Citizen Economists » mobile phones

Watching Markets Work: Bad Move, Nokia

Ajay Shah — Mon, 14 Feb 2011 17:54:07 +0000

I have long marveled about how quickly the world of mobile phones has rapidly moved through four paradigms. My first mobile phone was a Nokia and they seemed to rule. But then Blackberry won because Nokia did not get the importance of email. And then Apple won because Blackberry did not look beyond email. And then Google Android seems to have won because Apple did not understand the problems of a closed system. At each stage, it looked like there was a dominant solution, but the pace of change was brutal and the king of the heap was rapidly unseated. What an amazing pace of creative destruction.

So when I heard that Nokia was now going to be quite wedded to operating system from Microsoft [press release], I thought to myself “That can’t be so bright”. Then I looked at the stock price and it said:

So the market seems to have knocked Nokia down by 18% for wanting to run with a loser like Microsoft. And what’s more funny, the market seems to have knocked Microsoft down 4% for this contract too (which I don’t understand – compared with being wasteland, it seems that it is good news for Microsoft to have the support of Nokia).

Interesting Readings for March 3, 2010

Ajay Shah — Wed, 03 Mar 2010 12:55:13 +0000

Vikas Bajaj in the New York Times on privatisation in India.
I had recently written a blog post on India’s foolishness on visa rules for people coming into conferences. Siddharth Varadarajan has a great opinion piece on this in the Hindu. In sensible countries, there is no such thing as a `visa for the purpose of attending a conference’. It’s just called a tourist visa.
An editorial in the Wall Street Journal on India’s success on establishing a private sector with competition in mobile phones.
Swaminathan S. Anklesaria Aiyar in the Economic Times on what the budget speech should say. Also see Ila Patnaik in Indian Express on the roadmap, and in Financial Express on expenditure. Writing in the Business Standard, Sanjaya Baru is also optimistic about what Pranab Mukherjee will be able to pull off.
An extremely insightful conversation on charges of ETFs (in the comments to this post). This is the sort of thing one hopes for in blogs.
Give financial sector a Financial Stability Board, in the Times of India.
Bibek Debroy in Indian Express on India’s license-permit raj of exchange controls.
I was at IFMR recently: did a talk on distribution of financial products, and looked at the `KGFS’ idea on increasing outreach of financial products.
Sanjeev Sanyal in Business Standard on the outlook for Bombay.
Andrew Jacobs in the New York Times on new developments in the Chinese end of India’s tiger extinction problem.
John Gravois on remittances.
We in India can look at the brainpower in the Chilean cabinet with wonder and envy.
Catherine Rampall in the New York Times, reviewing Capitalism and the Jews by Jerry Z. Muller, which made me think about the different story of business-oriented ethnic groups of India.
Robert Litan on financial innovation.
Tarun Ramadorai in the Financial Express on hedge fund regulation.
Alessandro Beber and Marco Pagano, on voxEU, analyse the global evidence on bans on short selling in the crisis. Hopefully we will learn the lesson for the next crisis.
One of the great achievements of monetary policy reform in recent decades has been the establishment of executive Monetary Policy Committees (MPCs) which use formal voting mechanisms through which the policy rate is modified in order to achieve an inflation target, on a regular meeting cycle, with full transparency about how each person voted and why.
Writing on voxEU, Tim Besley and Andrew Scott emphasise the role of `fiscal councils’ where some (but not all) of these ideas are deployed into fiscal policy.
I find it interesting to look at how the army of a great power works. See Elizabeth Rubin in Time magazine on Robert Gates (the US defence minister), and Chris Wilson in Slate on some remarkable soldiers. I suppose journalists like Elizabeth Rubin and Chris Wilson are also integral to being a great power.
Interesting new things in the world of trading and exchanges, all from the Financial Times: Size of share orders cut in half on global markets and Small orders breed dark pools and higher costs by Jeremy Grant, Markets: Ghosts in the machine by Jeremy Grant and Michael Mackenzie, and lastly New US options exchange battles for market space by Hal Weitzman.

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U.S. Telecom Providers to Purchase and Innovate More in 2010

Eldon Mast — Tue, 12 Jan 2010 16:45:46 +0000

U.S. telecom and cable operators are likely to increase their capital expenditures this year according to estimates from Avian Securities.

In a research report released last week the firm estimates that telecom service providers will increase their spending by 1.5% to $57.7 billion.

Avian estimates that the largest spenders will be AT&T Inc. (NYSE: T) ($17.5 billion), Verizon Communications Inc. (NYSE: VZ) ($16.6 billion), Comcast Corp. (Nasdaq: CMCSA, CMCSK) ($5 billion), and T-Mobile USA ($3.5 billion).

