It’s round 2 in the Sunil Mittal vs Mukesh Ambani bout as Jio network spreads | columns | Hindustan Times
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It’s round 2 in the Sunil Mittal vs Mukesh Ambani bout as Jio network spreads

Reliance Jio’s launch comes at an inconvenient time for Bharti and other incumbent telcos that delayed making voice free, still charged for national roaming, and didn’t adapt innovative, and aggressive, data-pricing models.

columns Updated: Sep 26, 2016 01:12 IST
A staff member arranges Reliance Jio Infocomm 4G mobile service SIM cards at a store in Mumbai, September 6, 2016.
A staff member arranges Reliance Jio Infocomm 4G mobile service SIM cards at a store in Mumbai, September 6, 2016.(AFP)

Almost a decade-and-a-half after it first erupted (and then died down), the battle between Mukesh Ambani and Sunil Mittal for supremacy of Indian radiowaves is finally coming to a boil. In anticipation of Reliance Jio Infocomm Ltd’s launch, Bharti Airtel Ltd cut data rates, and got the industry group Cellular Operators Association of India (COAI), of which it is a part and which it pretty much controls, to lobby the government against various aspects of Jio’s soft launch.

The two companies have since been locked in a bitter battle over so-called Points of Interconnection, or PoIs (that allow calls between networks to be completed). Jio says it is unable to complete up to 20 million calls a day because Bharti has not provided enough of such points. Bharti has countered that the problem is with Jio’s own network. The Telecom Regulatory Authority of India (Trai) is now looking at flow across PoIs over five days (September 15-19) to find out who is lying. There have also been reports that Bharti is not allowing its subscribers to port their numbers (under the mobile number portability facility) to the Jio network -- if true, this could again result in action by Trai.

Read | Telecom firms face stiff penalties over points of interconnection issue

In interviews to two business news dailies (The Economic Times and the Business Standard) last week, Mittal struck a conciliatory note. The essence of his arguments: Problems related to PoIs and number portability are teething issues and will be sorted out; Bharti has significant strengths and will hold its own against Jio.

Read | We will increase revenue market share, says Sunil Mittal

Mittal is right. Bharti did hold its own against the might of Reliance Industries Ltd when the latter launched Reliance Infocomm in late 2002. Even then, Reliance’s entry into the mobile telephony space was controversial. The company only had a fixed telephony licence but went ahead and launched mobile services. Bharti and other telcos lobbied and took legal recourse to prevent the launch, but to no avail. Reliance’s entry triggered a pricing disruption that caused Indian mobile telephony tariffs to become among the lowest in the world, and the market exploded, almost doubling (or more) in size every year in the following five years.

Still, if Bharti held its own, it was in part because Mukesh Ambani, the brain and the force behind Reliance Infocomm, and his younger brother Anil Ambani got into a long and messy fight over control and ownership of the Reliance empire soon after (in mid-2004). The brothers eventually settled their differences in 2005, and the telecom business went to Anil Ambani, but it had lost at least some momentum by then.

Read | Challenging Jio? Airtel will give 3 months of unlimited data for Rs 1,494

Mittal didn’t comment publicly on the dispute but he must have been relieved that it took the heat off Airtel. Sure, even back then, it wasn’t an unequal fight. By the early 2000s, Mittal had already emerged as the most powerful person in Indian telecom – no mean feat for a one-time gelatin manufacturer who was up against the Ambanis, Tatas, Birlas, Modis and Goenkas.

Through the years, there have been murmurs that Bharti Airtel was the favourite of the department of telecommunications, although there’s been little to show for this by way of evidence. In the absence of a spectrum policy, all allocation of radio waves was ad-hoc (or based on temporary policies), and if Bharti benefited, so did several others.

India’s telecom policy has evolved since the early 1990s. It has seen five radical changes that effectively rewrote the dynamics of the business. The first was in 1999, when the government allowed telcos to move from a licence fee regime to a revenue sharing one. The change benefited all telcos and created the ideal conditions for the telecom boom of the 2000s .

Read | Call blocks: Telcos may be fined up to Rs 50 crore

The second was in 2002-03, when the government allowed companies with fixed telephony licences to offer mobile telephony services. This legalised the mobile telephony operations of Reliance Infocomm, which had started offering mobile services even before the change. The other beneficiary was Tata Teleservices Ltd.

The third, and fourth, in quick succession were in 2007-08, when the government allowed companies offering mobile services on the CDMA platform to also do so on the dominant GSM platform, and also decided to go back on the 1999 policy of allowing only four telcos in each circle, or operating area. The first of these changes again benefited Reliance Communications Ltd (as Reliance Infocomm was rechristened after its control passed to Anil Ambani) and Tata Teleservices. The second benefited several new entrants, although it also set the stage for what is now known as the 2G scam.

Read | Telcos connect with Jio, but fear impact on balance sheets

And the fifth was in 2012 when the government allowed companies with a broadband wireless licence to offer voice services. Only one company had a pan-India broadband wireless licence at the time – Reliance Industries Ltd.

In each case, the change of policy made sense from the perspective of technology and served the interests of customers (and both should be driving forces of any policy). However, the changes did disadvantage incumbent telcos and benefit a new entrant.

Not that many of the incumbents have done themselves any favours. In a country-wide survey last year, Mint discovered that there were no “best” telcos, only “best-of-the-worst” ones in terms of service.

Read | No ‘best’ telcos, only ‘best-of-worst’ ones

Reliance Jio’s launch comes at an inconvenient time for Bharti and other incumbent telcos that delayed making voice free, still charged for national roaming, and didn’t adapt innovative (and aggressive) data-pricing models. Jio did all three, in the process making itself look consumer-friendly (especially by comparison).

R Sukumar is editor, Mint

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