Why is Mukesh Ambani betting all his telecom might on VoLTE?
Mumbai: Reliance Industries Ltd (RIL) chairman Mukesh Ambani’s speech at the company’s 42nd annual general meeting in Mumbai was sharply focused on the performance of his telecom unit, Reliance Jio Infocomm Ltd (R-Jio).
The speech got a lot of traction online and resulted in the share prices of other telecom services providers (telcos) being beaten up even though R-Jio is yet to launch commercial services.
Ambani announced that R-Jio will offer mobile phone data at rates as low as Rs.50 per GB, signalling a price war in the world’s fastest-growing telecom market, he also underscored, among other things, that voice calls on R-Jio’s network will always be free.
R-Jio is primarily banking on Voice over Long Term Evolution (VoLTE), which is essentially voice over internet protocol or IP-based LTE network. LTE is referred to as 4G.
Similar to how the internet works, VoLTE relies on the IP Multimedia Subsystem (IMS) network, resulting in voice services being delivered as data flows. VoLTE as a technology makes sense as telcos are losing revenue from voice calls and SMS.
The question, of course, is whether VoLTE will help R-Jio gain ground and meet its target of 100 million subscribers in its first year of launch?
To begin with, R-Jio has spectrum to provide 4G LTE services in the following bands: 2300 MHz, 1800 MHz and 850 MHz (through a spectrum sharing partnership with Reliance Communications Ltd.). The company has to offer voice services using VoLTE technology on the same spectrum, or partner with an existing player to offer voice services on the Circuit Switched Fall Back (CSFB) option.
CSFB is a technology whereby voice and SMS services are delivered to LTE devices through the use of GSM or another circuit-switched network. CSFB is needed because the all-IP LTE network cannot support circuit-switched calls.
To be sure, VoLTE is catching on globally, and also being integrated with voice over Wi-Fi, similar to what Ambani announced during the AGM. However, the catch as of now is that VoLTE remains an unproven technology in India. Besides, R-Jio’s announcement has trigged a price war with other major telcos like Bharti Airtel Ltd, Vodafone India Ltd, and Idea Cellular Ltd.
Where does VoLTE stand in the scheme of things?
Ever since Singapore Telecommunications Ltd introduced the world’s first commercial “full-featured” VoLTE service in May 2014, the VoLTE ecosystem has been evolving. In July, 2015, SEATEL Cambodia announced the world’s first commercial 100% VoLTE service without 2G/3G in Cambodia. Three months later, Telstra said it had started enabling VoLTE across its network.
The buzz on fifth-generation, or 5G, technology is getting stronger. Moreover, the speed of 5G is much faster than 4G—20 gigabits per second, fast enough to download HD movies in a span of seconds but 5G networks are not expected to roll out until 2020 and the International Telecommunication Union is still working on 5G standard.
Meanwhile, 4G LTE is already picking up. In a 28 June report, Transparency Market Research (TMR) estimated the global LTE market to touch $610.71 billion by 2019 (it was $10.47 billion in 2012).
Technology-wise, the market has been categorized into LTE Advanced (LTE-A), TD-LTE and LTE FDD. In 2012, the LTE-FDD segment led the overall market with a share of 56.8%, according to the TMR report. However, TMR predicts that the LTE Advanced segment will register the fastest growth in coming years.
There were 111 operators investing in VoLTE in 52 countries (deployments, trials, studies) and 30 operators commercially launched VoLTE-HD voice in 21 countries, as of 13 October, 2015, according to the Global Mobile Suppliers Association (GSA).
The countries where VoLTE has been launched include Australia, Canada, China, Hong Kong, Japan, Singapore, the UK and US.
A 30 June report by Allied Market Research titled, “World Voice LTE (VoLTE) Market” projects that the world VoLTE market is likely to generate revenue of $34.8 billion by 2022. Asia-Pacific is expected to be the largest VoLTE market during the forecast period on account of the early roll out of VoLTE and VoLTE-enabled devices by the operators in the developed countries in the region.
Mobile operators around the world are progressively heading towards VoLTE owing to the increasing investments in Long Term Evolution (LTE) and IP Multimedia Subsystem (IMS), the report said.
Among the different VoLTE technologies, CSFB constitutes the highest market share owing to its wide acceptance globally, as the end-goal solution for offering voice services over LTE. Although, the technology requires specific modifications in the hardware infrastructure and utilizes multiple data transition elements, it remains the utmost cost-effective solution for voice provision in LTE, according to the report.