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2011-08-11T21:26:00.001+04:00

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Video – Ravi Bapna | Carlson School

2010-10-27T19:57:00.000+04:00

Video – Ravi Bapna | Carlson School

SCECR Haiku

2010-06-08T00:51:00.003+04:00

Datasets creative large
No causation without correlation
Effect not artifact

Tis' the season

2009-12-11T21:25:00.005+04:00

Its the time of the year when WISE (Workshop on Information Systems Economics) rolls along. This year we celebrate its 20th anniversary at the Arizona Biltmore in Phoenix. I've never missed a WISE meeting since I graduated from my PhD program at Connecticut. So thats 10 in a row now!

The main theme for WISE over the years has been to uncover the economic value created by IT in business, and to a lesser extent (some of us hope to change that), in society. If I had to point to one source where this collective wisdom is made accessible to all its the new book titled Wired for Innovation by Erik Brynjolfsson (MIT) and Adam Saunders (Wharton). Its a great read and future CEMBA students can expect it to be assigned as pre-class reading.

Among the interesting themes in the book is the notion that traditional national income accounting methods (think GDP calculations) woefully underestimate the value created by digital goods and platforms. A couple of interesting examples from the book - if you buy a $1 copy of the NY Times its shows up in the GDP, but if you spend 30 minutes on NYTimes.com, it does not show up. Likewise, whats the value to consumers of better information (say from free Google searches) or newer platforms such as eBay. They cite our Consumer Surplus in Online Auctions paper in the journal Information Systems Research where we demonstrate that in 2003 consumers got close $7 billion in welfare gains from eBay. In contrast, their revenues, which would have showed up in that year's GDP was $2.1 billion!

On a personal note, our above-mentioned paper was selected as one of five best IS papers by a committee of senior scholars. Regretably, neither me nor my co-authors (Galit Shmueli and Wolfgang Jank) will be at ICIS 2009 to receive this in person.

Off to Phoenix and then to warm India tomorrow!

Happy holidays to all and peace on earth.

Co-authors blogging..

2009-11-20T00:43:00.002+04:00

Its nice to have co-authors blogging about joint work. Here is a link to Nishtha's post on our recent study measuring returns to human capital investments in the offshore industry.

Dial M for Mackerel..

2009-09-03T20:21:00.003+04:00

The competition for rural India targeted information services is heating up with Nokia joining ITC eChoupal, Reliance and the Tatas. As I mention in this recent Wall St. Journal article with a catchy title "Dial M for Mackerel..." this is good news for the Indian farmer, and yet another chapter in the success of India's mobile telecoms story.

However, newer companies venturing into this tough tough market (think illiteracy meets fragmented land-holdings meets high price sensitivity) should be prepared to be in it for the long haul. Even in the best of circumstances, IT yields supermodular returns only when accompanied with the the necessary organizational complements (say process redesign accompanying an enterprise wide ERP implementation). Not only have the incumbent players (eChoupal) for instance invested heavily in developing the necessary societal complements (a "sanchalak" or a "human counselor" in every village plays a critical role in overcoming techno-socio barriers), the newer entrants will face the familiar chicken and egg problem of simultaneously growing a substantial user base and leveraging that data to offer highly personalized services.

Anyway, makes for an interesting space to watch...

Mumbai...Bleakness

2008-11-29T00:10:00.000+04:00

I came in to work this morning to catch up on mutliple things, but its hard to focus on anything when once considers that the seige in Mumbai is now into its third day! Much has been said already, so I don't need to rehash anything. I was particularly struck this morning by a moving piece by Sambit Bal, editor of Cricinfo.com. He writes,

"...I have watched a city of a million dreams held hostage by 20 or so men who have purged from their souls every trace of humanity - let's not confer on them the dignity of a religion - and I have felt the blood drain out of me...."

Go home Kevin P and company. Perhaps, one day, there will be another innings that will make more sense...

On leadership -- from the land of Gross National Happiness

2008-11-20T19:12:00.001+04:00

"“Destiny has put me here. I will protect you as a parent, care for you as a brother and serve you as a son. I shall give you everything and keep nothing. This is how I shall serve you as King.”

Jigme Khesar Namgyei Wangchuck, V King of Bhutan, (on his coronation)

Something for all world leaders, including President Obama, to think about...

