New Delhi: The ongoing fight between Reliance’s telecommunications business under the Jio brand name and incumbent telcos, including market leader Bharti Airtel and Vodafone, is actually the fourth round of a battle that started in the early 2000s.
The first three rounds were as much a result of fluid policy and changing technologies as they were of Reliance’s ability to somehow get the government of the day to enact favourable policies.
In the first round, Reliance Infocomm, then part of the unified Reliance empire, got the government to allow it to launch mobile telephony services with its landline telephony licences. Telcos with mobile licences were outraged, but nothing came of it—except a move to a so-called unified licence which, to be fair, is the only kind of licence that makes sense in today’s world. Still, it was lobbying, not an understanding of technology, that influenced the change.
That was in the early 2000s, and Reliance’s subsequent launch of inexpensive mobile telephony services helped make the Indian mobile telephony market the fastest growing in the world. Call rates dropped to around 2 cents a minute. The market exploded. Consumers benefited.
Come the mid 2000s, in the second round of the telecom wars, Reliance Communications, then controlled by Anil Ambani after a split in the Ambani family business, convinced the government to make mobile telephony licences technology neutral. Reliance then had CDMA licences (it did have a few GSM licences, but not enough). CDMA and GSM are rival mobile technology platforms though in India GSM has always been the dominant one. Again, the move made sense but again, it was lobbying, not an understanding of technology that influenced it.
Interestingly, neither Reliance, nor Tata Teleservices (which piggybacked Reliance’s efforts and launched mobile services with its fixed line licences, and then moved to the GSM platform) benefitted from the changes. The likes of Bharti Airtel, Vodafone India, and Idea Cellular were simply better at marketing, network management, and whatever else it took to succeed.
Round 3 began when Reliance Industries (controlled by Mukesh Ambani) acquired a stake in Infotel Broadband in 2010 soon after the Mahata family-promoted company won pan-India broadband licences. At the time, voice wasn’t allowed on data networks, but in 2013 the government changed the rules allowing companies with a broadband wireless licence to offer voice telephony as well on payment of an additional licence fee. Since then, analysts, telcos, and consumers have been awaiting the launch of Reliance’s broadband services, branded Jio. The expectation is that its launch will disrupt the market much the same away Reliance Infocomm’s launch in 2002 did.
In all three cases, incumbent telcos, represented by the Cellular Operators Association of India (COAI), lost. All three changes made sense—from the policy as well as technology perspective. But all three changes also benefited one company.
Round 4 is less about policy and technology and more about competition. The three big mobile telephony companies that pretty much control COAI (Bharti, Vodafone and Idea) have objected to Jio’s test which they claim is actually a full-fledged launch, only without payment of the requisite interconnection charges (to other telcos on whose networks calls from the Jio network terminate), submission of tariff plans to the regulator, and audit of customers. Jio has claimed that COAI (of which it is a part) is trying to sabotage its launch.
Fortunately for everyone concerned, this round is likely to end soon. Round 5 will begin with the commercial launch of Jio. The market will then decide who wins and who loses.