'Disciplined' RIL might not start tariff war 2.0

Telecom operators are already fretting the entry of Mukesh Ambani's Reliance Jio into the telecom data segment. To add to their woes, the oil-to-retail giant, which is India's largest company, is now stepping into the voice business, as it is participating in the 2G spectrum auctions.

Reliance already disrupted the sector once twelve years back with its ultra-cheap handsets using CDMA technology, taking over the mass market. This time around, they are entering a very mature telecom market, which is just about settling from a telecom tariff war caused by Tata Teleservices.

This might not happen again, if industry experts are to be believed. “The telecom landscape has changed dramatically because spectrum is not cheap and cost of entry is much more,” said Rajan Mathews, director general of Cellular Operators Association of India (COAI).

The sector is already battling very low voice tariffs which has left no margins to be earned. Hence, Mathews says this time around, there will co-operation not competition amongst operators. The bids for spectrum will not be very aggressive, and RIL in particular, will be 'disciplined'.

“I think bids will be more realistic keeping in mind what happened earlier,” said Kamlesh Bhatia, research director of Gartner. Though he expects RIL to enter via disruption, it would not lead to another tariff war, as it had happened in 2009 when Tata Docomo reduced its tariffs drastically, forcing others to follow suit.

The 3G auction which had driven up prices exponentially too has lessons to give to 2G spectrum bidders. “One can't bid outlandishly, and then offer affordable services,” believes Mathews. Reliance Jio, which is yet to launch its much-awaited 4G services, has already paved way for offering voice services by subscribing the government's plan to allow it offer the services by paying Rs 1,650 crore.

Reliance is also expected to bid for most of the circles, extending its pan-India presence in the 4G spectrum. A person close to the development says that the operator had bid for both kinds of spectrum that is on offer—900 megahertz and 1,800 megahertz as well. But 900 megahertz spectrum is available only in three circles of Mumbai, Delhi and Kolkata, in which Reliance would be bidding.

The 1,800 megahertz band spectrum might gel better with RIL's plan to offer 4G services on Long Term Evolution (LTE) technology. “The amount of spectrum that is on offer for 1,800 megahertz is also higher,” said Mathews.