US Regulator Unveils Low-Income Broadband Subsidy Plan

US Regulator Unveils Low-Income Broadband Subsidy Plan

US regulators Tuesday unveiled a proposal to offer broadband subsidies to low-income Americans, saying that Internet access is “a prerequisite for full participation” in modern society.

The Federal Communications Commission announced the proposal, which would involve reorganizing the “Lifeline” plan that is now available for telephone service.

FCC Chairman Tom Wheeler said the Lifeline program established in 1985 has helped tens of millions obtain basic telephone service but that today “it doesn’t make sense for Lifeline to remain focused only on 20th century voice service.”

The new plan helps “close the broadband affordability gap,” Wheeler said in a blog post with fellow commissioner Mignon Clyburn.

“The biggest reason these Americans don’t sign up for broadband is cost. Only half of the nation’s households in the lowest income tier subscribe to broadband,” Wheeler and Clyburn wrote.

“Internet access has become a prerequisite for full participation in our economy and our society, but nearly one in five Americans is still not benefitting from the opportunities made possible by the most powerful and pervasive platform in history.”

To win approval, the FCC will have to win over commission members who have been skeptical about such subsidies, claiming the program has been plagued with fraud and abuse.

Wheeler said the plan calls for a new “eligibility verifier” to be “a powerful check against waste, fraud, and abuse” by using a third party system which relies on data from other government programs such as Medicaid and food assistance.

Phillip Berenbroick at the consumer group Public Knowledge welcomed the proposal, saying that “access to broadband Internet service has become a necessity in modern America.”

Daniel Lyons, a scholar at the American Enterprise Institute, said the program’s funding base, a tax on telecom carriers known as the Universal Service Fund, is “unsustainable.”

Lyons said in a blog that the FCC should seek a federal budget item which “would subject the program to greater congressional oversight and impose on the commission a sense of fiscal accountability that the agency currently seems to lack.”

The FCC will vote March 31 on the plan, which would allow the monthly subsidy of $9.25 (roughly Rs. 620) to be applied to fixed or mobile Internet while setting standards for Internet speeds.


Tracxn unveils platform to help angels exit start-ups

Abhishek Goyal, co-founder, Tracxn. Photo: Hemant Mishra.

Abhishek Goyal, co-founder, Tracxn. Photo: Hemant Mishra.

Bengaluru: Start-up data analytics provider Tracxn Technologies Pvt. Ltd has launched an Internet platform aimed at helping early investors in mature start-ups sell their shares by connecting them to venture capital (VC) firms and other institutional investors.

If the platform, called TracxnSecondary, gains scale, it will increase liquidity in the Indian start-up business that is often criticised for not returning enough cash to investors.

Eventually, Tracxn plans to expand the platform to include start-up employees, who can use it to liquidate their stock options. Stock options are a key part of the compensation package for senior executives in some start-ups, especially among the highly valued ones such as Flipkart Ltd and Snapdeal (Jasper Infotech Pvt Ltd).

“(Angel investors) have been sitting on a very large pile of stock, which is very highly valued but still not liquid,” said Abhishek Goyal, co-founder, Tracxn. “Angels want to make more investments. The market is really attractive, (but) they’re all looking for liquidity. At the same time, there are a lot of international funds who want a small exposure to India. So there’s demand (for such a platform) on both sides.”

Tracxn has started working with a few angel investors and hopes to initially have a portfolio of 10 companies that have raised more than $50 million, including the likes of Flipkart, Snapdeal and Paytm, on the platform.

Within 30 days of launching it in India, the company will expand TracxnSecondary to Southeast Asia. “These are the geographies where the ecosystem is new and there aren’t many structured secondary avenues. The kind of funds we are working with are dedicated secondary vehicles, whose mandate is to buy from angels and make money on that, and that kind of ecosystem doesn’t exist in India right now. This is true for all emerging markets,” said Goyal.

Over the past two years, investors have pumped in more than $9 billion into Indian Internet start-ups, betting that the explosion in smartphone sales and the corresponding mobile Internet connections will lead to unprecedented sales growth for these young companies.

Unlike the two other large start-up hubs, the US and China, India is thought to suffer from a lack of ‘exits’—industry jargon for initial public offerings or acquisitions.

No Indian consumer Internet start-up launched over the past decade has gone public yet, meaning that a majority of the cash pumped into start-ups by investors has only increased in value on paper.

