Thursday, 9 July 2015

Reliance Jio : All set to debut by the year end

After 5 years of its entry in the telecom sector, billionaire Mukesh Ambani is now all set to launch high-speed broadband services by Reliance Jio Infocomm in December 2015. Addressing at the company’s 41st Annual General Meeting (AGM), Reliance Jio’s chairman, Mukesh Ambani, unveiled what the company has in its kitty for its 4G LTE services. Although there had been a lot of speculations around Reliance 4G services, the official announcement came out for the first time during the AGM. The offerings will include instant messaging, HD Live TV, movies on demand, news, streaming music, digital commerce, cloud storage and a digital payments platform. 
During the AGM, Ambani declared, “I am confident that Jio will play a significant role in lifting India from its current 142nd rank on Internet penetration to among the top 10 nations in the world".
After spending a huge amount of Rs 10,000 crore in acquiring spectrum rights across the country, the company is targeting to provide 4G services across India with an investment of more than Rs 70,000 crore. Currently, Jio network is present in all the 29 states of India and covers nearly 18,000 towns and cities across the country.  By the year end, the company plans to cover 80% of the country’s population and aims cover the entire Nation within the next 3 years. Till date, Jio Network has deployed 250,000 km of fibre across the country and has plans to deploy twice this length over the next 3 years.
According to Ambani, Jio will start an extensive beta launch within a few months, and will be upgraded to commercial operations by the year end. The fiscal year starting April 2016 will be the first full year of commercial operations for Jio, which expects to achieve 100% coverage over the next three years.
Although the launching news of the India’s second-biggest firm by value and the telecom business of Reliance Industries by the year end has given its rivals enough time to deploy their own high-speed broadband airwaves, yet the incumbents seems anxious with the fact that this could bring a drastic change in the Indian telecom sector marked by intense competition. Operators in India’s ultra-competitive market , who have been offering the lowest mobile tariffs in the world indicates that Reliance Jio could further drive the tariffs down by offering 4G-compliant devices just at 4,000 rupees (about $63), and voice & data services just at an amount ranging between 300 -500 rupees ($5-8) per month. Thus, a price war is sure to develop as the new venture tries hard to build a customer base in the country, the world’s second-largest mobile services market after China. This will also lead the customers to shift their interest from Airtel and Vodafone to Jio.
Jio as a Digital initiative  
Referring the launch in the telecom sector, Ambani told shareholders during the company’s AGM that, this will be "one of the largest transformational green-field telecom initiatives anywhere in the world". He also added that, Jio’s broadband assets will form the foundation for Prime Minister Narendra Modi's Digital India drive as it will bring all government services fully online."This is a key theme for transforming our nation and creating opportunities for all citizens by harnessing digital technologies," he quoted.
Besides launching a 4G LTE network, Reliance Jio wants to remain a step ahead by offering various services that the users will be able to enjoy on its high-speed network. It has already launched instant messaging mobile application ‘Jio Chat’ last April, and also on the verge of launching apps in education and healthcare sectors. It will also offer MiFi (mobile WiFi) hotspot devices, traditional WiFi devices and set-top boxes. 
The company has also obtained a provisional license to operate as a pan-India multi-system operator (MSO), under the name- Reliance Jio Media Pvt. Ltd. This has taken the company a step further towards becoming a nationwide distributor of television channels. Addressing the shareholders at the AGM, Ambani said, R-Jio is planning to transform all of its bouquet of television channels under Network 18 that already have 17 news channels, 14 entertainment channels, in eight languages, and a strong set of Internet businesses. The transition will enable the company to establish a leadership position in the market. 
By 2017-18, it will be the most integrated TV/mobile content in India.
A glance at the digital services under 4G Network
Here are some of the services that RJIL has planned to provide under its 4G network: 
JIO CHAT: Launched in April 2015, Jio Chat is an instant Messaging application that can be used for chatting, voice and video calling, conferencing, and file sharing including photos and videos. The app is available in Google Play as well as Apple App Store.
SWITCH-AND-WALK: This app will enable the users to switch between different phones running operating systems with just a few touches. It will enable copying of contacts, messages, photos, music, media, and applications with an ease.
JIO DRIVE: It is a cloud storage and backup service that will let the users store, sync and share the content between their devices. Users can also invite their friends to view their files.
JIO PLAY: It will be live streaming service that will let the subscribers watch HD TV having a variety of channels from anywhere and on any device. This is an on-demand app that will bring a multitude of Bollywood, Hollywood, and regional content on 4G devices.
JIO BEATS: It is personalized music streaming service having millions of songs and playlists in its library. It will also have offline playback functionality.
JIO MAGS: This app will let the users access the popular magazines with quite a few innovative but undisclosed features. It will also enable the users read old and the latest issue of the magazines.
JIO NEWS: It will provide with the hottest and breaking news from leading news publishers across various categories and regional languages. The news will load instantly on the 4G network and can also be read offline.
In addition to this, the company is also in talks with device makers to make available ultra-cheap 4G-enabled smartphones and tablets priced around $30 or Rs. 2000. The cheapest 4G phone in the market at present is priced at Rs. 5,000. The company does not want to repeat the mistake made in the case of 3G that lagged behind because handsets were not affordable.