ISB Alums Innovating at Google India

2008-11-18T19:16:00.000+04:00

Last week I was pleasantly surprised to pick up a link from Manik Gupta's Gmail page to his post announcing Google's mapping of India. Manik is one of those exemplary alums that ISB should be proud to have. He really understood the true essence of a business school education. One that goes beyond GPAs and placements (well, Google is not a bad landing;-), but really involves soaking in the educational experience in a broader sense.

I must admit Google India maps was of immense use to me when I had my Hyderabadi driver (never been North of AP) take my father's car back to Jaipur just prior to our move to Minneapolis. I could literally show him our house around the corner from Moti Dungri, across from the beautiful Birla Temple, on the map.

Not to be outdone, this morning I got an email from Alok Goel, another proud ISBian and former president of the Biz Tech Club at ISB. The official Google India blog features his latest product, an SMS based search service.

Part of my motivation for posting this is to express my disappointment at the shrinking enrollments in the IT courses at ISB. People who are passiionate about technology seem, naturally, to be burnt out by the four-five years they spend dealing with global delivery model. Long hours, distance (not just physical) from the clients and life in the trenches can be expected to take their toll. The natural inclination is to look for careers in i-Banking, consulting and marketing, which in of itself is a justifiable exit strategy from a B-School.

The paradox however is that overall supply of jobs for ISB graduates in these areas has never been greater than the demand, and a significant number of ISBians end up back in the technology sector, in roles that befit their enhanced profiles. Of the set that go back to the IT sector, there are those that believe that their prior experience is enough to carry them through should their i-banking-consulting preference elude them. There are others like Manik and Alok, who, after some soul-searching and wine tasting, recognize where their true passion is and work expressly towards that goal. They take relevant IT electives, engage with the relevant centers and dialogue woth the plethora of industry leaders that stream through Gachibowli.

In anticipation of this, our strategy has been to offer IT electives that expressly cater towards studnets looking to chart careers in the innovative aspects of this sector. These inlcude, but are not limited to, product innovation in networked Web 2.0 businesses (a great course developed and refined by Prof Amit Mehra, but which sadly may have to disappear next year due to low demand), business intelligence/data mining, global sourcing and financial valuations of tech. businesses.

The optimist in me hopes that it is a matter of time that this message sinks in, but are their aspects of the stroy I'm missing out? Do voice your frank opinions on this...

Election 2008 -- Polls v prediction markets -- the latter won hands down

2008-11-06T22:05:00.003+04:00

My PhD student Miguel Velasco pointed out this morning that the Intrade prediction market far outperformed opinion polls in prediction the overall election 2008 results. Take a look at this snapshot from Yahoo. The polls predicted Indiana and NC to go red, but the market got it right (in that they went left:-)

To play around with this interesting dashboard go to http://news.yahoo.com/election/2008/dashboard

On Sam...

2008-09-11T22:53:00.001+04:00

In class group discussion on whether Walmart should offer it's slick logistics and vendor managed inventory as a platform to others ( a la Amazon);

Group that is against this - " What would Sam say?" NO!

Group that is for it - Guess what, Sam's dead:-)

Down Economies -- IT Spending

2008-09-10T19:50:00.004+04:00

I begin teaching in the executive MBA program at Carlson today. I look forward to spending the next couple of months with this impressive mix of 60 odd (ok, 52 to be precise:-) Twin Cities executives from all walks of business. The question is somewhat timeless -- IT spending continues to rise worldwide, yet as many firms fail to drive value from these as those that do!

Interestingly, a new article from Mckinsley Quarterly dwells on what firms should do with respect to IT spending in downturns. Some interesting excerpts:

"CIOs, of course, should continue to make their operations more efficient and to reduce costs, especially in areas that show signs of bloat."

"Still, except in the most dire circumstances, turning off technology investments during a downturn is counterproductive. When business picks up, you may lack critical capabilities..."

"Few companies have successfully capitalized on the explosion of data in recent years. Often this information, residing in separate IT systems or spread across different business units, has never been mined for insights that could add value. "

Not surprisngly the three pillars of our course are:

How to manage IT to keep the lights on and continously reduce costs while improving service?
How to leverage corporate data for business inteliigence?
How to use IT to play offense and innovate?

Look forward to the hearing your views on this.

