1. Video content deal: Bharti Airtel 4G gets a leg-up over Reliance Jio

Video content deal: Bharti Airtel 4G gets a leg-up over Reliance Jio

In a move that will not only test the application of the telecom regulator’s norms on differential data pricing but also takes the fight further into rival Reliance Jio Infocomm’s bastion, Bharti Airtel is close to tying up with a US-based global content provider which would offer it video content on an exclusive basis over the closed electronic communications network (CECN), generally referred to as intranet.

By: | Published: April 26, 2016 6:47 AM
BHARTI AIRTEL shares, Sensex, Nifty, NSE, BSE

So far Bharti for its 4G services had adopted a model where it tied up with content providers to offer movies and songs to its subscribers. (PTI)

In a move that will not only test the application of the telecom regulator’s norms on differential data pricing but also takes the fight further into rival Reliance Jio Infocomm’s bastion, Bharti Airtel is close to tying up with a US-based global content provider which would offer it video content on an exclusive basis over the closed electronic communications network (CECN), generally referred to as intranet. Once the tie-up is formalised, Bharti will be free to offer this content to its subscribers to get a greater 4G play.

The development is significant since it adds another chapter to the competition brewing between Bharti and Jio with regard to the 4G battle. Recently, with two major spectrum deals with Videocon Telecommunications and Aircel, Bharti had stolen the first-mover advantage from Jio to be the only operator to be able to offer 4G services on a pan-India basis. With the content deal, it has thrown another challenge to Jio in an area where the latter was perceived to be stronger.

By moving to the model of buying content and storing it on its network and offering it exclusively to its subscribers, which is so far understood to be the RJio model, Bharti has once again tried to thwart its rival’s first-mover advantage.

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However, Bharti is being cautious this time around. Having burnt its fingers earlier with two forays into data pricing that led to allegations of violation of the principles of net neutrality, the company this time has sought advance permission from the Telecom Regulatory Authority of India to enter into such a tie-up, stating that as per its understanding it is within the rules of net neutrality but some stakeholders may view it as violation.

“We wish to bring to your kind attention that we have been approached by one of the big global content providers who wishes to offer their video content on exclusive basis over the CECN of Airtel, in compliance with the regulation. Such exclusive content would be offered in India to Airtel’s customers only,” Bharti said in its letter to the Trai secretary on Monday.

“We further submit that while such an arrangement with the global content provider over CECN along with its exclusive offerings to our customers would be compliant with the regulations, it may well be viewed by some stakeholders in violation of principles of net neutrality,” the company added in the letter.

Trai’s regulation on differential data pricing, which came into effect in January, bars operators from offering differential data tariffs through select tie-ups with content providers on the grounds of being “discriminatory”. It basically prohibits mobile operators from offering any data services, tariffs for which vary on the basis of either website, application, platform or type of content being accessed. However, it has left a big door ajar for possible misuse and thus litigation by allowing such tariffs on closed communication network. This is the reason for Bharti adopting a cautious approach and seeking the regulator’s nod in advance.

However, Trai chairman RS Sharma had explained to FE that the regulation was clear and there was no scope of any misuse. He had explained when and how the closed communication network pricing will be seen as a misuse and against the letter and spirit of regulation. “If an operator has an app or any content arrangement under the name A which is only for its subscribers for free on Intranet and another similar service under the name B which is open to all for a charge will not be allowed,” Sharma had said.

This means that if a content service being provided by an operator to its subscribers is not available on the net, it is fine and an operator is free to price it whichever way it wants to.

So far Bharti for its 4G services had adopted a model where it tied up with content providers to offer movies and songs to its subscribers. These services were available to subscribers of other operators as well via the net but they had to pay a little higher than Bharti subscribers. Under differential data tariff this was stopped.

Though Jio has not yet started its commercial services, it is understood that its model, instead of a tie-up, is to buy content that is then offered exclusively to its subscribers at competitive rates, even for free. Under differential tariff this is allowed. However, with the prospective tie-up, Bharti may once again thwart the first-mover advantage of Jio.

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