Reliance Communications will move its five million CDMA customers to Jio's 4G LTE network from May 4. While the users will continue to be RCom subscribers, the network will be powered by Jio's all-IP based next generation network.
The Anil Ambani-led RCom is leveraging the spectrum sharing pact it had signed with elder brother Mukesh Ambani-led Reliance Jio Infocomm for 4G services. The company will deploy its own 4G network and pre-dominantly use Reliance Jio infrastructure to deliver 4G services. The upgrade will happen in a phased manner. The first four circles to upgrade will be Haryana, Himachal Pradesh, Uttar Pradesh and Odisha. To enable customer migration, RCom will offer attractive deals on 4G handsets, which could be in collaboration with Reliance Retail.
In a letter earlier this week to the Department of Telecommunications (DoT), RCom wrote it intends to offer 4G LTE services to its CDMA subscribers, following the liberalisation of its spectrum in the 800 MHz band. RCom paid Rs 5,383 crore in January this year to DoT to liberalise spectrum in the 800 MHz band across 16 circles. The approval for the same came on Thursday.
In 2013, the Ambani brothers had entered into a comprehensive agreement for optimal utilisation of the existing and future (telecom) infrastructure of both companies on a reciprocal basis.
While the spectrum trading and sharing agreements will give older brother's Jio access to the much-needed spectrum in the 800 MHz band, Anil Ambani's RCom subscribers can now enjoy high-speed mobile broadband seamlessly on both the networks. The arrangement will be similar to intra-circle roaming arrangements that telcos currently have.
The migration of RCom's customers to Jio's network will also be a good test case.
Analysts have raised questions on Jio's ability to offer voice services purely on LTE (VoLTE) as it would not have the conventional method of delivering voice through wireless networks. Jio intends to offer voice through its data networks, which is similar to making calls on Skype or WhatsApp. The partnership with RCom to offer the fallback on voice in select markets could be a game-changer for Jio. Sources claim these tests are already underway.
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Jio is also moving closer to launching its services after the Union Cabinet approved the use of Trai's reserve price as the provisional price to liberalise spectrum in the 800 MHz band where no auction had taken place to determine market prices.
Jio's spectrum sharing deal with RCom was stuck as there were four markets where price for legacy spectrum could not be determined. Now the spectrum sharing and trading deal in these four circles (Tamil Nadu, Karnataka, Kerala and Rajasthan) will also go through. Sources claim DoT is expected to issue demand notice next week for these circles. RCom will pay Rs 1,300 crore to liberalise spectrum in these circles, and the spectrum will be liberalised in 30 days. The process of migration of RCom's CDMA customers will be complete once spectrum sharing deal is through for all 22 circles by mid-August. By Mid-August, Jio will have access to 800 MHz spectrum in all 22 circles, paving the way for a formal launch.
Deutsche Bank Markets Research in a note dated April 7 says, the Cabinet decision paves the way for Jio's launch around June 2016. The note says, "The Cabinet decision is crucial for the Jio-RCom spectrum deal. Jio and RCom have entered into a spectrum trading-cum-sharing deal across most markets which requires RCom to liberalise its spectrum before sharing. However, there were four markets which did not have an auction-based price and hence the necessity of the policy decision. The DoT has a 45-day period to approve the sharing of spectrum after the operators file for such a request. We expect Jio and RCom to file for sharing immediately."
Following the deal, both RCom and Jio will have over 10 MHz spectrum in the 800-MHz band in all 22 circles or service areas across India. Jio has acquired spectrum in this band in 10 circles and RCom has it in all 22 circles.