From One Twin Cities to Another

2008-06-19T18:10:00.000+04:00

We (the family) are getting ready to move to Minneapolis where I'll be joining the faculty at the Carlson School of Management at the U of M (as they call it, or if you are from Minnesota just plainly the "U"). Two years have flown by at the ISB and (through what I must admit was some very broad minded thinking by the U of M and ISB administration) I'm glad that I'll continue to direct CITNE, our fledgling research centre at the ISB.

Perceivably, this is a move against the tides. Away from the emerging lands of opportunity. Someday I'll get into the details of why and what prompted these moves. Something probably every US grown Indian academic considers doing (I think the broader immigrant reverse migration story has a different narration than our narrow segment of academics) at some stage.

As of now, I'm getting a rousing farewell. Four of my Mayo friends and their families are descending into the Twin Cities of Hyderabad and Secunderabad starting tomorrow morning. Looking forward to a fun weekend!

ISB Ranks 20th in FT's 2008 Global MBA Ranking

2008-01-31T09:32:00.000+04:00

Predictably, there has been a lot of buzz in the Indian media around the 20th place global ranking the ISB MBA has received. One question that is openly being asked is where are the IIMs? Did they not participate? Can they make it? Interesting questions all.

One of the joys of working at ISB is that we get the Financial Times delivered to us (via Mumbai and two days late) in our offices and hallways. To me the FT Weekend edition is worth it's weight in gold, by far the best newspaper reading in the world. At a broader level, it signals ISB's global mindset. Barring a couple of visits to IIM-B I've never stepped foot on any other IIM. So I'll let them speak for themselves.

At the ISB, one does get the feeling of being in the new India, one that is at ease with itself, but also intricately embedded in the global economy. We shift effortlessly between chai and samosas to measuring consumer surplus in eBay auctions worldwide (see the New York Times' recent coverage of our paper forthcoming in the premier peer-reviewed journal Information Systems Research or ISR, as we call it). Incidentally ISR is one the 40 journals that the Financial Times counts in the research component of its ranking. Research has a significant 10% weight in FT's scheme of things, and yes ISB has a long way to go on that (and we sure have our set of issues, but that is fodder for another chow) given the small number of our resident faculty size, but top-tier research is something that ISB cares about. Like in many US research oriented B-Schools 'publish or perish' is the mantra that rules the lives of the tenure-track ISB resident faculty.

Speaking of the components of the ranking, the DNA newspaper today quotes IIM-A director Sameer Barua as saying "the FT has ranked ISB on the basis of statistics of salaries give by them." The comment is troubling in more ways than one. The FT ranking methodology is by far the most open of all major international rankings. Anyone can view it at http://rankings.ft.com/pdf/key/global-mba-rankings.pdf, and Prof. Barua certainly needs to be pointed to it.

Salary rated components make up about 40% of the overall weight. Significant, but not the sole criteria. What bothers me more is the use of the phrase "by them." The first thing that FT looks at is whether the numbers given have been audited by KPMG or not?

Meanwhile, I missed the celebrations on Monday collecting data for some new research in Mumbai. Neverthless, rumour has it that a few more parties are forthcoming and that there is a new out-there "lounge" on the campus, and it also has a watering hole that is open beyond Sarovar's 10pm curfew at the EH. So the journey continues.

Party hard and work harder...

RB

On platforms: A marraige between social networks and online auctions!

2007-08-22T10:34:00.000+04:00

Have been discovering the wonders of Facebook recently (http://www.facebook.com/profile.php?id=699296175) and am amazed by it's ability to serve as a platform. Case in point is Mosoma, an online auction application that sits on the underlying social network. My colleagues Arun Sundararajan (NYU Stern) and Alok Gupta (Carlson School, U Minnesota) conceptualized such a platform about a year ago, but being what we are - academics - never got around to implementing the theoretical idea. The key benefit of such a platform is that it uses social capital to build trust in otherwise anonymous e-markets.

This aspect is of particular importance in emerging markets such as China and India. Given eBay's struggles in China, and it's not exactly lighting it up here in India, innovative models such as Mosoma will mesh well with the Asian mindset.

