The 4G Bat­tle ......................................................

Libertatem Magazine - - Content Content - By Shub­ham Pa­tel

IN­TRO­DUC­TION

One small move may, in cer­tain cases be a cause of rev­o­lu­tion. Same can be con­sid­ered for the in­tro­duc­tion of Reliance Jio (here­inafter re­ferred as Jio). On Septem­ber the 5th, Mukesh Am­bani of the Reliance In­dus­tries Limited an­nounced start of a new 4G based voice and in­ter­net data ser­vices through 4G telecom­mu­ni­ca­tion tech­nolo­gies. Jio in around 80 days of its in­cep­tion has at­tracted more than 5 crore sub­scribers. This would cer­tainly go as a record breaker in tele­com in­dus­try.

Jio has clar­i­fied that it’s main area of

fo­cus and hence source of rev­enue would be data ser­vices rather than voice ones. Jio presently is the only op­er­a­tor which has fully con­cen­trated in data sec­tor and even the voice calls are car­ried over VOLTE (Voice over Long Term Evo­lu­tion). VOLTE uses data trans­fer over IP which is gen­er­ally faster than the reg­u­lar method, this seems more im­por­tant to note as most of the other tele­com op­er­a­tors still use and have heav­ily spend on the ear­lier 2G and 3G tech­nolo­gies.

The com­ing of Jio into pic­ture was not as wel­comed by the other tele­com op­er­a­tors as it was done by the cus­tomers. Since the start­ing of ser­vices Jio has been in con­stant tus­sle, be it the mat­ter of MNP, the ini­tial test stage, call drops or an­ti­com­pet­i­tive na­ture. The tele­com op­er­a­tors are blam­ing each other and the customer is still in con­fu­sion over the is­sue.

THE 4G SPEC­TRUM AL­LOT­MENT

The years 2015 and 2016 can be con­sid­ered as start­ing points in dis­cus­sions re­lated to 4G net­work in com­mon par­lance, but the al­lot­ment of the spec­trums started way back in 2010 it­self. How­ever ques­tions are raised over the al­lot­ment of the spec­trums which en­able Jio to carry out its busi­ness.

Reliance ac­quired the 2,300 Mhz bands through In­fo­tel Broad­band Ser­vices Pri­vate Limited (IBS). It was re­ported later that the IBS failed to re­port to the DOT and the TRAI about its on­go­ing talks with the Reliance in re­la­tion to the later was go­ing to ac­quire IBS. This non-dis­clo­sure can be termed an­ti­com­pet­i­tive as it blind­sided the other par­tic­i­pants in the bid­ding process [V. Shrid­har, Front­line, Spec­trum Grab, 30/09/2016]. Af­ter the 3G al­lot­ment there was a luke­warm re­sponse for the lat­ter 4G auc­tions. The IBS man­aged to buy one block each in 22 tele­com cir­cles all over the coun­try, al­low­ing it a pan In­dia pres­ence. Less than a week later IBS is­sued 95% of its share to Reliance mak­ing it the owner of the com­pany, IBS was then later re­named Reliance Jio In­fo­com

Limited [Jai Bha­tia, Eco­nomic and Po­lit­i­cal Weekly: Vol. 51 Is­sue 39, Reliance Jio: Preda­tory Pric­ing or Preda­tory Be­hav­ior?, 24/09/2016].

It is al­leged that rules were bent to al­low the us­age of the bands which were ear­lier meant to be used for data pur­poses only. When IBS ap­plied for li­cense to op­er­ate mo­bile and land­line ser­vices it was granted per­mis­sion to do so by grant­ing a uni­fied li­cense. This caused the gov­ern­ment an es­ti­mated loss of ₹ 22,842 crore and al­lowed Reliance to buy the spec­trums at much cheaper rate than what oth­ers had paid for 3G. Due to the ini­tial in­tended na­ture of use, that was mak­ing data ser­vice avail­able in re­mote ar­eas, the Spec­trum Us­age Charges were kept as low as 1% but since then the na­ture of use has change but the SUC have not. For what other com­pa­nies are pay­ing from 5% to 8% of rev­enue Jio is li­able to pay 1% this shows a great anom­aly. [V. Shrid­har, Front­line, Spec­trum Grab, 30/09/2016]