Liquidity has improved slightly over the past three years or so. The sale of bus ticketing site Redbus to South Africa’s Naspers Group in June 2013 is a rare case of start-up investors actually receiving millions of dollars in cash (other start-up deals since then have weighed heavily toward stock swaps). Early investors in a few start-ups including Flipkart, Snapdeal and Quikr have also seen some returns on their cash investments by selling shares in secondary deals to other investors. Secondary sales of shares, however, continue to happen rarely.

TracxnSecondary hopes to help increase the frequency of secondary transactions. Whether the platform can gain scale will eventually depend on the investor sentiment toward start-ups. Currently, after an investment boom of nearly two years, VC firms and others have become cautious about start-ups.

TracxnSecondary also plans to work with large family offices looking to invest in start-ups. The firm said it will connect institutional investors to angels, and not as a peer-to-peer marketplace, so as to avoid regulatory issues. “ESOPs (employee stock ownership plan) will take time, as that is more regulated and require tie-ups with companies before we take that forward, so we’ll extend that a little later,” Goyal said.

Though Tracxn primarily provides data and analytics to help venture firms and corporate venture arms make investment decisions, this is its third initiative that goes beyond offering data. It has a platform called Tracxn Syndicate to connect start-ups with potential investors, and a start-up incubator called TracxnLabs, backed by Flipkart co-founders Sachin Bansal and Binny Bansal, to invest in new companies and help them grow.

The three-year-old firm was started by Abhishek Goyal and Neha Singh, former VC investors at Accel Partners and Sequoia Capital, respectively. Tracxn has so far raised $3.5 million from Sachin and Binny Bansal; Sahil Barua, co-founder of e-commerce logistics firm Delhivery, and VC firm SAIF Partners. It has received undisclosed amounts of money from Ratan Tata, chairman emeritus of Tata Sons Ltd, former UIDAI chairman Nandan Nilekani, Aarin Capital co-founder T.V. Mohandas Pai, WhatsApp vice-president Neeraj Arora and Junglee co-founder Anand Rajaraman, among others.

Tracxn currently analyses start-ups in India, the US and Southeast Asia in about 100 sectors, including enterprise infrastructure, enterprise applications, technology, consumer, mobile, digital marketing, health and education, and works with over 200 clients.


Xiaomi unveils Mi5 smartphone to spearhead sales drive beyond China

Xiaomi became the world’s second most-valuable startup after a 2014 funding round that valued it at $45 billion. Photo: Bloomberg

Xiaomi became the world’s second most-valuable startup after a 2014 funding round that valued it at $45 billion. Photo: Bloomberg

Beijing: Xiaomi Corp. trotted out its latest marquee smartphones as billionaire co-founder Lei Jun counts on the Mi5 to kick-start growth and claw back share in a slowing Chinese market.

The new phone will go on sale from 1 March starting at ¥1,999 ($306), similar to the previous generation, with a faster Qualcomm Inc. Snapdragon processor and fingerprint- reader, Lei said Wednesday in Beijing. Xiaomi became the world’s second most-valuable startup after a 2014 funding round that valued it at $45 billion.

The Mi5 will form the vanguard for Xiaomi, which is trying to sustain a meteoric pace of growth that saw it displace Apple Inc. and Samsung Electronics Co. from the top spot in its home market. The company began selling phones in India and is branching into Internet services and new gadgets to offset slowing domestic demand that saw it overtaken by Huawei Technologies Co. in China.

“Xiaomi should put aside concern about sales numbers and market share,” Lei said at the event. “Thrilling new products and continued support from Xiaomi fans are two key issues we should care about.”

Xiaomi had been one of China’s most exciting startup stories of the past few years, after a fairy-tale run of growth that helped it secure $1.1 billion in 2014 from investors including GIC Pte., All-Stars Investment Ltd. and Russia’s DST. Its market share however has since been pinched by competitors including Huawei, the country’s leading brand in the fourth quarter.

It sold more than 70 million smartphones last year, falling well short of target and prompting Lei to tell employees he was refocusing research efforts into “cool stuff” like robotics and virtual reality. On Wednesday, executives declined to comment on a Reuters report it planned to develop its own mobile processor chip.

Shipments of Xiaomi’s Mi4 series exceeded 16 million units as of the end of January, Lei said.

Like its peers, Xiaomi now heads into a challenging year. Apple and Samsung have both warned of decelerating smartphone sales as markets become increasingly saturated and the economy in China —the world’s biggest mobile market by volume — slows.

The company also unveiled a premium version of the Mi5 that sells for 2,699 yuan with both versions running on Qualcomm processors and fourth-generation plus networks. Bloomberg