Now, if only we can get Broadband penetration to grow at 1/10th of our mobile growth rate (in India:-)

Weekend Trip to the Tech Triangle

2007-08-07T08:01:00.000+04:00

This was certainly not my average weekend. Had the pleasure of accompanying Ajit and Savita on the road, talking to ISB alums and prospects on Saturday in Bangalore and Sunday in Chennai. It is great to see the passion for the institute continuing and hope that we can find more ways to connect with the alumni on an ongoing basis. How about everybody getting on Facebook?

Also, used the opportunity to give my 3G talk in what can only be categorized as "two different worlds." On Friday, Alok Goel and Jagjit Chawla (ISB 2007) invited me over to the Google's Infantry Road office in Bangalore. In between medicine balls, lava lamps and a lot of food, we discussed what it will take to get India's wireless information infrastructure up and running. On Monday, got the opportunity to revisiting the 3G issue in the hallowed, (what should be) rosewood paneled halls of The Hindu on Mount Road (Anna Salai) in Chennai. An interesting issue raised by Business Line joint editor Venu is the possibility of having dynamic allocation of 3G spectrum in a spot market. Apparently, this is at the heart of Google's recent proposal to the FCC. Have to dig into this.

Seems like everyone is eager to see what the group of ministers is going to come up with. Will chime in next week on that issue.

RB.

p.s. Note on the title of this blog. Have grown up hearing about the North Indian Golden Triangle (Jaipur, Agra and Delhi). Arguably, Hyderabad, Bangalore and Chennai, while not prime tourist attractions, represent the new technology centric heart of modern India. I must admit the Chennai surprised me on the hipness quotient. The Leather Bar at the Park Hotel is swanky and we even got turned down at an independent authentic-looking Thai restaurant for a Sunday evening dinner. Hyderabad has some catching up to do.

On how to roll out 3G in India?

2007-06-20T15:02:00.000+04:00

Got the chance to dig into the previous posts question and more in detail at this podcast interview recorded in the leafy chambers of Knowledge@Wharton in Philly. My colleague, Arun Sundararajan from NYU Stern and I touched upon (among other things) how the Indian mobile market is already competitive enough and if new operators are to be allowed, under what conditions it makes sense.

You have to listen to us for now till the transcripts come out.

Part II of this interview shall roll out in the next India K@W issue on June 29.

Part of the fun that beautiful afternoon was that we also got to meet Mukul Pandya, Knowledge@Wharton's editor in chief. In his humble way, he told us how his "network" approach has led to a subscriber base of close to 1M. That's quite something for an online knowledge publication that is about a decade old.

Should new operators (foreign or not) be allowed to bid for the upcoming 3G specturm auction?

2007-05-14T10:03:00.000+04:00

Seems like the 3G auction scenario (not to mention the Maran family feuding) is heating up again. Back in the early part of September I made a presentation to the TRAI on the benefits of using an auction over a beauty contest in India. The DoTs recommendations have indicated that they will open up the auction to new operators such as Singtel and NTT DoCoMo. Is this a good thing or a bad thing?

I have to admit I can't find a strong justification for the DoT's case. The only argument I can think in favor of the decision is that players like NTT DoCoMO may bring proven 3G technology and applications quicker to the public.

Arguments against;

1. Will further slow the roll-out as new operators will not be in a position to leverage existing economies of scale and reach -- the back of my envelope says that each new tower costs $100,000 capex and the country needs at least 30,000 more of these -- lots of zeroes:-)
2. Competition already exists as reflected in lowest mobile prices on the planet
3. This will over-heat the auctions which is unlikey to be well-designed in any case -- think big time winner's curse:-(

Your thoughts?

So it goes...farewell Kurt Vonnegut

2007-04-12T07:56:00.000+04:00

For all those war mongerers, a final word from the now late author, playwright and poet Kurt Vonnegut;

Requiem

When the last living thing

has died on account of us,

how poetical it would be

if Earth could say,

in a voice floating up

perhaps

from the floor

of the Grand Canyon,

“It is done.”

People did not like it here.

The NY Times carries an obituary

Custom Labels in Excel's X-Y Scatter Plots--Phew!

2007-02-02T16:39:00.000+04:00

Courtesy of ISB MBA student Prem Pasupathy (many thanks Prem! I've struggled with this significantly....)

Dear Professor,

I did some research on assigning a custom data label to data points in XY Scatter Graph. What I found was that it is possible to change the default label given by xls (i.e. the x or y value) by manually clicking on each data point and typing in a new text. After doing this in Chart Options dialog, the “Automatic Text” option appears.