SPEC­TRUM COV­ER­AGE OF RELIANCE, VODA­FONE AND OTHER OP­ER­A­TORS

Jio is lead­ing the ta­bles for max­i­mum reach, with reach in all zones fol­lowed closely by Air­tel which is present in 21 zones. Other com­peti­tors in­clude Idea fol­lowed by Voda­fone, BSNL and

Air­cel at last. Jio is the only tele­com provider to have 2,300 Mhz bands all over the coun­try. Ex­cept for Pun­jab, UP West, Bi­har and Jammu and Kash­mir it also enjoys 1,800 Mhz bands, and ex­clu­sive en­joy­ment of 850 Mhz bands for 4G in cer­tain parts. BSNL is the only op­er­a­tor to ex­clu­sively en­joy 2,500 Mhz bands in all the zones it is present which are 14 in num­ber. Air­tel and Voda­fone are a mix bag of 2,300 Mhz and 850 Mhz bands, whereas Idea has only 850 Mhz bands. Air­cel has 2300 Mhz bands in the ar­eas it is present.

ES­TAB­LISH­MENT AND EN­TRANCE OF RELIANCE JIO IN THE TELE­COM BUSI­NESS

Jio, in words of Mukesh Am­bani was es­tab­lished tak­ing into con­sid­er­a­tion the boom in the world and In­dia was lag­ging be­hind due to the lack of mo­bile in­ter­net ac­cess. The idea be­hind Jio was to pro­vide faster, bet­ter and cheaper in­ter­net ac­cess to the con­sumers. Jio has came up with very at­trac­tive of­fers as a part of its start­ing cam­paign. It of­fers free un­lim­ited voice calls and a bunch of data op­tions to se­lect from rang­ing from ₹ 149 for 300 MB to ₹ 4,999 for 75 GB, this has brought down the price per GB of in­ter­net from the ex­ist­ing prices, also as a part of scheme of things cus­tomers who buy a LYF Smart­phone and use Jio will are to get more of­fers, LYF hap­pens to be a prod­uct of Reliance In­dus­tries. The com­pany started with a eq­uity cap­i­tal of ₹ 15,000 crore and is said to be the big­gest start-up in the world.

The pub­lic re­sponse to­wards Jio is ap­palling as was man­i­fested by the ser­pen­tine lines which were be­fore the of­fices of Jio in ini­tial pe­riod, which is man­i­fested in the fact that it has reached a num­ber of more than 5 crore sub­scribers till now. The craze and de­mand of the Jio SIM is ev­i­dent from the fact that even thought it was in­tended to be free of cost, peo­ple are buy­ing it in black for costs upto ₹ 500 and above per SIM [Reeba Zachariah, The Eco­nomic Times, Reliance Jio sim be­ing sold in black, 04/09/2016]. Though it can be said that ma­jor­ity of this is due to the free data and voice call op­tions which is pro­vided by the com­pany, ear­lier the scheme was to last till De­cem­ber 31st, 2016 but now has been ex­tended to March 2017.

Though it was in place from De­cem­ber 2015, when it was launched for the trial pe­riod. Dur­ing that time its use was not only limited to its em­ploy­ees,

their fam­ily mem­bers and friends, but reached a whoop­ing 1.5 mil­lion peo­ple who ben­e­fited from it. Al­though such reach, be­fore the for­mal start­ing of the op­er­a­tions of the com­pany, is ques­tioned by some.

The rise of Jio as a tele­com provider in the In­dian mar­ket is noth­ing but as­ton­ish­ing, be it for what­ever rea­sons. This shows that the In­dian so­ci­ety is poised to adopt the in­ter­net in a much larger and grander scale. With its in­cep­tion Jio has also un­set­tled the ex­ist­ing few of the mar­ket.

