Tuesday, May 16, 2017

Jio Pushes Mutation in Indian Telecom

Indian telecom was quite dull in 2015-16 until Jio stepped in and started offering free services. Entry of Jio, the ambitious telecom project by country's richhest man Mukesh Ambani has forced the Indian telecom to undergo a major reshape.

The most obvious change is merger and acquisition of telecom companies - which makes the telecom market quite smaller. If all go right, India will have only 5-6 players -
  • Reliance Jio
  • Airtel (acquisition of Telenor India, Augere Wireless, Videocon (partially) and 4G spectrum of Tikona & Aircel)
  • Vodafone-Idea (to be merged soon)
  • RCom-Aircel-SSTL
  • Tata Tele (rumor is they might merge with merged entity of RCOM-AIRCEL-SSTL)
  • BSNL/MTNL (there are chances that both PSU may merge)
Among all, Vodafone & Idea's merger seems to create strongest entity which may give real tough competition to Jio and Airtel.​ R​Com​-A​ircel​-MTS(+Tata Tele) does not seem to be in a position to create a stir in the market as their present 4G coverage is based on RCom's 850 MHz band only​ and may they extend 4G to 1800MHz band; but the super-merged entity would not have any 4G network on 2300/2500 MHz where Jio, Airtel and Vodafone-Idea are placed too firmly. ​

Jio vs Incumbents

Reliance Jio was offerring free services to everybody since September 2016, and free has ended by 15th April, 2017 officially. Jio's strategy was pretty simple - try before you hop on to Jio 4G. Jio is LTE-only network, which is never tested for huge data load, or how VoLTE executes for Jio's voice services.Apart from regular voice, text and data Jio extended the free offerings on all of Jio's digital services (Jio TV, Jio Cinema, Jio Music and others). 

Jio wants incumbents bleed, and die. And it's working, Airtel acquired several companies and Vodafone is to be merged with Idea. 

But Jio has some issues - their voice network (VoLTE) is not stable (but improving gradually), and customers have problem making calls, during call, and getting calls. Even their LTE network sometimes fell prey of the free users. As Jio has launched commercially, we can hope these issues will be ironed out soon with the help of rented towers (Jio made deal with several tower companies) and rented network (fiber and telecom networking sharing). 

When Jio was in a nascent stage, many predicted that Jio would disrupt market by price & services. Jio definitely did a price disruption - free data & voice (and extended them too on Summer Surprise Offer) made a huge blow to revenue to other companies (those got a Jio SIM, did not recharge their data packs on existing SIM). As Jio brings out plans, Airtel, Vodafone & Idea responded quickly. Even Aircel & BSNL followed the trend to keep customers intact. RCom and Tata - they kept quiet and I seriously doubt their intention to stay in the market on a long term basis. 

In short I feel Jio would have a great future if they stabilized their network, improve customer care and other technical issues. 

Airtel vs Vodafone-Idea's Merged Entity

As of now the merger is yet to begin, and Airtel is still in power. However after their business merge, Voda-Idea can do immense problem to Airtel, just like Jio. Still I believe Airtel will continue to do better than this merged entity for atleast 2-3 years. With last acquisitions Airtel now has 4G spectrum on 2300MHz in all 22 circles and LTE2300 network is backed up by Airtel's legacy 2G/3G network. Just like Jio, Airtel has extended LTE network on 1800MHz also. Airtel's dual LTE network is already available in many cities and the company is not siting idle - they have started VoLTE trials across several cities to match with latest technological upgrades. 

In comparison Vodafone-Idea's LTE network is solely based on refarmed 1800MHz on 2 x 2.5MHz channels. Both companies had acquired LTE ready spectrum on 2500MHz (only Idea has 2300MHz spectrum in 3 circles). Though in practical 2500MHz band is almost similar to 2300MHz band, the earlier might need little more nanocells to match up the coverage by 2300MHz. Vodafone and Idea may be already started testing and deploying LTE-TDD on 2500MHz band but it will take another 2 years to reach the level playing range of Jio and Airtel. 

Summarizing Jio's impact on Indian Telecom: 

1. Merger & Acquisition

Discussed above.

2. Reduced ARPU for existing players

Jio's free services impacted the existing players' business in term of lowering of ARPU, specially data ARPU.

3. Revised Tariff Game

After the happy days, Jio has launched the plans - for Rs 309 you will get unlimited voice, data (upto 1GB/day) and texts. And incumbents & BSNL brought out similar plans.

4. App centric Ecosystem

MyJio app sets the example, now most operators has similar My app.

5. VAS turns into Entertainment Apps

I hate VAS, and you too. Jio turns down the age old concept of VAS - Use the apps like Jio Music, Jio TV, Jio Movies, etc etc. Right now they are of free subscriptions but in near future Jio may start charging you.

6. LTE turns Converging technology in India too

Be it 2G/3G/CDMA all operators are moving towards LTE.

7. Spectrum Refarming

Airtel, Vodafone, Idea, Telenor refarmed their 1800MHz spectrum for LTE roll out. RCOM shut down CDMA800 to launch LTE800.

8. Telcos put Effort on fiber optic deployment

LTE means huge data, and hence operators are pushing for creating efficient data handling network - and it's OFC not microwave.

9. Consumers are the winners

With M&A we, consumers have few choice left, but Jio cuts down tariff and the trend is now adopted by most operators. So cheaper tariff and we are the winners!

10. Advertisement industry got a boost

Though it's a different ball game, but every operators are creating their own niche of advertisements to go ahead of others.
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