After searching for some add-ins in xls that can do this automatically, I came across the following site: http://pubs.logicalexpressions.com/Pub0009/LPMArticle.asp?ID=209#jon013).

============================================================================

Using Text in Cells for Data Labels

Excel lets you apply data labels to each point in a series, with options to use the Y values or the X labels in the data labels (pie charts allow a few other options as well). You can manually change each label, but what if you want to use a range of cells in your worksheet as data labels for your chart series? There are a couple useful and free Excel add-ins that can automatically label data points, using labels in a worksheet range:

John Walkenbach's Chart Tools

http://www.j-walk.com/ss/excel/files/charttools.htm

Rob Bovey's Chart Labeler

http://appspro.com/Utilities/ChartLabeler.htm

============================================================================

The above mentioned tools are free and can be plugged into xls as an add-in. I tried out both of them and found it very easy to assign the labels. I hope this information will be useful to you.

Thanks,

Prem Pasupathy

Class of 2007

|| Indian School of Business || Hyderabad - 500 032 || India

Hutch Valutaion and Indian Mobile Market - IK@W

2007-01-15T09:43:00.000+04:00

In case you have not checked out Indian Knowledge @ Wharton, this week is a good time to start. There is a story that gives a 360 view of the Hutch valuation in the context of the larger Indian mobile market. As is typical of K@W it tempers what industry experts have to say with views and analysis from academia, including faculty from ISB:-)

So, any further thoughts, predictions on how this is going to play out?

The Hutch $20B+ Valuation

2007-01-09T13:00:00.000+04:00

Wanted to start a thread on the current bidding war for Hutch! We talked about this in the first Business Intelligence Using Data Mining (BIDM) class today in the context to mobile companies managing churn - keeping subscribers from switching to competition. Studnets alluded to the impressive subscriber growth and the higher than average ARPU that Hutch enjoys. Are there any spectrum issues? There is definitely more to the story...Thoughts??

India's Emerging Mobile Internet: The Spectrum of Choices

2007-01-08T16:17:00.000+04:00

(As appeared in the Dec 31, 2006 issue of Business Today, by Ravi Bapna and Arun Sundararajan)

Yahoo India's screaming billboards remind anybody who hasn't woken up to the fact that the Internet in India is coming soon to a mobile phone near you. Several concurrent trends suggest that this is not wishful thinking. Data from the second quarter of 2006 indicates that mobile phone sales currently exceed PC sales by a factor of fourteen! The disparity is greater in the rural areas, home to 71% of the population. In September 2006 alone, more than 6M new mobile subscribers joined one of the seven licensed operators, taking the mobile user base past the 120M mark. Contrast this with a total of less than 8M wireline Internet subscribers, suggested by the June 2006 data from the TRAI (http://www.trai.gov.in/trai/upload/PressReleases/377/pr9oct06no95.pdf). A PC sold in India isn’t always connected to the Internet, while all mobile devices have basic data messaging capabilities, and not surprisingly, the same report also suggests increasing congestion levels on mobile networks. Together with a rapidly expanding economy, and an increasingly active consumer society, the elements are ripe for a forthcoming mobile based Internet revolution.

Yet, much of this future depends on some key policy decisions that are currently on the desk of the DoT. Foremost, as India gears up to undertake the most ambitious expansion of its mobile infrastructure yet, it is critical that the right companies are allocated the spectrum necessary to (a) accommodate the projected staggering growth in mobile usage, and (b) roll out the advanced high-speed wireless technologies that will form the backbone for mobile electronic commerce in the near future. While much of the debate is being carried out under the banner of spectrum allocation for high bandwidth “3G” services, its context is larger and the policy implications are wider.

