1. Reliance Jio phone: Bharti Airtel, Vodafone, Idea eye unequal competition; major setback in store

Reliance Jio phone: Bharti Airtel, Vodafone, Idea eye unequal competition; major setback in store

Jio has a fully-4G Volte network and therefore can provide unlimited voice calls on its feature phones for free.

By: | New Delhi | Published: July 24, 2017 6:24 AM
Reliance Jio phone, Reliance Jio, Bharti Airtel, Vodafone, Idea The Volte 4G feature phone launch by Reliance Jio Infocomm will place the incumbents like Bharti Airtel, Vodafone, and Idea Cellular at a great disadvantage in the fresh competition which has emerged in the telecom market.

The Volte 4G feature phone launch by Reliance Jio Infocomm will place the incumbents like Bharti Airtel, Vodafone, and Idea Cellular at a great disadvantage in the fresh competition which has emerged in the telecom market. Unlike the free voice and cheap data package which Jio last year launched for smartphone users where incumbents could compete with similar tariff packages, in the feature phone segment they would be faced with handicaps making it difficult for them to come up with devices or tariffs similar to Jio’s. Jio has a fully-4G Volte network and therefore can provide unlimited voice calls on its feature phones for free. This is not the case with incumbents, who largely have GSM network which cannot support unlimited (free) voice calls and also suffers from data capability. While it is true that incumbents also have spectrum in the 4G bands and are slowly making their networks Volte, their disadvantage is not having sufficient spectrum in sub 1GHz band like 800 Mhz. Bulk of their 4G spectrum is in 1800 Mhz, 2300 Mhz and 900 Mhz.

For a higher Volte coverage with unlimited voice capability sub 1GHz spectrum is needed. Higher bands require more number of sites and therefore higher investments. While Bharti, Vodafone and Idea have spectrum in 900 Mhz, which is a low frequency band but of their total spectrum portfolio it comprises only 50%. Because of this constraint even if incumbents come up with any handset the way Jio has come to address the feature phone segment which has around 500 million users, their largely GSM network would prevent them from providing unlimited voice calls, which Jio is providing. If they do so their network would get choked making quality of service very poor. Similarly, lack of lower frequency 4G spectrum would not be of help even if they slowly make their entire network 4G. In this background, the incumbents are definitely going to fight hard to ensure that termination rate, which is currently being reviewed by the Telecom Regulatory Authority of India doesn’t get reduced and surely does not become zero. If the rates are lowered, Jio’s losses on account of paying interconnect usage charge would get reduced.

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Kotak Institutional Equities has noted the disadvantage the incumbents are placed at in competing with Jio on the feature phone front vis-à-vis smartphones. “Better-than-feared outcome on feature phone service pricing notwithstanding, we do see the JioPhone product offering (combination of device plus data allowance plus service price plan) as a reasonably formidable challenge for the incumbents. The challenge, unlike the smartphone product offering from Jio, is not pricing; it is the product. Incumbents do not have all the ingredients at this point to launch a competitive product,” it has observed. “LTE or 3G network in deep rural pockets – hi-speed data is a key element of the JioPhone product offering. Having a wider-coverage hi-speed (preferably LTE) network is a hygiene factor to compete with JioPhone, therefore. Incumbents may have to accelerate their LTE investments a tad; this could pose some upside risk to our short-term capex estimates for the incumbents,” Kotak has noted. As is known, Jio is launching a Volte 4G feature phone beginning September. The phone will virtually come for free in the sense that customers need to only deposit a fully refundable Rs 1,500, which they would get back once they return their phones after 36 months.

  1. P
    P V GOPALA RAO
    Jul 24, 2017 at 11:58 am
    Iam proud to be the member of JIO family I am eagerly waiting for NEW feature phone. Thank you very much RELAINCE GROUP.
    Reply
    1. A
      Apte
      Jul 24, 2017 at 9:49 am
      There is another news report today which says that the domestic manufacturers of feature phones in our country have to re-jig their handsets’ models if they wish to stay in compe ion as the new Jio phone will hit them hard. But my query is this: if Reliance Industries Ltd. which provides telecom services ( both voice data) through Jio, could think of a feature phone with some vital smart phone characteristics, why couldn’t these domestic manufacturers think of that kind of handset earlier? Till R-Jio came into the telecom services market, Airtel Vodafone Idea were almost dictating terms to customers. After R-Jio’s entry, whole scenario in the telecom services market has changed. Similar thing will happen in the market for feature phone handsets after Jio comes out with its 4 G powered Jio handset. It is a welcome development, no doubt.
      Reply
      1. S
        SN OJHA
        Jul 24, 2017 at 9:33 am
        Freedom from cartel raj of 3 telecom operators for hapless users.
        Reply
        1. A
          Akhilesh tomar
          Jul 24, 2017 at 9:32 am
          Sir hame bhe phone mil shaktha h Mere n. 09589697233 me Melissa yu bhathae
          Reply

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