Reliance Jio’s entry will force other telcos to cut prices: COAI’s Rajan S Mathews

MUMBAI,RUCHIKA SHAH: Reliance Jio announced the roll-out of its services for everyone from September 5 while making some revolutionary announcements that may change the game of the Indian telecom sector. Ruchika Shah spoke to Cellular Operators Association of India’s (COAI) Director General Rajan S Mathews, about the launch, what it will do to the sector and its ongoing war with Reliance Jio about its beta testing.

Mukesh Ambani, Nita Ambani, Akash Ambani

The COAI is a non-governmental association of major telcos in the country, with members like Vodafone India, Airtel India, Aircel, Idea Cellular, and Reliance Jio is its newest member.

What are your thoughts about the big Jio launch today?

As a valued member of the COAI, I’d say, kudos to RIL for presenting a very compelling plan. It will have a tremendous impact on the market. Mukesh Ambani highlighted four areas — network differentiation, quality of the network, ease of doing business i.e. no surge practice or black out days, Aadhaar-enabled subscription, affordability; and the content provided through its services.

These are very compelling items highlighted as a crux which sets it on the path to reach the 100 million mark within a timeframe. Ambani’s plan is well-positioned to give the telecom sector a rejig.

Do you think any part of Jio’s plan raises a flag about anti-competitive practices in the sector?

Ambani put it well in this speech: ‘Fair and open competition have been a hallmark of innovation,’ and we agree with that.

By and large, for COAI, the trial run by Reliance Jio was the only issue.

At this point, no other issues seem to emerge. The important question is, can both the sides agree that RIL is in commercial service? If yes, then the rules that apply to both sides will become clearer.

Ambani talked about free services for Jio customers from September 5 to December 31 — are you still in testing mode or have you launched? I think Ambani mentioned that December 31 is the full-fledged launch until which they will be using the data for feedback. If you’re in commercial service then it is upon the operators to give the agreed bandwidth within a 90-day period.

The other issue was about inter-connectivity points for which Ambani called for the incumbents to cooperate with RIL; we agree with that.

Will Jio’s entry prompt other telcos to cut their tariffs?

Yes, there will be a repositioning of tariffs, for example, in offerings like Jio’s Rs 19 for a day, another operator may offer 1GB for Rs 15 for six hours. That is where the price adjustments will happen.

It’s the beginning scenario where all the operators are still trying to determine what is the optimal price point. Now they will recaliberate. But the important point is that if prices come down then the volume should pick up. Telcos will say, we may lose margin but we will make it up in volume.

Participation in the upcoming auction is not expected to be too robust as the debt-laden telcos are still trying to make up for the money they spent in the previous auctions. Will the foreseeable price adjustments keep them at bay from buying more spectrum or will Jio’s data-centric ecosystem send them shopping for more?

The serious players will have no choice but to acquire the spectrum so that they can ensure they have the adequate spectrum and the capacity to offer 3G and 4G to provide consistent services. Some of the operators will have to buy.

There will be demand in the 1800hz, in the 2100hz, the 2300hz, and in some 800hz limited spectrum.

We see robust demand because Jio enhances the stakes.

Is there a need for clarity on the norms for beta testing of telecom services in India?

Without a doubt. What caused this entire situation is that there is no clear definition of what constitutes a test. Usually, most of the testing is done on your own network to test inter-connectivity. Nowhere, nowhere in the world, do we see a test go on for this amount of time, in this volume. To position it as a test seems to be counter to all the existing norms.

Any last words?

I think it’s an exciting time for the telecom sector. Competition is good as long as it is not irrational and counter-productive. There are only about four major players in the country right now. So there’s plenty of room for an upside without killing the goose that lays the golden eggs.

Posted by on September 1, 2016. Filed under Technology. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.