Mukesh Ambani 's $20-billion telecom juggernaut is finally set to roll out. Reliance Jio will start giving 4G connections to consumers from Monday, September 5.

The company will give all users free access to voice and data as a welcome offer for three months. After December, Jio customers will get all domestic voice calls, including roaming for free.

Last year, Ambani had said that the services would be priced between Rs 300 and Rs 500.

The Reliance Industries stock opened at Rs 1,053.90 and hit a high of Rs 1,072.55 on the BSE. However, profit booking seemed to have set in and the stock erased its gains to trade down 0.73 per cent or Rs 7.75 at Rs 1,050.25, at about 1.05 pm. The counter also saw a spurt in volume by over 1.99 times.

#RelianceAGM leaves telecom majors nervous. Bharti Airtel, Idea Cellular dwn 6%. RIL outperforms Sensex, stays positive. @businessline

Data plans

On Thursday, Ambani announced data plans starting from Rs 149 per month (0.3GB data) to Rs 4,999 per month( 75GB). "We have provided lowest 4G rates in the world,” Ambani said.

There is also a Rs 19 pack which gives 0.1GB. There is unlimited 4G access at night on a these plans. A special Student plan gives 25 per cent more data.

New services

The company is offering offer a slew of services including streaming music, high-definition video streaming and digital money payments. Content worth Rs 15,000 is being given free till December 2017.

The company aims to get 100 million customers in the quickest period, Ambani told the Jio team.

Jio has created 50 lakh jobs, including those at Reliance Digital stores.

Ambani said that the Jio was based on best quality network with highest capacity, affordable devices , compelling content and affordable tariff.

"Most incumbent networks have not built for data. They have had to retrofit to deal with data as an after thought," Ambani said. "They are pushing unnatural act like a language translator. With Jio , digital mother tongue will be IP in natural form," Ambani said.

Message to incumbent telcos from Mukesh Ambani

"Onus on incumbent operators not to create unfair hurdles for new operators, at points of interconnect." Last week, Jio customers had faced 5 crore call failures in calls to competing networks.

Make mobile number portability easy and quick for customers who want to switch from other networks to Jio, Ambani added.

Targets 100 million customers

For the last few months Reliance Jio had started giving mobile connections on a trial basis. Initially it had offered the connection to the employees of Reliance Industries. This was followed by a scheme which allowed the employees to invite ten other users.

Recently, RJio started giving connections to all those who were buying 4G enabled smartphones from specific vendors including Samsung, Intex and Videocon. As a result, RJio now has about 3 million users already on its network. These users have been availing the service for free.

RJio had acquired its telecom licence in 2005. Since then it has invested heavily into laying a hybrid network of optical fibre network and mobile towers.

Network

Compared to other networks, RJio will predominantly run on the fourth generation technology wherein even voice calls will be made using Internet protocol.

The company has laid out over 2.5 lakh route kilometer of optical fibre. Incumbent operators have legacy networks comprising largely of traditional switching-based 2G network. Operators like Airtel, and Vodafone, however, been ramping up their 3G and 4G network over the last one year to counter any threat from RJio.

Delays

But it's not been easy for RJio. The operator has been trying to launch the service since December 2015. Several deadlines were set but the launch did not happen.

Initially, it was facing huge challenges in deploying a network in the 2,300Mhz band, the spectrum band it acquired in 2005. Due to poor propagation characteristics of this spectrum, RJio engineers found it difficult to plan a network that ensured good coverage. Subsequently, RJio was forced to acquire spectrum in other bands including the 1,800MHz. It is expected to buy more air waves in the upcoming auction in October.

The other big issue that came in the way of an earlier launch was the availability of affordable handsets that support 4G. It is only in the last year or so that handset prices have dropped to below $100.

The third reason for the delay has been RJio's inability to get its last mile processes right. Setting up a robust network is one thing but dealing with consumers issues is another. During the trial period, several consumers had to wait for several weeks before they could get their connections activated as retail outlets were not equipped with adequate systems. The dispute with Incumbent opertaors over interconnection could also have been one of the other reasons for the delay.

Without proper interconnection in place, RJio subscribers would not be able to make calls to a user of other another operator. But these are teething troubles at best. Most of the incumbent operators have had to deal.with similar issues when they started operations 20 years ago. Some are struggling even now to perfect the network and consumer care systems.

Consumer bonanza

RJio's entry is expected to bring back the good times for telecom consumers. Lack of new players had dried up all discounts and offers from incumbent operators.

But now Airtel, Vodafone and Idea have already announced a slew of initiatives over the past few months as a pre-emptive move.

“The telecom market will be simmering for the next 3-4 months as operators will respond to any offers and tariffs by RJio that are seen to be disruptive. That’s good news for consumers, who have been bereft of real competition for several years, after the 2G scam made many new players exit,” said an industry expert.

As competition intensifies more offers will.come. Perhaps, Reliance will bring data tariffs down considerably just like it did for voice calls when it launched the 2G services in 2003 with Monsoon Hungama. Then voice calls were at Rs 2 a minute which came down to under one rupee after Reliance Infocomm's entry (now this business is under younger brother Anil Ambani Group post the split).

The current average revenue per GB of data is Rs 228. As a result not even one third of India's mobile users have taken a data connection. According to analysts at Analysys Mason, this should come down to Rs 57 per GB if there has to be a significant uptake of data.

Industry impact

But any decline in tariffs could hurt the telecom industry in terms of dip in revenue in the short term. This could force consolidation in the sector forcing smaller players to exit and medium-sized companies to merge. In the long-term, though the impact on revenues could level out due to subsequent increase in consumption volumes. Consolidation will also give the pricing power back to the operators.

"We Indians have been known for Gandhi giri..now we can do data giri," Ambani said.

Click here to read the full text of Mukesh Ambani's address to shareholders at the Reliance AGM on September 1, 2016.

Related Topics
comment COMMENT NOW