THE INTERCONNECT
...and how it can play spoilsport with Jio’s plans
RELIANCE IS DOING an unprecedented launch,” says Rajeev Chandrasekhar, Rajya Sabha MP and founder of BPL Mobile. “For the network to become a real network, they need the ‘oxygen’ for telecom—interconnection.” Interconnection is the physical linking of a carrier’s network with equipment or facilities belonging to a different carrier. Without interconnection, calls cannot be placed between competing operators. “In 1998, BSNL was denying us interconnection,” he recalls, joking about using the Reliance Jio handset on his table as a paperweight.
Regulations announced in 1998 made it a right for a new operator to be given interconnection with existing industry players. As Rajan Mathews of COAI (Cellular Operators’ Association of India) says: “There is basic interconnection for a certain volume of traffic. If I send you 50 calls, you have to send me 50 calls. There cannot be unfair trade.” Mahesh Uppal, a director with telecom consultancy Com First India, elaborates: “An operator (say A) who originates a call to another operator (say B) has to pay for it: Operator B will bill operator A. At the end of the month, minutes of calls sent and received will be tallied and cancelled and the extra minutes billed.” However, technicalities are muddying the issue. Reliance Jio Infocomm’s network began commercial services on September 4. Until then, despite having over 1.5 million users, Reliance classified Jio’s services as a ‘test launch’. Incumbents, miffed with Reliance’s aggressive entry strategy, claimed that Reliance’s test launch was, in fact, a commercial launch from the very beginning. This led to squabbles over a number of issues, including fulfilling obligations for interconnectivity. “Reliance and other operators seem to have their own interpretations of rights and obligations during the testing phase. Telcos feel Reliance has taken testing too far and has launched full commercial service in the test phase,” adds Uppal. Industry players, policymakers and analysts are all wondering why the regulator has been so lax in defining ‘testing’. “There is a grey area between pilot and commercial launch,” says Chandrasekhar, pointing to the need for a proper set of rules.
A protracted dispute over interconnection spells trouble for Jio. It is not even the first time Reliance is dealing with hostile incumbents. Back in 2007, when TRAI was questioned by a Parliamentary Standing Committee on Telecom about the apparent ‘cartelisation’ of GSM operators against CDMA entrant, Reliance Communications (RCom), they described it as ‘cooperative pricing’. India’s telecom market was—and still is— dominated by GSM players. RCom’s launch of CDMA technology at the time was accompanied by as much hype as the 4G LTE rollout now. The promise of CDMA was also data, which GSM players did not offer at the time. In order to stymie competition from the newest entrant, almost all operators offered similar pricing, and interconnection with other operators was a massive challenge for RCom, leading to the ultimate failure of its CDMA venture.
The challenges for Reliance are many. While other incumbents battle to retain customers— Vodafone and Bharti Airtel were quick to announce equally competitive tariff plans—for Reliance, the big challenge will be to swiftly build a customer base. For that, the company needs to ensure that other operators provide the interconnectivity it needs.
by Shweta Punj