And I thought 100 million broadband subscribers is a joke!
I thought 100 million broadband subscribers was a joke. But I can see light at the end of the tunnel. India can have 100 million broadband subscribers by 2012. No there is no ambitious Rajiv Yojgar Broadbandikaran plan to achieve this and there is certainly no black magic to it. Nor there will be some inflated numbers. There is just one word – Reliance. India’s current broadband subscribers stand at 8 million. And if there is one company which can give it a big push towards the 100 million mark, then it’s Reliance. Lucky for us Reliance has just entered the broadband segment.
Reliance Industries (RIL) which made broadband player Infotel as its subsidiary is known for its execution. Mukesh Ambani, Reliance’s chief is going full steam to get back into the telecom space. Money is no problem for Ambani as he has already spent close to $4bn for the wireless broadband license and is ready to splurge $1bn more to get the service going to both rural and urban markets.
Reliance’s broadband roll-out will not be without its share of challenges.
- Infrastructure : There is no voice backbone which means there are no subscribers and most importantly there are no towers. It has been a while since Indian telecom players have realized infrastructure sharing is the only way to remain profitable. RIL will find someone to share towers. Reliance Infratel, tower subsidiary of Anil Ambani’s Reliance Communication is planning to sell stake and go public. Mukesh Ambani’s RIL can pick stake in Reliance Infratel and secure some towers.
- Technology choice : RIL has to choose between Long Term Evaluation (LTE) and WiMAX. Qualcomm which is a winning bidder in 4 circles for 4G services is heavily backing LTE. Reliance might and most probably will forge a partnership with Qualcomm to push LTE.
- First move : 4G is faster than 3G. RIL has 4G license for all 22 circles. But RIL has to move fast and sell 4G before someone else can sell 3G. Whether it is 3G or 4G, it really doesn’t matter as it would be faster than India’s existing broadband speeds. People wouldn’t care much for the technology. They only care about the speed and the service. Whoever has both, wins.
But these challenges are nothing new to Reliance. And Reliance doesn’t have to worry about one thing which every other company is worrying about right now – money. Bharti spent quite a bit of cash to get lucky in Africa with it’s Zain Telecom buy. It has spent $3.3 billion to get 3G license in 18 circles and 4G license in 4 circles. Many voice leaders like Vodafone and IDEA has completely withdrawn from the wireless broadband race. A national launch of 3G and 4G services is something only three companies can do. MTNL and BSNL are the government owned companies which have both 3G and 4G spectrums in all the circles. Reliance, through Infotel is the only other player which has spectrum (4G) in all the 22 circles. Only Bharti Airtel comes close. Bharti Airtel doesn’t have either 3G or 4G license in 6 circles (Gujarat,Kerala, Haryana, Uttar Pradesh (E), Madhya Pradesh and Orissa). BSNL and MTNL are notorious for their poor marketing strategies, in spite of all the free passes they got. I don’t expect that to change in the next three years. That leaves us with RIL which is strategically positioned to capture India’s telecom space which is at the cusp of a data revolution.
RIL has its advantages too. It has a well established brand which will make it easy to gain customers. It would be interesting to see how the two Reliance’s stack against each other They will be competing in the same space for the first time – Reliance Communication selling its broadband service and RIL selling its own broadband service. Reliance Communication has only the 3G license and that too in 13 circles. Not much of an overlap and could prove to be complementary. The other advantage RIL has over Airtel and Aircel is it can focus on single task. RIL just have to chose between LTE and WiMAX and market its service at will. On the other hand Airtel and Aircel which hold both 3G and 4G licenses have to market their services separately or differently. This is in addition to making a choice between LTE and WiMax and choosing a partner which has the know-how in rolling these services out.
Next three years will be very exciting for India’s telecom, broadband and data space. I expect to see some ferocious broadband wars. India could as well lead the data revolution and India’s data revenues will surpass its voice revenues. It could soon be food, water and broadband for India too. Thanks to Reliance’s entry, now I don’t hold any doubts about India’s audacious goal of 100 million broadband subscribers by 2012. However, I still have one question. Now where will the content come from for these 100 million subscribers?
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