Reliance Jio Infocomm the telecom arm of cash rich Reliance Industries Ltd has already acquired 1800MHz and 2300MHz spectrum to rollout Telecom services. Globally 1800/2100/2300MHz are high frequencies that telcos use for capacity, 700, 850 and 900MHz are globally the bands that telcos use for coverage, as these are low frequencies with long range, and hence help keep cell count to a minimum. In this background we explore why Reliance Jio needs a smaller Spectrum Band to deliver high QoS broadband experience and compete aggressively with incumbents.
700MHz / 900MHz Spectrum Feasibility
The government is likely to auction 30-35MHz of 700MHz in 2015-16. However, 700MHz base price may be set higher than 900MHz making it highly expensive. 700MHz LTE ecosystem is also two years behind 850. 900, being a European 3G band, is not a mainstream LTE band yet and perhaps for a long time. We feel Jio would only select LTE ready frequencies, which makes 700/850MHz a better bet.
Case for Reliance Jio to acquire 850MHz Spectrum for 4G LTE Services
850MHz already in commercial LTE deployment in a number of markets, time-to-market would be quicker. Jio has two options for 850MHz. It could either participate in 850MHz auctions or could access RCOM’s 850MHz (Policy Changes are required in the latter case).
There is only one contiguous 5MHz block of 850 in key circles. There is an incumbent without 900 in such circles and hence hole-filling requires one 5MHz block. Hence there is a reasonable chance that they get into a bidding war with Jio. Jio would find it difficult to match the combined might of the incumbents as each incumbent requires 850MHz only in a few circles and Jio could face an exorbitant spectrum bill.
Reliance Jio Mobile Data War with Airtel, Vodafone and Idea
Jio would have 850, 1800 and 2300. Incumbents have abundant 900, 1800, 2100 in metros. For instance, Bharti has 6MHz of 900, 7MHz of 1800 and 5MHz of 2100 in Delhi. With incumbents holding abundant data spectrum, they are evenly matched with Jio in terms of capacity.
Handset of 3G Vs 4G LTE in 800 Band
Incumbents would counter Jio’ 850 LTE by offering 3G on 900+2100. Though 850 has a flourishing LTE ecosystem, it is no match to 900+2100 3G ecosystem in terms of number of handsets and affordability. 850 LTE handsets likely to be relatively expensive, Jio would need to subsidize heavily, but this would translate to very long recovery periods.
Lets keep our fingers crossed for the next few months when the new Government will unveil its Telecom Policy and then we’ll analyze the scenario.