RIL plans private GSM network

Mukesh Ambani's Reliance Industries Ltd is preparing to apply for permission to set up a nation-wide broadband telecom network for internal (non-commercial) use.

The network will in part use the global system for mobile (GSM) standard for mobile communications, as well as the latest broadband wireless technologies like WiMax to support a number of business applications.

The idea behind the network, which may entail investments of up to $750 million in the long term, is to connect Reliance Industries entire set-up in the country onto a common intelligent backbone.

This will serve various ends "" connecting the entire Reliance Retail supply chain and front-end to a real time platform and linking the Reliance Petroleum chain, as well as hooking up the company to various trading centres and commodity exchanges in India and abroad.

The company will also use the network for connectivity within its planned Special Economic Zones and to meet bandwidth demands.

Crucially, the company plans to use its own "interface devices" in the network. It is not clear yet whether the platform will also provide voice connectivity to Reliance Industries employees.

The need for a telecom network arose after the split in the company, which saw the Reliance Infocomm network go to Anil Ambani.

Subsequently, RIL moved much of its business to other operators "" Airtel for voice connectivity and Bharat Sanchar Nigam Ltd (BSNL) for leased line connectivity.

Given its huge communication needs (by some estimates, Reliance Industries pays between Rs 200 cr and Rs 250 cr per annum for leased line connectivity alone to BSNL), it makes sense for the company to invest in an internal network, especially given the ease with which regulatory approvals are likely to materialise, as well as the cheap equipment costs.

An added advantage is the experience that some key company employees have in setting up and managing telecom networks.

The company will have to apply to the department of telecom for approvals, including grant of frequencies to operate the network.

Planning was on and a blueprint for the network was expected soon, said sources. State entities like the railways, the defence establishment, and the police rely on extensive internal communication networks.