RIL weighs voice options with 4G

Reliance Industries Limited, which plans to mark its re-entry into the telecom sector by launching its 4G services this year, is known to be evaluating various options of offering voice with the service.

In 2010, the Mukesh Ambani-led conglomerate bought 95 per cent stake in Infotel Broadband Services for Rs 4,800 crore. Infotel Broadband is the only company that bagged a pan-India licence for broadband wireless access across the country.

Sources say RIL is known to be evaluating a possible bid for the re-auction of the 2G spectrum, after the Supreme Court cancelled the 2008 licences. A questionnaire sent to the city-based company did not elicit a response. A company official later said it was “too early” to make a decision, as the government was yet to get clarity on the matter.

Even so, there are other options if the company wanted voice, he said. “We can always buy a massive amount of voice in bulk and offer them in a bundled format,” he told Business Standard. Experts and industry watchers agree it would make sense for companies which own BWA spectrum to enter the voice business as well.

RIL has already proclaimed its preference for the next-generation LTE (long-term evolution) to offer high-speed data services through Wimax spectrum. The technology is supposed to be the latest to support high data speeds. However, this technology is in evolution stage and has not been widely deployed.

Industry insiders say the combination of 4G data with voice can create a disruptive market in the telecom industry. “Wimax players can offer voice and combine data with it,” notes an industry insider, who did not wish to be identified. “This, they claim, can put conventional telcos under a lot of strain.”

In more such disruptive pricing, analysts expect voice to be an application, which can be offered almost free to high-quality data consumers. Though experiments are currently under way to allow voice over LTE, it is still under experimentation stages. The device ecosystem, too, is yet to evolve. These factors make 2G licence a good asset to have.

Says yet another source: “Now that you know that auction will be coming up there will be slots available, 2G spectrum can be possibility for LTE players.” Others say having a 2G or voice customer base would help LTE players, especially new entrants. “The cost of selling or acquiring a new data customers can be very high if you are a pure play challenger,” notes Alok Shende, co-founder and principal analyst of Ascentius Consulting. “There is merit for you to get some relationship with a service, which is as ubiquitous as voice.”

Shende also points out that customer relationships can be stronger if the same company offers both data and voice, which is a preferred combination for telecom services.

He, however, says entry into 2G voice business is not easy. “Recent evidence that has come from the 2008 licencees says getting into voice business and starting from scratch is extremely difficult,” he notes.

Meanwhile, RIL has been sprucing up the content side, ahead of its LTE launch. Last year, RIL purchased 38.5 per cent stake in a digital learning solutions firm, Earmarks Education, in order to build a content pipeline for its wimax service. The company is also known to be acquiring stakes in cable operators to get the last mile connectivity, in fixed-line services.