Well Guys, Your Move now

Reliance Jio has ushered in a sense of déjà vu. Will history repeat itself or be rewritten?  

Exactly three weeks after the 3G spectrum auction ended in May 2010, leaving the government richer by a whopping Rs.67,000 crore, a little known company called Infotel Broadband Services was in the news. This was because it was the only company that won the pan-India license for broadband wireless access (BWA) spectrum. It paid close to Rs.12,850 crore at a time when a large player like Idea Cellular did not win the bid for any circle, while Bharti Airtel chose to buy spectrum in just four circles. 

There was some element of curiosity about Infotel and what its plans were. All that was put to rest when Mukesh Ambani-owned Reliance Industries bought a 95% stake in Infotel and the story suddenly looked very different. After Ambani handed over the telecom business in 2005 to his younger brother, Anil, he was now back in the sector, one that he was known to have a soft corner for. At a time when the large operators were paying huge amounts for 3G spectrum, what Ambani had in mind through a BWA foray, was intriguing, to say the least. It had just been a few days since the non-compete agreement between the two brothers had run its course and there was nothing that came in between Mukesh and telecom now.  

In a terse statement, he said that there was an opportunity in wireless broadband, and India could provide world-class 4G services. The critical part was the mention of how a single 20 MHz spectrum, when used with long term evolution (LTE) could provide greater capacity, compared to existing 3G infrastructure. If incumbents were betting on 3G and voice, Ambani was looking at data and beyond with a planned investment of Rs.100,000 crore. Clearly, the die had been cast for another full blown telecom war in India.

Pushing the envelope
Very little was heard from or about Reliance’s telecom plans till Ambani addressed his shareholders at the annual general meeting early this month. Ambani announced a slew of benefits for those signing up with Reliance Jio, which is the new brand, and these include free voice calls, free roaming and a substantial cut in data tariff. There is no entry barrier either, since handset prices start at Rs.2,999 topped with simplified tariff plans. In all, Jio has just ten tariff plans, a point Ambani did not forget to emphasise on to drive home the point of simplicity to the user.


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