more evolved for 4G, while Jio initially took on 2,300 MHz. Only later did Jio apply and securel,800 MHz in the auction of February 2014 by paying Rs 11,100 crore as spectrum fees. In the auction this year in March, Jio secured spectrum in the 800 MHz band for another Rs 10,100 crore. The spectrum auction fees are not paid in one go, but is spread over the licence period. And yet, it is still a substantial cost to operators and the reason why their investment in infrastructure is low.
Jio employees say they have been able to integrate the 1,800 MHz and 2,300 MHz bands for rolling out their services. Industry sources say this integration is not easy and is a technology challenge. Industry observers say the company is still working on the integration of800 MHz, while the 1,800 MHz and 2,300 MHz integration is complete. This means the rollout will not be a big one of both voice and data across the country. The first phase will be in those 13 circles in which Jio has both 1,800 MHz and 2,300 MHz. This will be followed later with a rollout in circles where Jio has just 800 MHz.
Data Is King
Jio may roll out over the coming years and cover 800 cities, but it is not seen as a challenge for voice services. Its biggest advantage is that it is a data network and offers far superior speed than anything else (The Thrills of Speed).
Data revenues are growing fast for all the operators. In
Data revenues are growing fastforalloperators
fact, the smaller operators with limited circles sell more data packages than voice. For instance, if you notice the advertising of Sistema Shyam Teleservices, which sells telecom services under the brand name MTS, you would think it is an Internet service provider, selling dongles. Similarly, Tata-DoCoMo also positioned itself as a data service provider. Air- tel’s data revenue as a percentage of total mobile revenue is in the range of 16 per cent to 17 per cent and growing much faster than its voice revenues. Every operator is witnessing a similar growth in data volumes and revenues. This is the low hanging fruit that Jio is expected to capture by becoming the second SIM in existing handsets. Consumers may continue to use voice with their existing providers, but for heavy data usage they will shift to a Jio SIM.
Which is why one of the first apps that Jio launched is a WhatsApp clone called, uninspiringly, Jio Chat. The app allows users to video chat, besides a few other bells and whistles. It may not have caught popular attention but it did trigger an action from operators, who first began favouring some apps and choking bandwidth for others. While the issue was labelled as a Net Neutrality battle, it was really more of a peremptory strike by incumbents against Jio’s app-based strategy.
Jio’s strategy is not just about apps; it includes a combi
nation of products and services. Jio Chat is an example of one such product, which can be downloaded on any phone and can work with any operator, though to realise its true potential you might need a second SIM card from Jio.
Breaking Out In Hotspots
A similar product is offering broadband wi-fi services in select locations. Jio has been studying user behaviour patterns in Ahmedabad by offering broadband wi-fi services in six-eight locations. These services are in malls and open public spaces. The company may offer more such hotspots to let people experience Jio services.
Wi-fi is an important area for all telecom operators. Vodafone, Airtel and even Idea seem to be developing hotspots or working with wi-fi operators. Jio is using a blend of LTE and wi-fi networks to provide connectivity in select spots, but this will only proliferate. It is working with state governments and city authorities to provide wi-fi services, according to the Reliance Industries annual report for 2014-15.
RAMPING UP APPS Another product that Jio is
Jio s WhatsApp clone, Jio planning to launch is My-fi, a Chat, triggered action „ … , . , , .
from rival operators small credit card-sized device
that one can carry to create small wi-fi zones. This is a product for todays digital connected- everywhere generation. Jio officials confirm the device exists and there are pictures of it floating online. The pricing for My-Fi is said to be Rs 1,800-2,000 but this is conjecture. Technically, people could use their existing phones combined with My-Fi to make voice or video calls, provided the data charges are low; so low that users won’t think about their consumption patterns while using it.
High-speed broadband connectivity over fibre and wireless-to-home is another product that the company is developing, according to its annual report and other
sources. One of its breakthrough products uses a micro base station installed outside the home. This will provide a number of services. Technically, this base station can provide video content for IP-enabled TVs and of course, broadband into the house. This is expected to disrupt DTH service providers, who are the only HD quality TV services providers.
Jio has also developed a bigger version of its micro base station to service a whole colony. This unnamed station can also function as a wi-fi hub like the GBM towers. It is small enough to be placed on an electric pole and has been developed by Cisco under its small cell network. It covers a radius of50-60 metres.