TELE­COM TOWER SHAR­ING AGREE­MENT

Jio has plans for the pan In­dia pres­ence to cap­i­tal­ize the early bird op­por­tu­nity in the 4G mar­ket. To en­sure the ben­e­fits it eyed for the wide­spread reach is a must need. Jio in or­der to do so en­tered into tower shar­ing agree­ments with var­i­ous ex­ist­ing play­ers. The part­ners in this agree­ment in­clude Bharti Air­tel, Viom Net­work, As­cend, Reliance Com­mu­ni­ca­tions and In­dus Tow­ers. Jio is cur­rently us­ing 192,500 net­work tow­ers which in­clude 45,000 of Reliance Com­mu­ni­ca­tion, about 82,000 of Bharti Air­tel and In­dus com­bined, 42,000 of Viom and 4,500 of As­cend. The com­pany has said that it would us­ing its own as well as rented in­fra­struc­ture to pro­vide in­ter­net ser­vices.

Th­ese agree­ments give a strong push to­wards the pan In­dia ex­pan­sion­ist dreams of Jio. Agree­ments like th­ese also in­still con­fi­dence that any bud­ding tele­com op­er­a­tor needs not to nec­es­sar­ily worry about the in­fras­truc­tural is­sues, if they en­ter in agree­ments they can start op­er­a­tions and with time can de­velop their own in­fra­struc­ture.

CALL DROPS AND IN­VOLVE­MENT OF TRAI

The com­ing in mar­ket of Jio brought an­other less com­mon is­sue as a preva­lent one in the do­main of the tele­com in­dus­try. The Pro­moter of Reliance Jio, Mr. Anil Am­bani claimed that about 900 crore calls of Jio were dropped since the ser­vice has started. It is al­leged that though the cus­tomers are show­ing pos­i­tive re­sponse the ex­ist­ing com­pa­nies are not.

Call drop­ping is not a new is­sue in In­dia, ear­lier also th­ese kinds of prob­lems sur­faced. The TRAI mooted for the penalty of Re. 1 per dropped call, but it was re­jected by the Supreme Court. Af­ter this it was said that the com­pa­nies would spend more on build­ing tow­ers and nec­es­sary in­fra­struc­ture to re­duce this is­sue. The prob­lem man­i­fested again with en­try of Jio as the calls failed to con­nect.

See­ing the state of af­fairs of call drop and the tus­sle over Point of In­ter­con­nec­tion (POIS)TRAI came into the pic­ture. Jio al­leged that Jio to Jio calls did not drop whereas Jio to some other net­work ini­tially 90% calls dropped. Jio puts the blame for this over the other com­pa­nies. The Qo S Rules pro­vide that not more than 5 of ev­ery 1000 calls made should drop and TRAI on the anal­y­sis of data found that the “call fail­ure fig­ures to be 0.5% qual­ity of ser­vice stan­dards”. TRAI called upon all the com­pa­nies to come and set­tle the dis­pute, over which the com­pa­nies promised to in­crease the POIS. The con­tentions that Jio it­self is an­ti­com­pet­i­tive and thus ham­pers them was sided by the TRAI as the other op­er­a­tors are paid a ter­mi­na­tion charge for ev­ery call made to their net­work (i.e for ev­ery call a Jio user makes to X com­pany’s num­ber 14 paisa are paid to X). TRAI sided with Jio and put a fine of Rs. 3500 crore on Air­tel, Voda­fone and Idea com­bined.

Though af­ter the in­ter­ven­tion of TRAI and steps taken by the other play­ers the call drop rate of Jio has came down to 20% from the ini­tial of 90%. This data may seem sat­is­fac­tory but is alarm­ing as the tele­com in­dus­try should have been bet­ter equipped and ben­e­fit of cus­tomers should have been made the top pri­or­ity.

MNP PROB­LEM WITH RELIANCE AND JIO

MNP stands for Mo­bile Num­ber Porta­bil­ity, it al­lows the user to change its tele­com op­er­a­tor with­out chang­ing the con­tact num­ber. Since not every­one fa­vors chang­ing their num­bers for the sake of free of­fers that is where the MNP is­sue comes into Jio pic­ture.

