The much-awaited soft launch of Reliance Jio’s next-generation mobile services has been delayed by another month. Reliance Jio was on course to launching its own brand of handsets and running trial runs of its telecom service across the country by seeding handsets in September.
But this has been deferred as the company is still ironing out last-minute issues. As the formal December launch inches closer, analysts and competitors believe the company will find it difficult to offer voice seamlessly across the country as it does not have the requisite spectrum. Telecom analysts say the firm has several options to offer voice services, but these will come with downside risks.
The firm has pan-India spectrum in the 2,300 MHz band, on which it intends to offer next-generation mobile broadband services. However, spectrum in this frequency is not efficient for voice, which still accounts for 77 per cent of revenues of the telecom sector. So even as data is the future, voice offerings will be critical for Jio to capture critical market-share. Incumbent telcos currently offer voice on 800 MHz, 900 MHz, 1,800 MHz and 2,100 MHz. Reliance Jio has pan-India spectrum in 2,300 MHz, and in select circles it has 800 MHz and 1,800 MHz spectrum. Goldman Sachs is of the opinion that Jio can be a disruptive force in the telecom sector, especially on data, but its voice strategy remains unclear. The brokerage has listed half-a-dozen voice options that Jio can fall back on to offer voice on its fourth-generation (4G) networks.
Data is undoubtedly the future of mobile telephony. Rumit Dugar of Religare expects India’s telecom data market to grow to $16 billion by 2020 from $4 billion in calendar 2015, a compounded annual growth rate of 35 per cent – though cannibalisation risks to the traditional $26-billion market remain. Despite this, analysts are concerned about the voice offering as Reliance Industries has invested $14 billion in its telecom venture so far and voice still accounts for three-fourths of the telecom sector’s revenues. If the company has to popularise its service, it will have to have a credible plan to offer voice like its rivals do.
There are many theories competitors and analysts are toying with to guess what Jio will do to offer basic vanilla voice services on its network. Handset makers believe the company will ride on the dual SIM phones, which give users the flexibility to use Jio's connection for high-speed data services and a rival's service for voice. Given that it might not be the best way to launch its services, analysts have come up with seven options that Jio is seriously evaluating. Voice over long term evolution (VoLTE) - the next generation of mobile networks - is something Jio is seriously contemplating.
The handsets the company intends to launch will also be VoLTE-enabled. Goldman Sachs believes VoLTE coverage is unlikely to be competitive compared to incumbents.
Also, the voice quality on LTE might not be as good as other telecom operators that offer voice on 2G.
The other option before Jio is circuit-switched fallback option. Under this system, traditional voice and texting services are offered on LTE networks through regular GSM or other circuit switched networks. LTE or 4G mobility services or LTE are IP-based services (internet protocol) and that cannot support circuit switched calls.
This is supposed to be an interim solution for LTE players till VoLTE gains traction. This is what differentiates Airtel, as it is able to offer LTE services and also fall back on its 2G networks to offer voice.
Spectrum sharing is another option that Jio can look at. However, competitive intensity might prevent Reliance Jio from sharing spectrum if costs are very high. It can also look at intra-circle roaming arrangements for voice with other players. However, regulations are not clear on this yet. Jio can also look at merging or acquiring any other operator to offer voice services. While voice over internet protocol or over-the-top apps such as Facebook and Whatsapp might be a short-term solution, it cannot be a go-to-market strategy.