Within its content services, Jio is also planning to launch a set-top box that can replace existing DTH boxes. With these, one can watch the past seven days of programming from the cloud. It also allows people to buy and download movies and keep them in the cloud to watch later. To make this possible the company has invested in a data centre to host these services. While the size and capacity of the centres is not known, its existence gives Jio a big edge and pitches them against not just telecom operators, but also digital services providers like Googles YouTube or even Facebook’s WhatsApp Messenger. Both these Internet companies are not able to offer high quality HD content as their data centres are outside the country.
The data centre is also important as Jio is offering VoLTE that perforce requires a telecom cloud. Sandeep Girotra of Nokia says, “For VoLTE to successfully take off in India, an underlying IMS (IP multimedia systems) network is a must. This also requires a gradual shift towards Telco Cloud, where many of the IMS infrastructure can be on a cloud platform, making it faster and easier for new applications like VoLTE to be deployed.”
As for Airtel’s plans to bundle content along with its 4G service, Srini Gopalan says: “Differentiating telecom services using content is old school. There are obvious limitation of both content and bandwidth here. There is a shortage of spectrum and till it is resolved it is not possible to realise the potential of mobile broadband.”
Airtel is not the only sceptic. Other companies like Vodafone and Idea are also not following a strategy to seed the market with both content and devices. Jio, as a pioneer, has to create the market and has no choice but to shoot the arrows and scare away competition. It is also hoping that the seeds it has been sowing for so long, will give it a rich harvest soon. ED
- Yatish Rajawat is a smiorjournalist based in Delhi
& @yatiskrajawat For more on telecom, visit www.businessworld.in
HE ROLLOUT OF RELIANCE JIO’S 4G SERVICE this time may cause ripples, but not waves or a tsunami as the entry of Reliance Infocomm had caused in 2001, supported by distortions in policy framework then. There have been massive expectations in the telecom sector ever since Reliance Industries (RIL) acquired a majority stake in Infotel Broadband, which won pan-India broadband wireless access (BWA) licenses in the 2010 auction. The expectations have hinged on Mukesh Ambani-led Reliance’s re-entry into the telecom space through Reliance Jio Infocomm. The Reliance group’s foray into the mobile segment in 2001 via Reliance Infocomm had challenged and practically transformed the country’s telecom landscape through its market-disruptive strategies through blatant policy manipulations and large-scale operations. Back then, Reliance was instrumental in introducing various offerings at dirt-cheap prices, which went on to revolutionise wireless growth in India. The industry, experts and users are now expecting a very similar wave to sweep the broadband segment.
Coming to the positive side, Reliance Jio does have several inherent strengths as a company. It always had the financial backing of RIL, one of the largest business entities in the country. Due to this, the company always had sizeable resources and in the past, it has been a market changer with disruptive marketing strategies. That is no longer a plus
point, when incumbents too are well entrenched, technologically and financially. In the past three to four years, Reliance has managed to build up significant capacity. It has a fairly large and geographically well- spread network and Reliance has always seemed to maintain cordial relations with top government officials. Somehow, whenever someone decides to analyse its history, they realise that various policies were tweaked to favour them from time to time.
Reliance Jio aims to become India’s largest telecom player within three years of its service launch and to break even by the end of the third year of operations, many believe that Reliance Jio can change the pecking order in the world’s second-largest telecom market. But personally, we feel there are some major obstacles that Reliance Jio might be facing at the entry level. The potential challenges are very basic in nature, i.e. a weak device ecosystem, lack of backhaul network support and issues related to the low density of 4G networks. The already saturated urban voice market and the incumbents’ underutilised 3G networks will definitely pose challenges. Passive infrastructure sharing with existing incumbents will help Reliance Jio in the short-term only, but pan-India service strategy will require the establishment of new towers and cables, leading to huge capital expenditures.
We believe that while the company may want to adopt the strategy of disruptive pricing again, the scenario has changed significantly over the past decade or so. Customers are more educated and spoilt now. They would need a strong reason to switch from one operator to another. Either the quality of service being offered by Reliance Jio has to be the key differentiator or the price strategy of the service has to be extremely attractive for majority Indians. However, this doesn’t seem to be an easy task in the ruthless telecom market that currently