by V. SRIDHAR
Mukesh Ambani, the chairman, managing director and largest shareholder of the biggest Indian conglomerate, Reliance Industries Ltd, set the cat among the pigeons on September 1 when he announced an audacious foray into mobile phone services. In an address to company shareholders, but which was carried far beyond by live feeds on TV channels, Ambani announced that the company’s subsidiary Reliance Jio Infocomm Ltd would launch its much-delayed mobile services from September 5.
Ambani’s speech can be broadly parsed into three sets. First was the general homilies about how Jio would transform Digital India. The second set of issues pertained to how Jio would enable popular access to data, the new currency of enlightenment and empowerment as he described. The third was his promise to obliterate the distinction between data and voice on his network, what in technical terms has been described as IT convergence and has accelerated over the last decade.
Ambani waxed eloquent on how Jio planned to transform India by enabling cheaper access to data. Data, he said, were the “digital oxygen” and he said Jio’s service would enable India to move from a situation of data shortage to one of data abundance. While commentators have dissected Jio’s data plans and shown them to be not very different from that of its competitors, Ambani’s killer punch to competition was the virtual elimination of the distinction between voice and data traffic on the Jio network.
The key element in Ambani’s announcement was the offer to Jio customers that they would enjoy a lifetime of free calls on its network, a move which clearly unsettled the cosy cartel-like world of Indian mobile operators which has been repeatedly accused of neglecting investments in infrastructure.
Long queues at Reliance outlets were reported from across the country when the service was launched on September 5. Although the Jio SIM was for free, there were reports that customers were being asked to pay Rs.1,000 in Delhi and Rs.350 in Bengaluru. Reports from other parts of the country also indicated brisk sales of the Jio SIM in the black market.
Chaos in the networks
As expected, the battle turned ugly, with Reliance’s competitors desperate to defend their turf at any cost. A day after the announcement, the cosy club of operators, represented by the Cellular Operators Association of India (COAI), started making noises about how providing “interconnect” to a flood of subscribers from the newly launched company could prove difficult. The fact that voice calls were free on the Jio network, and since all calls from the new operator were obviously to other networks, triggered a massive demand for “interconnection” with other networks.
Jio alleged that the incumbent telcos were not providing adequate quantum of Points of Interconnection (PoIs), resulting in its subscribers being unable to reach out to subscribers on other telecom networks. The incumbent telcos countered it by saying that the installing of new PoIs to handle the surge in traffic would involve investments and take time. Although they are obliged to provide PoIs, they argued that the free calling regime initiated by Jio was responsible for the chaotic situation. Bharti Airtel, the operator with the biggest subscriber base, said it planned to increase the number of PoIs available to Jio connections but urged the regulator to use the Interconnection Usage Charge (IUC) as a means of controlling the “asymmetric flow of traffic” caused by one operator choosing not to charge for calls.
Curiously, the industry association functions as a company in which voting rights are distributed according to revenue shares, which implies that although Jio is a member it has no voting rights. “We have zero revenue, so we are crowded out,” Ambani told a daily, referring to the COAI’s structure that effectively shuts out the new operator from having any meaningful say. The COAI, which is primarily controlled by the three main incumbent operators (Bharti Airtel, Vodafone and Idea Cellular) dragged the Telecom Regulatory Authority of India (TRAI) into an ugly fracas when it alleged that the regulator, at the “behest” of Reliance, kept the COAI out of the talks that were held on September 9. The regulator reacted angrily by demanding that the COAI’s director general, Rajan Mathews, apologise for alleging that TRAI had asked him to leave a meeting conducted to discuss interconnect issues. TRAI said Mathews’ allegations were “patently wrong, mischievous and perhaps made with mala fide intention”. The regulator also clarified that interconnection among operators was a “bilateral issue”. TRAI has asked the incumbents to commit to an increase in PoI capacities in order to facilitate interconnection with calls from Jio subscribers. The regulator hopes that the issue would be “settled” in 90 days, by which Jio’s introductory offer is scheduled to expire.
It is evident that neither the regulator nor the government has learnt from past experience. Fourteen years ago, when Reliance launched its first foray into the telecom business—about which Mukesh Ambani talks little now—the regulator watched helplessly as the then incumbents refused to allow interconnection. Their grouse then was that Reliance had made use of a Wireless in Local Loop (WiLL) licence to make a “back-door entry” into full-blown mobile telephony. While it is true that Jio is free to charge within the tariff limits prescribed by TRAI, or not at all as in the current situation, it is evident that the regulator has allowed Jio to create a chaotic situation that threatens to choke networks. It is evident that the regulator ought to have demanded that Jio provide enough time to other operators to set in place systems that can handle the explosive surge in traffic from a single operator.
Social basis of the digital divide
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