To the surprise of many, Bharti Enterprises Chairman Sunil
Mittal and Reliance
Industries Chairman Mukesh
Ambani – arch rivals in the telecom
sector, where their respective ventures Bharti Airtel
Jio are baying for market share – displayed a rare public bonhomieon Wednesday. The occasion was the inaugural edition of the India Mobile Congress (IMC), and the heads of top telecom
service providers were sharing the dais.
With Mittal and Ambani exchanging warm notes and acknowledging each other as “friends”, one thought that came to many was whether this might mean an end to the bitter telecom
wars in the Indian market.
While Mittal’s Bharti Airtel
has been an old and established telecom
operator, the recent emergence of Ambani’s Reliance
Jio on the scene has caused a great disruption in the sector and left all incumbents rattled. More recently, Mittal and other incumbent telecom
operators have been aggrieved by the Telecom
Regulatory Authority of India’s (Trai’s) decision to lower inter-connect charges (IUC) from 14 paise per minute to 6 paise, a move that is seen benefitting only Ambani’s company and against which many are set to go to court in a few days. Older telecom companies
fear they might lose over Rs 5,000 crore because of the cut in IUC.
Some of those present at the IMC venue say one should not make too much of the so-called bonhomie. Mittal and Ambani were only “being civil”, as the government wanted them to focus on its ‘Digital India’ agenda rather than use the forum to air their differences on IUC, the watchers argue. With Minister of State for Communications Manoj Sinha also present, “what do you expect two mature industrialists to do at a public forum? People are making too much about the statements”, says a senior executive of a leading telecom
But many say there is a clear difference in the focus of Mittal and Ambani, from that of other incumbent telcos. Both Bharti and Jio have betted on the 4G revolution and the belief that the market will dramatically shift to data. This is also apparent from the fact that Bharti and Infotel (which was later bought by Reliance
Jio) had in 2010 bid and won spectrum in the 2,300MHz band (4G), even as other operators were uninterested. At that time, many incumbents had publicly said India was not yet ready for 4G, and some even now claim that the band currently used for capacity building could not have sustained 4G on its own.
While Bharti in 2012 became the first company to launch commercial 4G services in India, it is also way ahead of all except Jio in making a technological leap to 4G voice-over-LTE. It launched its 4G VOLTE
services in Mumbai a few days ago and plans to go pan-Indian with it by the end of March next year. This will not only bring the company technologically on a par with Jio, but also give it the cost benefits that Jio enjoys at present. By comparison, while some others might roll out their 4G VOLTE
services only by the end of next year, the smaller ones might not roll out at all due to cash constraints.
Many incumbent operators maintain that India is still a voice-only market and Trai’s IUC
decision is forcing both service providers and users to move to data – at a huge cost that neither wants to incur. With over 500 million users in rural parts – at least 300 million of them using mobile phones only for incoming calls (they pay Rs 10-20 a month on recharges) – IUC
was a key element that helped telcos subsidise them. Without the income from termination of calls, there might not be any economic incentive to invest in rural markets. Also, that these customers are looking only at voice services is reflected in the present 4G VOLTE
subscriber base of only 25 million in rural India.
Besides increasing the cost for telcos, the Trai
decision forces customers to make a choice and shift to 4G LTE at a stiff price – now they will have to pay for a new device, and the cheapest available, Reliance
Jio, costs Rs 1,500 upfront, plus a monthly commitment of Rs 153. That is much more than what they pay at present (many have been using devices priced under Rs 500). “We are not against Digital India or new technology. But if the government says it will be technology-neutral, why is Trai
forcing 500 million customers and telcos to move to data. It is anti-consumer; they will have to pay many times more,” says a top executive of a leading incumbent operator.