Reliance Jio, incumbents' war heats up

As telecom operators slug it out in the market to grab a higher share of the fourth generation (4G) voice or data subscribers, there's another war being fought between the legacy telecom players and Reliance Jio Infocomm Ltd, which is preparing to commercially launch its services soon, in the government corridors.

Charges and counter-charges are flying thick and fast between the two with the lobby body for GSM incumbent companies Cellular Operators Association of India (COAI) accusing RJIL of masquerading "full-blown and full-fledged services" as test services and its 1.5 million subscribers choking their network.

The industry body went to the extent of alleging that the Telecom Regulatory Authority of India's (Trai) decisions and consultation papers depicted a "pattern of bias" for new telecom companies.

The whole issue stems from RJIL's test trial of its free 4G, or Long-Term Evolution, (LTE) and Voice over LTE (VoLTE) services, which began in December last year. The test is on till the end of this month.

Even while RJIL's offerings is in beta stage, existing players have offered attractive voice and data schemes and packages to its subscribers. This has seen data revenues of operators slip even as its usage has shot up in recent times.

Refuting all allegations made by COAI, billionaire Mukesh Ambani-owned RJIL, in a letter written to Trai chairman R S Sharma on Wednesday, said the "contents" of the letter written by the GSM players' body was "malicious, unfounded, ill-informed and frivolous, and contrary to actual facts". dna is in possession of RJIL's letter.

"All steps taken by COAI, in the last few days, by issuing press releases, alleging unfounded biases with the regulator and by writing against test trials are in fact attempt to sabotage the market entry of RJIL, a new player, and malign its name," said the RJIL letter signed by Kapoor Singh Guliani.

Mahesh Uppal, director of the telecom consultancy firm ComFirst India, did not see RJIL's test trial violating any government norm.

"As far as Reliance's test trial is concerned I don't see any problem with it because they are the ones who are sitting on very expensive spectrum and are at a disadvantage and they are obviously offering service for free. I don't think they are in breach of any rules in doing so. I don't think they can be faulted as far as running the trial is concerned," he said.

In its letter to the Trai, RJIL has informed the telecom regulator it has already invested over Rs 1.34 lakh crore till now and would be spending another Rs 1.5 lakh crore in the ongoing phase of the project.

"This is higher than the gross block of any of the incumbent operators," it said.

RJIL claimed its VoLTE would offer superior quality of voice-calling at competitive costs and its scale would be unparalleled in the world.

"The entire process for test trial being conducted by RJIL is absolutely consistent, transparent, non-discriminating and after following due and adequate disclosure to all authorities," the company said in its defence to Trai.

Besides questioning RJIL's test trial, COAI, in its letter to telecom secretary and Telecom Commission (TC) chairman J S Deepak, has also countered its grouse about legacy operators not providing enough interconnect bandwidth for call emanating from its network.

The letter, written by COAI director general Rajan S Mathews on Monday, said the rising voice traffic of the new player, which has already reached 15 lakh subscribers, was choking the network of the legacy players.

RJIL has said the Point of Interconnect (PoI), where networks of operators connect, provided by incumbents to them, was not enough and was affecting its quality of service.

"There have been severe quality issues on termination of calls from RJIL network to other operator's network, precisely because of this issue," it wrote in its letter to the Trai.

It said by not facilitating with adequate PoI, the incumbents were violating the Clause 6.2 of the Unified License that mandated all operators to provide interconnect and requested the telecom watchdog's intervention in the matter.

Uppal said there are mechanisms in place to deal with these kinds of issues; "I don't take this allegation seriously. I think choking of points (of interconnect) is overstated".

COAI has also raked up the issue of Interconnect User Charge (IUC), which has been going on for many years. Department of Telecom (DoT) has been slashing IUC over the years. From 30 paise per minute over a decade back, it is down to 14 paise per minute today. Trai has floated a consultation paper to review the current IUC. This could lead to it being snipped further or completely withdrawn. The incumbents feel this is being done to favour the new players.

"As far as IUC is concerned, if it does become significantly lower or brought down to zero. It will certainly hurt the existing players and it will be unfair to them because they have made huge investments in infrastructure and they would want to monetise that investment," said Uppal.

Trai's Sharma has reportedly dismissed allegations of bias saying; "The allegations of bias against Trai are baseless".