It is useful to begin by establishing that the spectrum in question, a certain electromagnetic chunk of the air above us, is a scarce resource, and one that belongs to the public at large. Cellular operators need access to this spectrum to carry voice and data over their networks, and companies around the world have paid a range of prices, from $0 in countries such as Luxembourg and the Czech Republic, to $87.5 million in Slovenia, all the way up to $34 billion for five licenses in the UK. However, it is important to realize that to roll out a new generation of mobile services, spectrum is necessary but not sufficient. The realized value of this public resource and whether the promise of 3G to the common man will be fulfilled also depends on the extent of infrastructure and equipment deployment to follow. The true capacity of 3G depends on not just the frequency of spectrum, but on the extent of massive capital investments in infrastructure (for instance, the density of base stations) that companies choose. Further, better infrastructure implies more bandwidth and greater coverage, which in turn provides a richer infrastructure for mobile commerce. This is important because whether the upcoming allocation of spectrum translates into the ability of a Mumbaikar to watch a streamed Bollywood classic on the long commuter train ride home, or the ability of a rural farmer to get customized instructional help on nurturing the latest fruit varietals given his micro-climate, or an enterprise capability to seamlessly string together a mobile video-conference on the fly also depends on subsequent entrepreneurial activity in mobile application and commercial development.

To summarize, the value proposition of 3G lies in making the spectrum available efficiently, ensuring adequate subsequent infrastructure roll-out and providing the right incentives for innovation in providing the content and commerce that will follow.

Allocating 3G Spectrum and Subsidizing Infrastructure Deployment

Given that we have upto seven operators vying for five 3G slots that are being vacated by the Defense, a well designed lump-sum fee spectrum auction is an effective way of identifying the most capable companies. Yes, an auction is clearly better than a "beauty contest" in which allocation decisions can often be flawed because of politics or an incomplete understanding of the true capabilities of the contenders. However, it is equally important that we utilize the current state-of-the art in spectrum auction and mechanism design. This includes allowing for bidders to use so called “bundle bids” to express complementarities in their valuations for getting, say, an extended urban area or a certain contiguous region to derive economies of scale. Under such a scheme, bidders could jointly bid for say Delhi and Punjab and Haryana, or submit a bid that reflects synergies in the market for Mumbai and Maharashtra. These synergies are natural if one factors in the ability to share marketing and customer service infrastructure and reduce roaming charges to subscribers. While bundle auctions are mathematically complex, significant recent advances have been made in reducing the computational burden of such auctions. For instance, the Adomavicius and Gupta combinatorial auction from the University of Minnesota presents a user-friendly and real-time English auction-like version of such a mechanism.

It is also worth noting that India's mobile market is brutally competitive, and the desire to win will likely cause companies to overbid for their licenses. This is risky, because the winning firms may end up saddled with excessive debt and an inability to raise the capital needed to profitably build out their infrastructure. This in turn will hurt the evolution of mobile commerce in the country.

Keeping in mind the need for rapid infrastructure buildout following the allocation of spectrum, we recommend that the license revenues be utilized to subsidize the future deployment of infrastructure. This can be achieved by providing the winning firms infrastructure buildout subsidies that are proportionate to their winning bids and their subsequent on-the-ground activity. This will favor those companies that have the desire, capability, capital and plans to deploy the best infrastructure possible over ones who bid a lot for spectrum and then don't build out sufficiently. True, this could inflate spectrum bids, since companies will adjust for getting back some of their bid as a subsidy. But this is a not necessarily a bad thing, because it aligns private and social incentives, by committing the winning companies to putting in future infrastructure. The key idea is that once the spectrum is won, the cost of the winning bid is sunk, and the subsidy gives companies steeper returns from infrastructure deployment, which increases their incentives to do so, and accelerates both the pace and quality of the backbone for mobile ecommerce.

Will the Indian Mobile Net be Neutral?

In case you are wondering why the subsidy should be give to the operators and not, say, to the future content and commerce providers, you are onto something fundamental. A passionate debate along similar lines is now under way in the US, under the banner of “net neutrality”. Should an ISP be allowed to charge you higher rates for visiting Google rather than Yahoo? Is it in the spirit of the Net to start looking inside data packets to ascertain where a packet is going, or what application it belongs to? Should a VOIP packet at a given router be preferred over a WWW packet, or priced differently? Should a minority inner-city neighborhood be given the proverbial bypass on the information superhighway?

