KOLKATA: Reliance Jio Infocomm’s plans to launch 4G services in December has given incumbents such as Bharti Airtel, Vodafone and Idea Cellular enough time to deploy their own high-speed broadband airwaves to unleash aggressive data plans and take on the Mukesh Ambani-owned adversary.
Industry insiders and analysts also say Reliance Jio’s rollout is fraught with challenges, given that voice offerings on the 4G-LTE technology platform, using the 2,300MHz band of airwaves, is yet to develop globally. Voice currently still makes up over 80% of industry revenue.
“We don’t see much of an impact of Jio’s December rollout, given that this is going to be phased and a pan-India presence is quite some time away,” said a chief executive of a leading telco, who did not wish to be named. “Jio’s scattered spectrum holdings across multiple bands, would pose challenges for seamless delivery of high-speed data services on-the-go”.
He said voice over LTE (VoLTE) had “security and delivery issues, which they (read: Jio) would have to contend with”.
At its annual shareholders’ meeting Friday, Jio Chairman Mukesh Ambani said the company is in the throes of pre-launch testing and standardization drill of its digital broadband network that is equipped to handle both data and voice using ‘long term evolution’ or LTE — a technology standard for offering high-speed 4G services.
Another top executive of a leading GSM carrier said Jio’s biggest challenge would be offering voice and data services seamlessly across its countrywide LTE network.
“Since there’s zero clarity on whether Jio would offer a quality voice service on LTE, it remains to be seen if their data-dominant offering appeals to the mass market, given that 85% of industry revenues still stem from voice,” he said. Jaideep Ghosh, partner, management consulting, KPMG in India seconds the emotion. “Customer acquisitions will be Jio’s biggest worry as today’s announcements suggest it is primarily focusing on data play.”
According to Ghosh, unless Jio is able to bring much more to the table, both on the voice and data fronts, compared to what incumbents offer, it would be very difficult to “wean away” customers from the top three carriers.
Jio has said its mobile offerings of voice and data would be at Rs 300-500 price levels. Similar offerings currently cost around Rs 1,000 in the market.
KPMG’s Ghosh also said sub-Rs 4,000 4G devices, be it tablets or smartphones, “is unlikely to galvanise revenues or subscriber market share for Jio as urban telecom penetration is already over 100% and rural penetration is also around 50%”.
A top executive of one of India’s biggest GSM carriers noted that there was “a conspicuous absence of any voice strategy” in Jio’s announcements at the Reliance Industries AGM on Friday. “One mustn’t forget that voice remains the dominant telecom business driver in India, given that mobile carriers collectively generate nearly 4 billion incremental voice minutes a day.”
Analysts at Bank of America Merrill Lynch, however, said “dual sim smartphones” could be an option for potential customers. “Given the lack of a traditional voice offering by Jio, we believe potential dual sim smartphones could be attractive to consumers as they could continue to use their existing telco SIM for voice calls and use Jio’s sim for access to cheaper, high-speed data offerings,” said the US brokerage in a note.
Still, the December launch, as opposed to industry expectations of mid-July-August, have given incumbents ample time to leverage their 4G spectrum wins in the past two auctions and cut data rates, said BK Syngal, ex-chairman of erstwhile VSNL (now Tata Communications).
Any cut in data rates by existing players, Bank of America Merrill Lynch said, would, however, lead to another tariff war and further hurt a debt-laden sector.