Ambani asserts that Jio will be much more than telecom services. According to him, these kinds of services are currently provided only by large enterprises to their employees. However, all these apps are being piloted as of now and will be launched with its 4G LTE network. Impact on the telecom market
It is also learnt that the company is planning to introduce these services in a bouquet pack costing under Rs. Rs. 300-500 per month. "In our digital business, our plan is to provide the same power of computing, communication and information to every individual, whether in towns or rural areas, that the US president had (provided) 10 to 15 years ago. All this at about Rs 300 to Rs 500 per month," the RIL chairman said .Industry experts speculate that, if these services are offered at such minimum price along with some gigabytes of 4G data, then it is sure to disrupt the entire mobile services industry in India. Analysts are of the view that this could financially jeopardize the existing telecom companies including the market leaders- Bharti Airtel, Vodafone India, Idea Cellular and Reliance Communications.
According to Rajan Mathews, Director General, Cellular Operators Association of India (COAI), “As long as the pricing is rational, Reliance Jio's entry will help build awareness about data and will be a welcome addition to the market since incumbents are used to competition". On the other hand brokerage firms are of the view that the launch of Reliance Jio would put extreme pressure on the data tarrifs of the existing telcos who are finding it difficult to raise voice tariffs in a competitive market. “We maintain our view that Jio launch will lead to heightened competitive intensity that will impact existing telcos, particularly Bharti Airtel given its higher exposure to urban subscribers," quoted a brokerage company.
 However, despite its strong balance sheet, most experts say that the telco’s entry is not likely to create any hyper-competitive environment as the discounting strategy as witnessed in the past has failed to help previous challengers. Considering the data of its rivals, Reliance Jio may also find it difficult to make inroads into the metros and category A telecom operating zones.
Reliance Jio’s strategy
Reliance Infocomm Limited made an entry in the telecom sector for the second time in 2010 by acquiring the only company that had won pan-India 4G spectrum in an auction. The telecom business, named as Reliance Jio Infocomm since the auction, was unable to be introduced in the market all this while because of its TDD-LTE technology standard, which is yet to be developed fully across the globe. Bharti Airtel's 4G services developed on a similar standard haven't met with much success yet. Apart from this costly device has also remained a major factor for the delay.
The participation of the company in the spectrum auction was keenly observed by the industry with many expecting the telco to bid for 1,800MHz spectrum, while sending the price of the 900MHz spectrum higher to force excessive payouts by the incumbent telcos that needed the radio waves most.
However, the fact that the telco was able to get 1,800MHz spectrum in 14 circles along with the other operators has got many analysts to believe that Reliance Jio’s entry may not disrupt the sector as much as earlier expected despite the fact that these 14 regions account for 71% of the industry’s revenue.
Reliance Jio has Deutsche Telekom AG as an adviser for its 4G services and signed up with partners (including Reliance Communications) and vendors (including Samsung Electronics Co.) for towers and equipment, including handsets, to start rolling out its services later this year.
Some analysts opine that Reliance Jio’s recently acquired airwaves in the 1,800MHz band are insufficient for 4G roll-outs, but would be adequate for offering traditional voice services, thereby posing a credible threat to its rivals. While some analysts also go to say that in the short run, Reliance Jio could utilize the 1,800MHz spectrum to roll out voice services as a complement to its expected TD LTE data offering in the 2.3GHz band.
Industry experts claim that the rolling out of Reliance Jio will not be an easy task as there is lot of challenges in its path. Some of these include:
One major challenge for Reliance Jio is Customer Acquisition. Jio needs to give away the top one-third of the India’s mobile users from rivals as these users account for over two-thirds of the industry’s revenues. As it struggles to ensure seamless coverage, Reliance Jio has only few months left to ensure the roll-outs within the five-year period as stipulated by the telecom regulator at the time of the 2010 auction. But it will be difficult for Jio to "wean away" customers from the top three carriers unless it has something extra to offer in its platter, both on the voice and data fronts, compared to what incumbents offers.
Next challenge would be seamless offering of voice and data services across the countrywide LTE network using the 2,300MHz band of airwaves, which is yet to be developed globally.  In India, 85% of industry revenues still stem from voice. It is to be noted that voice strategy was conspicuously absent in Jio's announcements at the AGM.
Another challenge could be that the proposed 4G devices which the company is mulling to roll out along with the 4G LTE network, might fail to stimulate revenues or subscriber market share for Jio as urban telecom penetration is already over 100% and rural penetration is also around 50%.
The oil-to-retail conglomerate, Mukesh Ambani, is now the largest holder of spectrum in India and the first operator to hold a pan-India licence. This is Reliance re-entry into the telecom business. RIL’s previous venture, Reliance Infocomm went to Anil Ambani’s court, when both the brothers had a bitter parting leading to split in their business.The operator had stimulated the market by dropping call rates further. The two brothers have made up since and out of that emerged an understanding that Mukesh Ambani’s group could enter the telecom business.

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