Avian’s estimates may be conservative. Several weeks ago Dick Lynch, chief technology officer for Verizon said, “It’s no accident that again [in 2009], Verizon’s consumer and business services won major industry awards.” Lynch asserted that those awards were the direct result of network spending in 2009. “The better the network, the better the performance of the applications that ride on them. It’s as simple as that,” he said.

Accordingly, it is likely that communications providers will spend much of their 2010 capital budgets on technologies that increase the efficiency of their high speed wireless networks. In 2010, CTO’s are focused on core fiber capacity and grooming technologies. AT&T’s CTO John Donovan said last week that his firm completed 7.2-Mbit/s wireless upgrades throughout its whole network including doubling the number of cell sites with fiber-optic capacities.

“We expect that the majority of our mobile data traffic will be carried on fiber-based backhaul by the end of 2010,” Donovan said. AT&T will continue to enhance the “world’s largest deployment of 40-Gig backbone technology,” boasted Donovan.

Last week T-mobile had good news boasts of it own. The firm announced the completion of a scheduled upgrade to its entire network — an upgrade which boosts wireless air speeds from 3.6 Mbps to 7.2 Mbps. Additionally the company promises that speeds in 2010 will peak at blazing wireless rates of 21 Mbps and that spending on a trial in Philadelphia is already underway.

The spending news came just prior to T-Mobile’s announcement introducing the “Nexus One”, a smartphone that will run on T-Mobile’s network. The Nexus One supports these high speed wireless technologies and analysts see its pairing with T-mobile’s high-speed network upgrades as a significant enabler for economic and technological innovation.

Grassroots Strategy for Mobile Phone Based Payments, Sighted in Africa

Ajay Shah — Mon, 03 Aug 2009 15:49:59 +0000

Today’s mobile phones are as powerful as the computer used in Apollo 11 for the moon mission. So how can India’s 400 million-plus mobile phones/NASA computers transform access to finance?

Many people have been talking about the potential of mobile phones to revolutionise payments and ultimately consumer finance. Chapter 3, `Broadening access to finance’, of Raghuram Rajan’s report puts a considerable emphasis on the role that mobile phone companies can have in improving financial inclusion, even though they are not traditionally seen as financial firms. [Also see].

One breakthrough came on 30 June 2009 when the RBI authorised 17 banks to introduce mobile banking services, enabling customers to carry out fund transfer between banks and accounts.

And there are signs that banks are innovating. For example, there’s a Citibank pilot project, reported in the Business Standard a couple of weeks ago, that enables credit card customers to use their mobile phone for payments.

But these are only small steps. The RBI guidelines are still quite conservative, and the Citibank pilot is only for six months and for customers in Bangalore.

What about the hundreds of millions of unbanked people in India who have mobile phones?

A brilliant idea that is used in Africa, where mobile phones are used for money transfers, could be important in India. It’s great for unbanked people, because it doesn’t require a bank account or even a bank. And it enable small transfers to be made to help friends and family, say with school fees, medical expenses or loan repayments. It requires no cooperation from the government.

Here’s how it works, for person A to send $5 to person B

Person A buys a $5 top-up card for his mobile phone from a street vendor or phone kiosk and scratches the card to reveal the top-up code.
Instead of keying in the top-up code, Person A sends it to Person B as an SMS message.
Person B receives the SMS and takes her phone to a local phone kiosk, and sells this top-up code to the local trader.
The local trader inserts the top-up code into his own phone to verify that the $5 top up is valid and pays Person B (a bit less than $5).
The local trader can then sell calls on his phone or use the credit for his own private use.

Essentially, a secondary market in top-up cards has been developed that enables small money transfers to be made quickly and easily.

This informal money transfer system has proved so popular that these top-up cards are now sold among the diaspora in London as a handy way of remitting money to relatives. And Western Union is now planning to roll out a mobile money scheme in Africa to avoid being left behind.

Banks here are also keen to explore the opportunities that new technology provides. Yet regulators remain cautious of the potential of mobile phones for transforming access to finance.

While the legal and regulatory issue wait to be resolved, it would be an interesting experiment to see if an informal transfer scheme, along the lines of the one described in this blog post, would work in India. It would also be interesting to hear comments on what other solutions people are using already to make the most of their pocket-sized Apollo-11 quality computers.

These are small steps, which are a grassroots effort at overcoming problems. The big leap will come when the mobile finance sector is opened more fully to competition and innovation.