Points Of Confrontation
Starting 2017, all telecom operators will have three new realities to face. One, they will need to learn to co-exist peacefully as court battles won’t help anyone; improve their respective services to plug mass migration of customer base to Jio
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As consumers continue to avail the benefits of “free” 4G services from Reliance Jio, primarily data, the company is embroiled in virtually daily confrontation with its rivals over shortage of points of interconnections (PoIs). Incumbents like Airtel have fallen afoul of Jio over insufficient PoIs that enable mobile users to make calls to numbers on other networks. Jio says over 280 crore calls have failed between Jio and Airtel in the last three months or so because of the PoI shortage, a point refuted by Airtel of course. Airtel argues that it has provided over 7,000 additional PoIs to Jio, taking the total number of PoIs to over 17,000. “This capacity is sufficient to serve over 75 million customers, based on the forecast provided by Jio to Airtel,” it said recently adding that the regulatory obligations permit providing only so many interconnections in 90 days, which it is doing. Jio is not buying it. It has , in fact, alleged that Airtel is violating the licence agreement by providing only one-way PoIs for completing calls rather than two-way nodes. Airtel, however, slams Jio and blames free services for the mismatch.
There are two takeaways from these confrontations. One, more and more existing consumers are ‘trying’ Jio for data services, not voice, at least in the urban centres. And two, customers do not switch loyalties so easily. While Airtel has already said that it will wait and see what happens to Jio after 31 December (when its free offer ends), Jio has hinted at extending the freebies till March, of course under some other scheme.
Meanwhile, Fitch Ratings has said that Jio faces stiff competition from financially strong incumbents like Airtel, and that future capex will depend on growth of its customer base. Fitch has re-affirmed ‘BBB-minus’ rating of Reliance Industries (RIL) with stable outlook due to its robust oil business. For RIL, which has invested Rs 1.6 lakh crore in building its 4G network, Jio is the best bet for boosting its future prospects. “Jio will face intense competition from the financially strong incumbent Indian telecom players, but we believe falling data tariffs will support significant expansion of overall data consumption in India over the medium term,” said Fitch.
Starting 2017, all telecom operators will have three new realities to face. One, they will need to learn to co-exist peacefully as court battles won’t help anyone; improve their respective services to plug mass migration of customer base to Jio; and devise innovative offerings so as to improve their average revenue per users, else only two or three players will be left standing.