Jio al­leged that the Bharti Air­tel, Idea and Voda­fone were not al­low­ing the cus­tomers to change their num­bers to Jio based on un­sub­stan­ti­ated grounds. It fur­ther claims it as a vi­o­la­tion of Telecom­mu­ni­ca­tion Mo­bile Num­ber Porta­bil­ity

Reg­u­la­tion, 2009 and TRAI di­rec­tions. It is also per­ti­nent to note that when Reliance asked it’s em­ploy­ees to change their num­bers to Jio then

4919 MNP re­quests of such cor­po­rate num­bers were de­clined by Air­tel

[Sami Khan, In­ter­na­tional Busi­ness Times, Reliance Jio num­ber porta­bil­ity is­sues: Air­tel, Voda­fone, Idea re­ject­ing MNP re­quests, Jio tells TRAI, 16/09/16]. The com­pa­nies have said that the claims of Jio are base­less and they are not stop­ping the con­ver­sions with­out proper rea­sons.

This be­comes im­por­tant as with­out this the ex­ist­ing cus­tomers would not be able to switch to Jio. This takes away from the cus­tomers a right to knit pick what they find best for them­selves keep­ing their num­bers save. The need of keep­ing a num­ber

in­tact is also man­i­fested from the fact that a mo­bile num­ber of a per­son is dis­trib­uted to nu­mer­ous per­son and mak­ing ar­range­ments to tell all a new num­ber may be­come cum­ber­some and re­dun­dant process. The com­pa­nies at a fun­da­men­tal level should not stoop to th­ese lev­els as not only it is anti com­pet­i­tive and they ham­per the growth of the other com­pany, but also take the free­dom of free choice from the con­sumers.

THE PRICE WAR, PREDA­TORY PRIC­ING AND COM­PET­I­TIVE­NESS

Com­ing of Jio launched a cold and bit­ter war of price and al­le­ga­tion from all sided. The al­ready present com­pa­nies call the tac­tics of Jio as preda­tory and Jio al­leges that they by not al­low­ing con­nect­ing the calls are be­hav­ing in anti com­pet­i­tive na­ture.

Preda­tory Pric­ing, as the word sug­gest is a method of pric­ing adopted by the com­pany where it low­ers the price of the ser­vices pro­vided. Due to this the other play­ers of the mar­ket have to re­duce the price. The rea­son be­ing that if they do not they lose the pop­u­lar­ity and sup­port of the cus­tomers, and if they do the ben­e­fit de­cline. It is usu­ally done to un­set­tle the pre­vi­ously ex­ist­ing play­ers and to then cre­ate a mo­nop­oly in the mar­ket. The In­dian law de­fines preda­tory be­hav­ior as when the price at which the ser­vice is pro­vided is much less than the cost price at which it is pro­duced with a aim to ham­per com­pe­ti­tion. When Jio an­nounced its “ul­tra” cheap plans all the other tele­com com­pa­nies had to bring down their prices which ul­ti­mately lead to a price war where com­pa­nies al­most by cut­ting the price down by half tried to re­tain their cus­tomers. Com­pa­nies like BSNL an­nounced that they would com­pete with Jio on a plan to plan ba­sis. The com­pa­nies al­leged that what Jio was do­ing was preda­tory in na­ture.

In­dian telecom­mu­ni­ca­tion mar­ket is dot­ted with mul­ti­ple small and big tele­com op­er­a­tors. The real com­pe­ti­tion though was be­tween the main three of the mar­ket, Bharti Air­tel, Idea and Voda­fone to­gether con­trol around 75% of the telecom­mu­ni­ca­tion mar­ket. They came into pic­ture when the calls started drop­ping and al­le­ga­tions raised that they were will­fully do­ing so, so as to re­frain cus­tomers from switch­ing.

