For markets like India and Africa, the data growth story is linked to low cost smart-phones. With LTE deployments taking place simultaneously in India and the globe, Indian operators face a big challenge in terms of driving LTE economics. India would lag the US in LTE affordability by 11 years based on a 20% yearly rate of decline in technology costs and by 5 years based on a 40% yearly rate of decline in technology costs.
All BWA operators in India will launch the TD version of LTE and their fate is somewhat dependant on the progress made by China Mobile. China Mobile will not be entirely dependant on low-cost smartphones to drive traction on LTE. Indian operators, on the other hand, may have to wait for the LTE ecosystem to align with local market dynamics. In this backdrop, let us analyze what opportunities Indian market offers for Telcos.
Mobile Broadband – Case for Residential Internet Connectivity in India
India’s wireline infrastructure is poor; only 8m lines owned by Bharat Sanchar Nigam Ltd (BSNL), a public sector undertakings (PSU) operator are broadband-capable and is not open to any other Telco. There is nothing stopping Indian operators from launching data card-based LTE services. Indeed, Airtel is already doing so and Reliance Jio may follow suit. The data card business not only adds an incremental revenue stream for the operators, particularly GSM operators, it should allow them to compete directly with CDMA players, who have enjoyed an early mover advantage in this segment.
What Options Lie in front of Reliance Jio Infocomm ?
Follow Airtel in 4G / LTE Data Services The pure data-centric strategy has not worked globally; reference can be made to Clearwire in the US. However, a pure data-centric approach would allow Reliance Jio to compete for market share the
CDMA operators, which lead the wireless data card business.
Offer voice solutions and position LTE on the same level as other mobile services Taking this approach, Reliance Jio will be in direct competition with established telcos. However, Reliance Jio’s presence in the market would not pose much risk to incumbent telcos, without a mature, affordable BWA technology ecosystem. For any technology to gain traction in India, both cost and range need to be combined, in our view.
Offer BWA LTE along with Wi-Fi Reliance Jio is planning to adopt a Wi-Fi based model instead to monetize its BWA spectrum given that most mobile devices today are Wi-Fi enabled. It comes with its share of challenges without a ubiquitous coverage, a Wi-Fi model would also lack secondary features, such as location awareness, which are important for many mobile data applications. Wi-Fi also has range limitations and compares poorly with cellular services not only in terms of mobility but also in service quality and security.
Reliance Jio Infocomm Device strategy Apart from Mi-Fi and Dongles, Reliance jio will launch Mobile SmartPhone and Tablets. For SmartPhones we expect a tie-up with other 2G operators especially Reliance Communications GSM network but they’ll face challenges in implementing CSFB which Airtel has already implemented and hence the Voice minutes will be standalone offerings for someone to use where Reliance Jio LTE coverage is not available.
With these 4 Base Cases – Reliance Jio Infocomm will follow a combination of the above depending on the market [Metro Cities, Tier II Cities, etc] As Telecom Trends indicate a gradual shift towards Data based offerings, Reliance Jio will have to take that into account and move up the value chain of offerings. Stay tuned for more.