Once the spectrum is won, and sufficient infrastructure is put in place, it is reasonable to assume that carriers will need to do what they can to recoup their investment and maximize their rate of return. They will be tempted to translate their control over the channel into discriminating in favor of content providers who are either owned by them, or who pay them better licensing fees in exchange for access. This reduces the incentives of independent content providers to innovate, because of what economists call a threat of "holdup", and a fear that they will not get enough returns on their innovation because the infrastructure provider will extract disproportionate economic rents. A similar story played out for a long time in the past with long distance telephony in the US, where the local access provider charged the long-distance providers a hefty percentage per minute. Currently, the wireline Net is neutral in the US, and the debate isn’t likely to end soon. The key lesson for us in India is that we have to be careful not to commit to policy that gives the infrastructure owners too much power, since they could strangle future innovation in content, commerce and application development. But yet, they have to have enough skin in the game to feel comfortable spending billions on the spectrum and infrastructure so that the content and commerce emerges.

All told, there is a delicate balance to be struck, one that calls for a national debate and the use of global thought leadership. The future of ecommerce in India rests on it.

(Ravi Bapna is faculty member at the Indian School of Business and is the Executive Director of the Centre for IT and the Networked Economy. Arun Sundararajan is a faculty member at NYU's Stern School of Business and Director of the IT Economics track at NYU's Center for Digital Economy Research)

The Information Systems (IS) Residency Program

2006-11-17T09:42:00.000+04:00

The IS residency program at CITNE is designed to host and mentor late stage PhD students from leading research universities around the globe with an interest in pursuing ICT centric research that is applicable to business and society. The program will match students with host companies on the basis of their research interests, their methodological skills and the research needs of the host companies. A typical residency will last anywhere from four to six months but could be extended to a maximum of a year on a case by case basis. In addition, for the duration of the residency, the students will be treated as Research Associates at CITNE, ISB and will be given equivalent of graduate student housing, travel money and a research grant to cover expenses. They will also be encouraged to take equivalent of PhD level methodological courses that are offered to Academic Associates at ISB.

Topics can range from, but not be limited too, software engineering excellence, 3G mobile-commerce, Web 2.0, the economic impact of peer-to-peer and Grid computing models, understanding the determinants of innovation diffusion, search optimization, auction design and evaluating the impact of ICT of firm and economic performance.

Our initial partnership in this project is with the QAI and Bill Curtis’ Workforce Development Global Center of Excellence (WD CoE) in Bangalore.

For Late Stage Graduate Students

You will be required to submit a five page research proposal that clearly demonstrates the applied and relevant nature of your research problem. You are also encouraged, but not required, to list potential industry host companies where you would like to pursue your research. Applications should be submitted as nominations by your dissertation advisor or your Dept.’s PhD program coordinator.

For Host Companies

Companies seeking to collaborate with late stage PhD students, any by extension their advisors, from the leading research universities around the world are encouraged to view this program as a way to get world-class, unbiased and generalized insights and analysis into future trends, products, services, processes and business models. They are encouraged to provide specific problems they would like to seek collaborations on, and will be required to provide a senior mentor who will guide the PhD student’s research within the firm. Additional thought leadership will be provided by CITNE and WD CoE mentors.

Cost

Each graduate student residency will cost the host company a sum of INR 6 lacs (USD 13,333) for a period of upto six months. This money will be used to fund the student’s stipend, travel, research allowance and administrative overheads. The program is developed on a cash-neutral basis.

About CITNE at ISB

CITNE, ISB's Center for Information Technology and the Networked Economy is multi-disciplinary research center aimed at fostering rigorous and relevant ICT centric research and education to maximize the global competitiveness of the ICT industry and in promoting the country’s economic development. CITNE is conceptualized as an atrium of minds, where a free flow of ideas takes place between IT researchers, practitioners, graduate students and entrepreneurs.

QAI is a leading global consulting organization addressing knowledge intensive industry sectors such as the IP/BPO space and delivers multi-faceted interventions to enhance the innovation and competitiveness of organizations.

3G: Going, Going, Gone!

2006-11-10T05:26:00.000+04:00

This is the orignal (unabridged) version of my Economic Times editorial piece (Oct 31, 2006) on the upcoming sale of spectrum in India.

3G - Going, Going, Gone!

The brutal pun notwithstanding, these are interesting times if you care about the air above you. The issue here is about value. Economic value of the 25 MHz of spectrum that is soon to become available to the seven or so licensed cellular operators operating through the country. Technical constraints specified by the IMT-2000, make feasible three indivisible chunks spectrum that can be sold (5 MHz, 10 MHz, 15MHz). You don’t have to be mathematical genius to realize that a maximum of five spectrum slots (of 5 MHz each) can be sold. With potentially seven operators vying for five slots we have a scarce resource, which begs the question of deciding which cellular firm gets how much spectrum and at what price.

