But if it prolonged its introductory offer, telcos' paybacks on investments would get affected; the revenue mix is likely to tilt in favour of data, revenue from voice will shrink
Reliance Jio Infocomm's (Rel Jio) reported scheme of clubbing free voice with data plan and a tariff as low as Rs 80 for one gigabyte (GB) when it commercially launches its fourth generation (4G) services will get it a big chunk of the market only if it has a wide network coverage, say experts.
TV Ramachandran, chairman, Assocham National Council of Telecommunications, said the winner in the 4G game would be the one who has the "best and widest coverage". "In mobile, it is always about coverage. The person who wins is the person who has the best and the widest coverage. For both voice and data, nobody wants a phone with limited coverage. That is going to decide who will be the winner. So let's wait and see," he said.
Reliance owns a huge optic fibre network across the country. It is also reportedly trying to rent a large number of tower sites from various vendors.
Ramachandran expects Rel Jio's promotional offer to disrupt the market, and if it continued for a long period, it could even affect the payback on staggering 4G investments made by the telecom operators. "It is a given that any new entrant will have to cut tariff. And Reliance is coming in a big way. So, they would definitely have an impact on the market. It may not just be free voice but possibly also a big slash in tariff. If both (voice and data) are down then paybacks for investments can get affected," he said.
According to him, Rel Jio's introductory offer would have to give way to rational business approach later. One major shift post Rel Jio's entry could be a higher portion of data revenue in its total income. Currently, telcos still earn 80% of their revenue from voice, which may shrink with the tariff war in the 4G space. The Mukesh Ambani-owned telecom firm has been talking of launching its 4G services for over past several years. Last December, it finally rolled out its services for only employees. It later extended it to family and friends. It is still in the beta phase and is bundled with its Lyf smartphones. The prices of these handsets range between Rs 2,999 (Flame 3, Flame 4, Flame 5 and Flame 6) and Rs 19,999 (Earth 2).
G Krishna Kumar, telecom executive based in Bangalore, sees an explosion in the use of the internet with Rel Jio's foray into the market. He says what their Monsoon Hungama did to voice in 2002, their official entry into the 4G would do the same to the internet. "The introductory offer of free voice and extremely low priced data connection is intended to attract new customers to the internet. It's 2002 offer (Monsoon Hungama) saw more and more people use mobile for voice, this (4G commercial launch) will do the same for internet," said Krishna Kumar.
However, he says, eventually, how much market share Jio gets would depend on the quality of experience it provides for the end users. "It is sure that the price (tariff) drop will create a ripple effect and a highly competitive environment that will help the end users," said the Bangalore-based analyst. Jio has already built a subscriber base of 6 million, of which 1.5 million users are its own and 4.5 million are Anil Ambani-owned Reliance Communication's CDMA users, who have migrated to the 4G network.
praveena.sharma@dnaindia.net
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