India’s telecom companies are at a war involving the mighty new entrant Reliance Jio (RJio), a fully owned entity of Reliance Industries versus the rest which include Bharti Airtel, Vodafone and Idea.
The three main existing players with Airtel being the leader are well-established but still cagey about the game plan that the Mukesh Ambani-steered RJio has up its sleeve.
In the works for six years with a whopping investment of Rs 1.50 lakh crore and a headcount of 60,000, a passionate Ambani unveiled the project with free service till December 31, 2016. Beyond the free run, RJio claims its 4G-driven mobile internet would be available at one-tenth of the global price. Independent analysts, as also the incumbent telcos, see this nothing short of a price war. If it is so, then as they say, every thing is fair in love and war.
For now, the customers, who were feeling rather helpless about the call drop problem, are being given the prime slot as RJio targets 100 million subscribers in 100 days. And Airtel-Vodafone-Idea trinity would leave nothing untried in the coming few months first to retain their subscriber base, which is close to one billion, and then to somehow see that an unpleasant scenario is created for RJio customers right from the beginning. There would be charges and counter-charges, but then it if is a war, such things are expected.
If there is one thing that the incumbent telcos are pretty sure about, it is that RJio is ‘too big to fail’. This they would happily concede, but what they apparently want is that Ambani’s mighty project should not be given a walkover. So, they would do anything and everything to keep the Telecom Regulatory Authority of India (Trai) busy as customers see escalation of the battle in the weeks and months ahead. Though the government, including the Prime Minister’s Office, has kept itself away from the slugfest, it is evidently keeping an eye over the developments with a no-nonsense Telecom Minister Manoj Sinha giving enough rope to the industry to slug it out.
As one thing, like not making available points of inter-connection (POIs) by the incumbent service providers seems like getting resolved, yet another crops up. Now, the fight is over number portability, which, according to RJio, is sought to be blocked by the existing players, who expectedly deny the charge. Such a clash would surely cause inconvenience to RJio customers, who perhaps, are also prepared for such roadblocks, thanks to the kind of public awareness that is being created by the corporate war.
Too many irritants
Too many irritants at the beginning of the service to RJio customers would be a gain for incumbent service players. Here comes the role of the regulator, which has to strongly intervene and ensure that all the licensing conditions are adhered to by both the new and the existing players. On the face of it, the “tsunami” of free calls by RJio terminating at Airtel or Vodafone points looks conforming to the rule book as such freebies are allowed in the initial months of a commercial launch.
Still, Trai need not play goody-goody to either RJio or the trinity. As things stand today, it is pretty clear that it would not be the way earlier Reliance telecom forays – now controlled by Anil Ambani – went about. This is a bigger war with a personal stake of Mukesh with, many would argue, tacit support of the government’s “Digital India” drive. The Sunil Mittal-headed empire along with other players might even go to court against Trai and RJio, but that again would be a tactic to delay the smooth launch of the new service that would solely bank on all-IP, only LTE, 100% VoLTE (voice over LTE) – essentially high speed 4G.
Several global analytical firms have rightly suggested a better course of action for the incumbent players: instead of wasting their energy in a policy battle, they must play to their strength. After all, Airtel remains by far the leader and would remain so in the immediate future. However much RJio tries, it would not be able to equip the subscriber base of the existing telcos with 4G equipment, though it has brought down the price point of the handset to the sub-Rs 2,000 category and an upgrade at sub Rs 3,000.
The data market still remains largely uncovered, while voice can be improved in terms of quality of calls, which still drop. With spectrum being an expensive source and the pressure on telcos to go for more of it, there is a pertinent question about the viability of the industry since it remains under heavy debt, including RJio, funded by Reliance Industries which was cash rich till it embarked on a humongous investment of Rs 2,50,000 crore on extra hydrocarbon business and forays into telecom sector.
Mukesh Ambani sounds confident about his balance sheet, describing it among the strongest of the global peers, while Bharti Airtel is able to service its part of big debt thanks to a robust cash generated by its 250 million plus subscribers base. In the long haul, the industry has a huge potential for everyone, courtesy a large untapped market. For now, it all looks “Mahabharat” at play, though all the warriors may emerge as winners and not losers. The biggest gainers would be you and me as consumers, as it is we who make them winners.
(The writer is a senior journalist based in New Delhi)