Corporate Aug 23, 2013
Reliance Jio Infocomm has finally thrown its hat in the ring and could soon offering voice telephony to you and me. But more than what it will do to the voice market, Reliance now needs to be watched for pricing and competitive action in the high-speed data market with Bharti's 4G offering coming directly in its line of fire.
Reliance Jio is the only pan-India 4G spectrum holder and forked out over Rs 12,800 crore to bag pan-India BWA spectrum in 2010, much more than competitors shelled out. Now, it has put in application for Unified License last evening according to two different stories in the Economic Times and in Business Standard newspapers. This application, which could be approved and a license granted as early as next month, means Reliance Jio can offer any kind of service including voice with a single license which is now delinked from spectrum. Reliance Jio will have to pay an additional Rs 1,658 crore to get a UL. New guideline governing UL allow internet service providers like Reliance Jio, which owns airwaves for broadband wireless access (BWA), to also provide voice services using the airwaves.
But like we said earlier, the debate over whether Reliance Jio will bring a tsunami to the voice market is a bit premature. What it could immediately do though is revolutionise the data market. Reliance is a pan India player in 4G space whereas closest competitor Bharti owns spectrum in only four circles of Maharashtra, Kolkata, Punjab and Karnataka. Bharti is the only player to have launched 4G till now. Kunal Bajaj of Analysis Mason told Firstpost that a Unified License will allow Reliance Jio to offer 'fixed voice' services which are like shared telephones similar to the 'Tata walkies' some years back. "This service will not use the traditional mobile phone but shared phones and will be similar to what Airtel is using for its 4G services."
So in effect, Reliance Jio could be looking to revolutionlise the data market for now, not so much voice telephony. But herein lies the problem. Pure data services do not have a big enough market as of now and so Reliance definitely needs a tieup to bundle data and voice together. High-value customers-most of whom are with players using GSM services-are the ideal target audience for premium services like 4G. They are already getting voice as well as data under 3G services. Reliance needs these high-value customers to migrate to its service under 4G but this will only happen when it finalises a tieup for voice services.
Bajaj pointed out that no where in the world have voice services been offered on 2300 mhz spectrum band with Long Term Evolution technology (this is what Reliance Jio has at present) and it is difficult to offer voice services continuously on this spectrum band. If the company were to indeed try offering voice, it will not be compatible with current handsets and newer devices will be needed. Voice business will only make sense if Reliance Jio were to tie up with existing voice operators to offer intra circle roaming etc but here, the sector is still mired in uncertainty since such pacts are not permitted in 3G voice services and only conditionally permitted for 2G. In short, voice telephony may be some time away for Reliance Jio and will make sense only if it either acquires 1800 or 900 mhz spectrum in ensuing auctions or acquires an existing voice player.
There have been enough protests by the big daddies of mobile telephony over Reliance Jio being given UL earlier and their fears cannot be dismissed all together. Earlier this year, Reliance Jio had accused incumbent GSM biggies of not wanting to lose their "monopoly" over the mobile voice market. "In our opinion, the current unfolding of events shows the incumbent cellular operators and their association COAI are scared of the new competition. They fear that implementation of the Unified License (UL) regime will deprive them of their monopoly over the mobile voice market and therefore they are now opposing the very implementation of such regime and other pro consumer policies of the government like One Nation-One License and One Nation-Free Roaming etc," the company had said in a letter to DoT.
There is very real fear out there - if Reliance does begin offering voice over broadband, it can provide very stiff competition to other BWA spectrum holders such as Bharti Airtel.
COAI has said earlier that the policy of allowing broadband players to offer voice telephony was illegal and alleged that in the notice inviting application, issued prior to the broadband spectrum auction in 2010, it was clearly written that companies that chose to pick an Internet service provider licence (ISP) will not be permitted to offer voice service. The COAI further said the DoT has stopped 3G operators from offering intra-circle roaming services on grounds that the notice inviting application (NIA) did not include this.
"The DoT is clearly violating the provisions of the notice inviting application for broadband auction. Differential interpretation cannot be given to the NIA for two auctions with different outcomes for two set of operators," COAI had said.
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