exists in India.
Back in 2001, when Reliance Infocomm had entered the Indian telecom market to provide 2G services and caused massive disruption, mobile technology was a proven technology worldwide. In comparison, Long Term Evolution (LTE) services are still in the nascent stages globally. The entire 4G ecosystem has not yet developed in terms of devices. 3G itself has not taken off the way it should have. There is a lot of potential for 3G services, which is slowly getting tapped. 4G ecosystems has not yet developed in terms of devices, deployment of towers. 4G maturity will take time, which puts aside any apprehensions that Jio’s aggressive plans will shake the industry.
The incumbents are ready to fight harder for a larger share of pie. It is not that easy for a new operator to add value customers by just giving discounts and freebies. Jio undoubtedly will get customers initially, but it might not be the case that will help them in the long-term. They, too, need to have quality and loyal customers instead of getting unnecessarily aggressive they are expected to be calculative.
It’s always dangerous to be a rookie in this sector.
Reliance has to play really, j well. They are launching a very new technology that has yet to evolve. Every time they make a mistake, a competitor will learn from it.
We feel that every time Reliance will try to make the right moves, the incumbents will try to ensure that they do not compromise their leadership position. After gaining a first-mover advantage, Bharti Airtel has been steadily rolling out its 4G services across its licensed circles. Spectrum liberalisation has encouraged non-BWA spectrum holders to foray into the space-using spectrum in the 1800MHz band. Idea Cellular and Vodafone India have picked up large amounts of spectrum in this band in the recent auction and can become potential challengers for Reliance in the 4G space over the long-term. Airtel and Idea are established players in the field with millions of users. It is difficult for another player to just enter and impact the market instantly.
The competition is cut throat, and intense and thriving in this segment are difficult. The BWA rollout deadline will also see other players holding spectrum in the 2300MHz band launching services and competing with Reliance in some circles. As per the government rules, all the companies that won BWA spectrum in 2010 are re-
quired to roll out services in at least 90 per cent of their service areas by August 2015. However, we believe at present Reliance, is better prepared than its competitors for a service launch in the BWA space. Therefore, the company wjll have to build a highly-effective business model around a differential pricing strategy and innovative applications. To make an impact, Reliance Jio will need to offer applications that attract the mass market.
Reliance has spent close to four years strengthening its infrastructure muscle, bringing in more investments, devising fresh strategies, signing partnerships (Samsung handsets), and acquiring spectrum. However, the gestation period has been a long one, and the company has failed to convert all the hype into a commercial or main- j stream service launch. Going ahead, the long-awaited launch of Jio is expected to usher in some much needed dynamism into the data segment. Its potentially reasonably priced 4G services could give a shot in the arm to the 4G mar- . . • kets if the business model is
p|VJ y i shaped properly. As for its
^impact on the incumbents’
* business, the entry of a new Mjitt player like Reliance Jio will
- ‘•stir the waters, and put pressure on revenue growth, margins and capex over a long time, but in the short- run, the impact might not be what they caused in 2001. At the same, it will result in the creation of huge capacity across the telecom value chain. For the consumers, the main beneficiaries, they can look forward to some exciting times and superior speeds. After all, the Jio’s 4G launch is expected to usher in a new broadband era in the Indian telecom sector.
This time market place is different, scope for policy manipulation is limited or has already been consumed, customer is not gullible, and most importantly, the competitors, too have deep pockets, are smart street fighters and are no novices. Whatever happens the ultimate winner would be the consumer and the biggest adjudicator as to who succeeds in today’s world of choices. Incumbents are advised to prepare for tsunami and Reliance Jio to be prepared for a long haul pitted as they are against formidable entrenched players. Let us see who is startled, incumbents by tsunami or Reliance by resilience and resistance of the enemy? DEI
The author isformer CMD ofVSNL and currently serves as a director at Sonata Information Technology. His views are personal