Reliance Jio vs the rest: Trai, PMO dragged into the fight

The stage is now set for the next round of battle with India’s largest-ever spectrum auction starts on 29 September


Photo: Abhijit Bhatlekar/Mint
Photo: Abhijit Bhatlekar/Mint

New Delhi: Reliance Jio on Monday threatened to take legal recourse against telecom lobby group Cellular Operators Association of India (COAI) dragging an already ugly battle between the two to a new low.

The advent of Jio into the market has made its rivals wary and the strategy that it has adopted, which is to start small and go big, has a visible impact on actions by COAI on behalf of its other members. Jio, too, is a COAI member.

The intensity of the battle is such that it has not only dragged the Telecom Regulatory Authority of India or (Trai) into the matter, accusing it of favouring a new entrant, but attempts have also been made to draw the attention of the Prime Minister’s Office. The stage is set for an intense fight in the sector as Jio slowly spreads its wings, which is also likely to coincide with the sale of India’s largest-ever spectrum auction, beginning 29 September. As the date approaches, one can expect more tantrums, war of words, legal notices, divided industry and a vigilant Trai, unless the government steps in to douse the fire.

Here is how matters have unfolded in the past:

The interconnect points

It all started with Reliance Jio claiming that COAI has rejected additional interconnect points demanded by Jio from existing operators in a letter to Trai chairman R.S. Sharma. COAI responded saying that the points provided by the operators are sufficient to support 15-20 million users and that Reliance Jio only has nearly 2-3 million customers. Points of interconnection are where two networks connect with each other.

Subsequently, Reliance Jio accused the telcos of breach of licence agreement and also requested Trai to take action against telcos.

Cloud over Jio’s commercial launch

On 8 August, COAI wrote a letter to the department of telecom claiming that Reliance Jio is providing “full blown and full-fledged services and subscriptions to up to more than 1.5 million users on its network, purportedly to test/trial users”. The letter stated that Reliance Jio was generating data volumes which were 25-30 times the Indian average and by passing government regulations with predatory pricing and unfair competition. The letter requested the telecom department and the regulator to intervene in the matter and instruct Reliance Jio to stop providing services masquerading as tests.

COAI’s core members

Reliance Jio, in its response dated 10 August, termed the contents of COAI’s letter “malicious, unfounded and ill informed”. Jio has invested over Rs.134,000 crore so far in the project and would invest over Rs.150,000 crore in this phase of the project. This is higher than the gross block of any of the incumbent operators, it said, adding that the company is conducting test trials to check if the network is optimal for loaded conditions especially since VoLTE services are being offered at this scale for the first time anywhere in the world. Pointing towards the top three leading telecos, Bharti Airtel Ltd, Vodafone India and Idea Cellular Ltd, Jio said that “core members of COAI having control over the conduct of COAI”.

It said that the top three telcos, which are opposing the downward revision of IUC (interconnection usage charges), are commanding a market share in excess of 65% in the one billion plus subscribers’ market. “It is simple maths to decipher, who will end up paying more IUC,” Jio said in its letter.

On 5 August, Trai issued a consultation paper to review interconnection charges seeking reduction in the same. Interconnection charges are paid by telecom operators to each other for using network resources of the other operator to make and receive calls. The move was not welcomed by telecom operators as their revenues get hit by reduction in IUC.

To the Prime Minister’s Office

On 11 August, the industry lobby group COAI wrote to the Prime Minister’s Office expressing “deep concern” over the recent consultation papers floated by the telecom regulator. The association cited bias and accused Trai of adopting discriminatory practices against existing telecom operators. “It seems that some of the papers have been crafted and timed to serve interests of some new entrants in the sector, with complete disregard for the massive investments made by existing operators,” COAI said in its letter.

On Monday, COAI again wrote to the PMO, raising concerns of existent telecom operators about non-level playing field, disguising commercial operations by Reliance Jio as pre-commercial and also accusing Reliance Jio of evading payment of revenue share and levies.

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