locations. However, fixed broadband penetration in India is pitifully low, despite recent momentum following the launch of Jio Fiber, One Broadband, and other services. The answer lies with the allocation of more spectrum. More spectrum and new use cases like Fixed Wireless Access (FWA). In India, the 5G spectrum auction has been on the cards for some time. Will we have a 5G auction soon? Absolutely not. While the impact of Covid19 has brokered an uneasy truce between the Govt and the telcos over license fee demands, there is a looming problem with capital scarcity. If they are barely able to pay their past dues in license fees, where is the capital left over to pay for exorbitantly priced spectrum in an environment where there is bound to be a squeeze on lending and credit? Telcos around the world are currently re-evaluating CAPEX plans. My prediction is that any 5G auctions that have not already happened will get delayed to 2021 at the earliest and follow up auctions in other countries will also get pushed back.
Despite my reservations on the potential delays for 5G auctions, I am hopeful that India’s telcos take matters into their hands and look at new technologies like Dynamic Spectrum Sharing (DSS) and older technologies like carrier aggregation (CA) to help them pool existing resources and boost bandwidth. DSS has been primarily mooted for combination scenarios where operators can combine 5G and 4G spectrum, dynamically, in order to boost capacity. However, this can also be done with 4G and older 3G/2G networks. The recent announcement of 3 Indonesia with Nokia for applying DSS to their 4G and legacy networks is a very interesting case in point for India’s operators to follow.
One silver lining coming out of all this. If we assume that the lockdown continues in the short term and we slowly limp back to a semblance of normalcy, we are still looking at a fundamentally different world coming out on the other side. I for one hope and pray that people, many if not all, reboot and begin to place more value on the truly essential things in life. For one thing, I believe that people’s appreciation of connectivity and the premium they are willing to pay for this will be renewed. Building and operating a telecom network is tough, gritty and at the best of times, a thankless business, no more or less so than the plumbing networks that take our refuse to dark, dank corners. Both are vital, essential but also taken for granted!
The rise of the “digitally literate” class
One of my biggest takeaways from the Covid19 induced lockdown was the startling rise in “digital literacy” of several people. In these fraught times, can anyone really afford to be a Luddite anymore? In the early days of the lockdown, everyone had suddenly discovered Zoom, the popular online collaboration tool. As an industry analyst, I am more familiar than most with the whole work from home (WFH) model as well as with online collaboration tools. When not on the road, we analysts regularly find ourselves working from home, a lounge, a Starbucks, or any available temporary space. Once, I have even logged into a Skype video call sitting in a stairwell of an office building because I was delayed and there was no other option. But tools like Zoom, despite its well-documented security issues, have been invaluable, especially when backed up with reliable mobile data connectivity. So, it was amusing for me to see everyone “discovering” Zoom and giving me tips on how to use the platform. More amusing still was the number of people who were spending copious amounts of time every day on Houseparty, an app that had its “15 seconds of fame” before sliding back down to earth when security issues were inevitably discovered.
Digital literacy has also been force-fed to our children in recent weeks. Schools were the first casualty of Covid19, and the city of Mumbai shut its schools down by March 13th. Since then, some schools have been very proactive and moved quickly to adopt an online learning model to tide over the disruptions. Google Classroom and Zoom have become the norm for my daughters’ school, and I have been really impressed with how quickly the girls have become pros. Of course, there have been many teething issues but I believe the kids have performed far more admirably under the circumstances relative to their parents, many of whom have seemed flustered and struggling to keep up with meeting rooms, passwords, unique personal IDs and other features. Of course, any new digital network is still only as strong as its weakest link. I am thinking of the one teacher who has been struggling with the platforms available, frequently puts himself on mute in the middle of an online class session and frequently sounds like he is calling from the frozen Siberian tundra. Nonetheless, on the whole, this period has been a remarkable testament to how adaptable human beings are, and with the crop of technology tools at our disposal today, it has become so much easier to cope.
Increased awareness of and adoption of digital platforms by Governments
India’s response to Covid19 has been heavily debated and opinions are highly polarized. While I am not about to weigh in on this highly political and charged subject matter, I would like to comment on India’s adoption of digital platforms to disseminate information. One of the earliest manifestations of the official response strategy was the launch of universal “ringback” public health message on Covid19, in Hindi and regional languages, ensuring that everyone, including those without smartphones, were made aware. Official Government channels have been created on YouTube, Twitter, Facebook, WhatsApp, and even Telegram, with a steady diffusion of public interest and safety messages being sent out daily. For example, the Telegram channel sends out daily updates on the number of confirmed cases, recoveries, and death rates on a daily basis in nearly all major Indian languages. They also share tips on improving hygiene, how to wear a mask and so on. The Indian Government has also not gone as far as the Chinese, where aggressive moves were made to monitor and track citizen movements, including the use of a Health QR code, as well as data collated and analyzed from mobile base stations to pinpoint a citizen’s recent movements.
However, despite their eagerness to use digital media to do outreach, not all the Indian Government’s moves have gone smoothly. The first has been the usage of the Zoom platform by Government ministries, including Defence. While the conduct of meetings via video conference was a powerful signal to send across the bureaucracy, little care was taken to research the potential issues with the Zoom platform. Even as news began to ripple about the security challenges, it took weeks for the Government to issue an advisory against usage of Zoom until further notice.
Contact tracing is another Covid19 related exercise for which the use of technology was perfect. Singapore launched a contact tracing app called TraceTogether that has been rolled out with some success. India has tried to follow suit with a similar concept app called Aarogya Setu, which sought to leverage the massive installed base of Bluetooth radios in mobile phones to collect data on other devices (“people”) who came into close contact with a potentially infected user. That data, tied back to the host’s mobile number, would then be used to create a log of all people that the infected user had met and allow aggressive contact tracing. However, unlike the Singaporean effort, the Indian app has raised the hackles of privacy activists and experts who have criticized the design of the app, which sends the data to an undisclosed cloud location, prompting fears of abuse and digital surveillance.
The heightened adoption of digital platforms by individuals, organizations as well Government agencies is welcome. But it does come with a potentially hard trade-off3 with privacy. How secure are these new platforms and applications? Who controls the data and where does it reside? How aggressive should Governments be when tracking their citizens? Where do we draw the line between public health considerations and the privacy of the individual citizen? In an ideal world, these questions would not be viewed as mutually exclusive, but these are exceptional and challenging times.
A final word. A prayer for those afflicted with this contagion, and for the rest, a heartfelt wish to stay safe! See you all on the other side…