How Reliance Jio will challenge conventional telephony?

Expecting a big upheaval in market, telecom firms are keeping a close eye on the scenario likely to unfold after launch of Reliance Jio Infocomm’s 4G LTE service in India later this year.

In a first of its kind pan India Unified License for 22 circles, Reliance Jio is all set to become the first telecoms in the country and also world to launch a massive roll out of 4G services. Unified license allows Reliance Jio to brand and basket all telecom services including voice telephony under a single license. Sharing of telecom network infrastructure with existing players will help cut cost and is likely to accelerate commercial roll out process at a faster and economical manner.

With its focus on network infrastructure, technology application and services – Reliance Jio has adopted a partnership based business model for telecom infrastructure for 4G wireless and OFC based high speed broad band services. It plans to use LTE technology for its countrywide next generation network (NGN) deployment to extend connectivity and facilitate digital services to customers.

Reliance Jio has planned to provide advanced 4G voice calling, using VoLTE ( Voice over LTE). This will ensure high quality voice calls over 4G network, showcased first last year as LTE – TDD interoperability use case at MWC Barcelona – where Jio was present with China Mobile, a major telecom entity in the world.

Reliance Jio has been involved in developing ecosystem for LTE phones in India. They have been working with established OEMs, ODMs and chipset vendors on end to end device architecture and engineering. They are conversant with the needs of customers and problems of operators.

They are now in the process of rolling out high speed internet services via FTTx in more than 900 cities in India. This core of high speed fiber connectivity will enable Reliance Jio to bring forth a wide variety of digital services across different market segments and locations, the market for which is expected to grow exponentially in coming years.

Smartphone users at MWC 2015 Shanghai

Reliance Jio is expected to enter in to a beta program shortly. Its network will be operational by the next financial year starting April 2016. In addition to its holding in 1800 MHz band in 14 telecom circles, Reliance Jio is only one among private telecoms to have a seamless pan India spectrum availability under 2300 MHz band.

The telecom operator has capital outlays of Rs one lakh crore. They have raised finances from banks and financial institutions aggregating over Rs 3,700 crores to part finance the capital expenses (Capex). It has declared its intent to trade and share more air waves to its pool including predatory pricing practices to win over customers to its base.

Indian telecom market in a near saturation stage which has opened the window of possibility for M&As . The firm has geared itself up for this scenario it appears. RIL is likely to integrate e-commerce business with Jio on its 4G service and can offer any time anywhere shopping. Reliance has applied for a new generic top-level domain JIO to enhance its branding strategy.

Jio has indicated that they may offer 1 GB download pack at Rs 60 compared to what incumbent operators are selling for Rs 150 to Rs 200 at present. Overall product basket is likely to be attractive for the customers.

Indian Telecom market has its own peculiarities. It throws challenges of its own. Saturating mobile market poses a big challenge to Jio. In case service roll out gets stuck and M&As are not encouraging, Jio venture may take about 8 years to break even, a time considered long abroad. Though some operators like BSNL have also been silently and slowly modernizing their NGN network, Jio roll out based on a new technology is being attempted for the first time on this scale. Operators therefore are keenly watching the developments with baited breath.

Telecom sector is headed for a change in coming years as the new frequency auctions aim for end to end solutions which address the entire value chain across various key domains of national interest such as education, healthcare, financial services, information flow, Government to citizen interface and even entertainment. Government and commerce is likely to be more active participants in the new era of digitization spree of India, keeping in view the priority Government has accorded to the sector.

Not a new player in telecom field Jio has tasted waters abroad as well. RJIL Pte Ltd Singapore was awarded a facility based Operator (FBO) license in Singapore which allows it to buy, operate and sell undersea and / or terrestrial Optical Fiber connectivity , set up its internet point of presence, offer internet transit and peering services in addition to data and roaming services in Singapore.

Jio has launched free Wi-Fi hot spots in 8 locations in Ahmedabad, 9 locations in Baroda and Surat. Trial with high speed Internet service is underway with 55,000 unique devices since the launch. Users have been provided 72 hours of free usage – which can be re-activated for continuation. They have inked deals with Indus Tower, and L&T Metro Rail ( Hyderabad) for service to passengers.

Commercial roll out of the much awaited Reliance Jio 4G service by the end of 2015 intensifies the hope of a reliable affordable and high-speed communication shortly next year.

Ashutosh Pandey, Sr. telecom analyst at SG Analytics
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