Prior to delving into matters of mechanism design and valuation elicitation, let us establish a few fundamental facts. No one entity owns the air above us! Period. It belongs to you and me and all our neighbors and our neighbor’s neighbors and so on ad infinitum. Profit maximizing cellular operators that wish to use the air need to pay the Government for the privilege to do so. In 2000, in a 3G spectrum auction designed by Professors Binmore and Klemperer, telecom operators in the UK, with a population roughly 60 million, paid $34 billion for five licenses. In 2001, in tiny Slovenia, with a population 1.9 million, the price of the single license awarded was $87.5 million. To put things in perspective, at the time of writing there are 117 million paying mobile subscribers in India, with no telling where we will be by 2007, when 3G services roll out.

The fundamental question here is determining a fair and transparent mechanism that decides the allocation and pricing of a scarce national resource. Common sense suggests that the allocation should be efficient. In economic terms, allocative efficiency is maximized when the mechanism is able to identify and transfer the resource to the firm that values it the most. The TRAI, like any good regulator, is also concerned about protecting the consumer. This translates to doing what it can to ensure lower prices and better services for the consumer. Finally, subject to other constraints, the mechanism should not leave the public’s money on the table. Based on prior practice in a host of countries, it is reasonable to claim that choice is between an auction and a so-called “beauty contest.” In the latter firms submit business plans and the government identifies which companies are the best. In contrast, in the case of auctions, firms are forced to put their money where their mouth is.

To gain a better understanding of the comparison of the two approaches let us examine the source of the value from 3G. The expected value of the 3G technology, a future technology, to any firm is going to depend on the nature of applications and services it provides, the perceived value to the consumer of its’ offering relative to that of the closest competitor and the slice of the Indian mobile market (of roughly 320 by 2010) million, it can capture. One simple and grossly sub-optimal heuristic comes to mind! How many paying subscribers will be willing to watch a 255kbs live video stream of an Indian v. Pakistan cricket match while sitting in a commuter train from one of Mumbai’s suburbs to the city? How much will they be willing to pay for such a service, or for watching a Bollywood blockbuster on a quick train ride from Delhi to Chandigarh. The bottom line is that nobody knows what future 3G services will be offered, by what firms and at what price. The information asymmetry is grossly in the favor of the firms, with their deep pockets and a battery of pinstripe consultants they can hire.

The regulator has to design a mechanism that seeks this information to the extent it can, and making sure that the signals it receives are credible. One sure way to achieve this information elicitation in a fair and transparent manner, and protect the consumers’ interests, is to carefully design an auction that facilitates price discovery (firms will come in with their initial valuation estimates and the mechanism should facilitate it’s revision), determines an efficient allocation and which culminates in a lump-sum payment by the winning bidders to the government. I will argue that in the Indian context, an equivalent fair and transparent beauty contest cannot be designed (notwithstanding high auction prices and related financial difficulties faced by operators in some countries), simply on the virtue of the fact that it is almost impossible to hold anyone accountable to the business plans they present. Any allocation of this sort cannot, ex ante, come close to guaranteeing efficiency, that is allocating the resource to the firms that will make the best use of it.

There are other technical and economic auction design issues that the authority will do well to seek expertise on. They will be the subject of another piece. However, it is worth bringing up a key point that may not be obvious to the casual reader. It may not be obvious why high auction prices paid by companies for the spectrum will not be passed onto the consumer. The key to this insight lies in viewing the lump-sum auction fee as a sunk cost that is part of doing business risk, similar to say an infrastructure company building a toll-bridge with the expectation that people will pay to cross it. Of course, that depends on what alternative people have to that bridge, which is where the issue of competition comes in. As long as the auction design ensures that there is significant (four to five players) competition in the market, prices for future 3G services in India will depend on what the market forces determine. A lump-sum sunk cost is the only fool-proof way to prevent strategic high bidding by some operator, who can then renege and renegotiate based on say political clout in a different political climate.

The TRAI has boldy and correctly invited everyone to the dance floor. Let the music begin!

hmm, so i have a blog

2005-12-01T00:24:00.000+04:00

ended up creating this in order to post a comment on amardeep singh's fantastic blog. lets see how it evolves...