Has the government bent over backwards to clear the decks for Reliance Jio Telecom’s entry into the telecom sector with 4G next year? The incumbents allege that the policy has been tweaked to suit India’s best know business house.
A decade ago, Reliance Infocom—the telecom entity of the unified Reliance—was at the heart of a noisy debate over “limited mobility”, norms that facilitated its entry into the booming telecom sector. Reliance conclusively won that round. Now, similar fears have been raised about Reliance Jio Telecom—its 4G offerings to be launched next year will mark Mukesh’s re-entry into the telecom sector.
Recently, in the New Telecom Policy 2011, the government allowed 4G operators to offer voice by paying Rs 1,658 crore, a decision that is being opposed tooth-and-nail by the rest of the industry. As Reliance Jio is the only 4G operator with a pan India license and spectrum, this will give it a huge advantage over the incumbent companies and affect their bottomlines as 4G technology and spectrum is perceived to be far more efficient than 2G or 3G.
Industry body COAI (led by older players like Airtel, Vodafone and Idea Cellular) has been quite vocal on this front, arguing that the government is trying to illegally enlarge the scope of RIL’s services—after all, 4G licences were given specifically for non-voice services. The new policy also separated the spectrum from the licence, allowing an operator to use its spectrum to offer any service. Before this, spectrum was issued only for a purpose specified in a licence. So, an operator with a data license—Reliance Jio in 4G, for instance—could not use its spectrum to offer any other service including voice. Now that is allowed. While this is being done in the name of the government’s overall resolve to have a unified licence for all services, the benefit to some players is evident.
This effectively means RIL will be free to use its spectrum for any service it wants to offer without having the kind of restrictions incumbents have faced in the past. The fact that RIL holds 20 MHz of spectrum—one of the largest in the industry in the 2.3 GHz bands which is one of the most efficient and high speed bands—will only help its case.
On top of that, early next year, the government will go for auction of the 700 MHz band which is the most suited for wireless broadband. While the auction will be open for all companies, most other companies are bleeding and have limited resources to have big exposures in spectrum auctions. Reliance, on the other hand, is sitting on a huge cash pile and is starting its business in this sector. That could in all probability make it the gorilla in the 4G space, something most of players are scared about.
This piece did not appear in print
