C-DOT, Telecom and the Bottom of the Pyramid

Recently, C-DOT celebrated the Silver Jubilee of its founding. The alumni had many events and among other things launched an India Think Tank. C-DOT had a checkered history. Please see my earlier post on C-DOT for background. But, in C-DOT and Telecom there are some very interesting lessons for India.

C-DOT was synonymous with the transformation of Indian Telecom. In 1984, Indian Telecom was in a very bad shape. Troublesome electro mechanical exchanges, severe call congestion and a five-year waiting list for a telephone connection characterized Indian telecom. It was at this stage that Sam Pitroda with C-DOT began what became a remarkable re-engineering of the telecom sector. C-DOT, the inspiring vision of its founding leaders, the dedication of the young engineers, the maturity of the political leadership of the time, the consequent sustained government policies, a transition from monopoly to healthy competition, the regulators who moved in place, and finally the Indian entrepreneurs who run telecom today- together made this huge transformation possible. They redefined telecom and gave it a new meaning in India.

C-DOT’s success is not to be measured by the Erlangs of traffic carried by the C-DOT switches today, or what C-DOT is up to in 2009. C-DOT’s original, highly published 36/36 mission was to build digital switches for India; but the true mission was to act as a catalyst to begin a Telecom transformation. Both got achieved. C-DOT’s legacy is a positive and deep-rooted transformation in Telecom. It was the forerunner to the Telecom and IT revolutions that followed.

Telecom is arguably the only sector in which such a massive and dramatic change for the better happened in the last two decades. C-DOT happened at a time when the country was in the depth of its “phoren” syndrome, when everything foreign was good and we as a nation were very unsure if “we could ever do it”. Those were the days of a closed economy and a veritable license raj, with the good old Ambassador cars and Vespa scooters ruling the roost with long waiting lists. The waiting time for telephone was five years.

In 2009, there are many things good about India today. We are the largest democracy, India now has a fast growing world class telecom services industry; Tatas have impressed the world by successfully designing and producing the Nano; we have built a growing and well respected IT industry; India has entered the nuclear club and launched a moon mission; Delhi metro is evolving into a success story; we have some of the largest oil refineries in the world; we recently found a very large gas deposit; we boast of a thriving entrepreneurial class; we have produced may billionaires, richest men in the world; our middle class is bulging; we came out of the 3% “Hindu rate of growth” and are in a sustained 6 to 8 % growth bracket and so on…. But, we also live in the same country in which, many things have to improve big time. Just step outside Bangalore, our IT Capital, into the nearest rural hamlet - you will encounter a 14 hour power-cut in summer; 50 % of our population can’t make sense out of the morning newspapers – they can hardly read; infrastructure continues to be a mess; a couple of big rains and our metros get thrown completely out of gear; 49% of our children under 6 are malnourished; 65% of our population struggles in agriculture which accounts for just 18% of our GDP; we are not generating enough new jobs to switch them to; 25% of our districts are Maoist infested - mainly due to lack of development; the average time for our legal system to dispose a case is 15 years; 35 million cases are pending; people continue to “buy” their degrees in many colleges in India; we file miserably low number of patents compared to most peers; we are host to the largest destitute population in the world; about half the rural households in India do not have electricity and use kerosene for lighting…the list is endless. In short, India lives in its contradictions.

In such an environment, Telecom got “fixed”. It didn’t happen accidentally on its own. Big changes do not come easy. The bureaucracy, the MNCs and the vested interests would not have allowed it, but for the sustained efforts of a few thought leaders who fought against all odds. These visionaries thought strategically for Telecom and executed the plan. Everyone came together the right way. Slowly we started believing in ourselves. We as a nation demonstrated that “it can be done”. This gives great hope. We can transform ourselves! We need to continue to transform this nation - sector after sector by thinking and acting strategically.

Technological innovation is a useful tool in making such a transformation. In 1984 Telephone was considered the rich man’s toy and it did not get any priority. Early during the C-DOT experiment, through STD-PCO and RAX, the rural and urban masses got a taste of telecom. They loved it and benefitted from it immensely. Suddenly, Telephone became a “must-have” for the bottom of the pyramid and this helped drive the growth. Today, India adds 10 Million lines a month – no other country has ever seen such a growth in the past. It is no longer a luxury, it is recognized as a basic necessity. Therein lies an interesting opportunity.

If we look at the Bottom of the Pyramid as a market opportunity (a concept articulated well by CK Prahlad), we live here within that market and we understand this well. If we could successfully innovate solutions that would work for our bottom of the pyramid in India, there is a huge market opportunity in the whole southern hemisphere – Africa, South America and Asia, the whole of emerging markets. For example, India’s Aravind eye hospital makes world class Intra Ocular Lenses at $ 6 a piece Vs $100 to 150 in the global market. Aravind has already gained 10% global market share. Tata’s Nano built for this market promises converting India into a small car hub for the world. Our telecom service providers have innovated a business model by which they could make good profits even at very low ARPU. India has smart people who could innovate and deliver solutions well – C-DOT and other examples amply demonstrate that. This process can be repeated and scaled in sector after sector – auto, energy, healthcare, agriculture, e-governance, space, infrastructure, transportation and many others. With India’s thriving entrepreneurial skills, the capitalism will take over and run with it, generating enough jobs in the process.

We do not have time to lose. We must take the positives from our successes and pull ourselves up. We are a country of smart people with a strong entrepreneurial culture. The bottom of the pyramid problem is indeed a great opportunity. While the west is running out of growth ideas, we could keep growing rapidly for the next 40 years just addressing this single macro opportunity.

But, this cannot and will not happen automatically. It requires positive belief, strategic thinking and questioning the status quo – exactly like what was done on Telecom. People like Sam Pitroda, Verghese Kurien, Abdul Kalam and others did this very well. We must highlight and learn from these successes. Capability is not an issue in India. It is the mindset change that is most important. Once that gets addressed, the interconnected wheels start moving and achieve great results. If we capture the imagination of people and combine the right vision, strategic thinking, technology innovations, energetic young Indians, supportive government policies, and finally Indian entrepreneurship – nothing is impossible. It is about the collective imagination and mindset of people - policy makers, opinion leaders, media, questioning young people, academicians, entrepreneurs, bureaucrats and others together make things happen.

“It is possible. We can do it.” If we could articulate this well and send out a message loud and clear during the C-DOT Silver Jubilee, and ignite the imagination of people, we would have done a very good job indeed.