What puts Jio in the po­si­tion of com­mand is the fact that though it has brought spec­trums of lower fre­quency, but it is es­sen­tially fo­cus­ing in 4G mar­ket. Whereas the other play­ers have their re­spec­tive 2G, 3G and voice based ser­vices to mon­i­tor, and also to look­out 4G de­vel­op­ments. Jio eyes to take the ‘early bird’ ben­e­fit in the 4G mar­ket, but if the com­pa­nies in­vest in­creas­ingly in the 4G sec­tor the Jio ef­fect may be turn out to be short lived. What needs to be con­sid­ered is that not all the tele­phonic op­er­a­tions can be con­verted to 4G or VOLTE be­cause of the so­cial eco­nomic con­di­tion of In­dian So­ci­ety. The in­come vari­ance still re­strains the lower strata of the so­ci­ety to adopt th­ese ex­pen­sive tech­nolo­gies.

This was not the first time that com­pa­nies such big came into this dog­fight, same was the case with Ola and Uber, Flip­kart and Ama­zon. As is with ev­ery case only time will tell that to what ex­tent th­ese of­fers were preda­tory.

FREE VOICE CALLS: IS IT REAL?

Free voice calls, apart from the 4G data is one of the most talked as­pect of Jio. The com­pany prom­ises un­lim­ited free calls us­ing the net­work. Ques­tion which needs to be raised is that how much this of­fer or claim holds true. Jio uses the VOIP (Voice over In­ter­net Pro­to­col) to trans­fer the voice calls which is dif­fer­ent from what tra­di­tion­ally was done as only very small part of voice is sent as data in 2G and 3G ser­vices. Since Jio only has 4G ser­vices it has lesser op­tions in re­spect of voice calls.

There are sev­eral caveats at­tached to the con­cept of Free Voice call which Jio if flout­ing. Firstly, the best of this ser­vice is pro­vided when both the caller and re­ceiver are us­ing a VOLTE net­work and nec­es­sar­ily a 4G en­abled de­vice. When the caller would con­nect to a per­son of some other net­work then the same qual­ity of trans­fer would not be pro­vided as then Jio would con­vert the packet based data to cir­cuit switched (which ac­cord­ing to the present cir­cum­stances is the nor­mal way). Se­condly if the customer does not has 4G en­abled phone then he would need to have the Jio4gvoice app to fa­cil­i­tate the calls. Fi­nally if some over the top ap­pli­ca­tion such as What­sapp, Skype etc would be used to make the VOIP calls then data would be de­ducted.

This should be looked in the back­drop of the fact that most of the mo­bile phones, at least those launched be­fore 2016 are not 4G en­abled, this means that if those con­sumers what to use the ser­vices they ei­ther need to get the app, or they need to have a 4G phone, which ul­ti­mately would make the cost in­curred more than what is pro­vided for.

CON­CLU­SION

The Prime Min­is­ter en­dorsed it (as per Jio ad­ver­tise­ments), the me­dia houses called it “revo­lu­tion­ary” and “game changer” and the com­peti­tors call it “preda­tory” or “an­ti­com­pet­i­tive”; the true na­ture how­ever only fu­ture would man­i­fest. But what Jio did is that it changed the en­tire out­look with which the telecom­mu­ni­ca­tion was seen prior to its en­try. Preda­tory or not it has been able to set cer­tain stan­dards which the other com­pa­nies in­vari­ably have to com­pete with. There are sev­eral caveats and un­der­lin­ing things at­tached to the rise of Jio in the In­dian mar­ket, but it seems well ac­cepted in the mar­ket.

This long due in­no­va­tion was need to bring In­dia at a level pedestal with word on this front, as well as mak­ing the fast and cheap in­ter­net ac­ces­si­ble to all. One of the ques­tions that this Jio bat­tle seems to bring for­ward is to pon­der and con­sider that how much time would be taken by the tele­com in­dus­tries to rise from this state of hy­brid na­ture and com­pletely shift to VOLTE and whether the same is bound to hap­pen in near fu­ture or not.

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