Reliance has been working on this mega project for 2–3 years now and in a fairly hush hush manner. So scarce has been the information that the information minibytes that started filtering out about 4 weeks prior to the launch were picked by all media, which gave the project a huge build up. This generated more media hype than the past launches of many competitors. If this was a calibrated strategy to arouse curiosity to unbearable levels then that itself was a marketing coup. A Rs 100-crore plus media blitz; live teleconferencing between six chief ministers; a 50,000-strong network of distributors; 5 paise per 15 second call; MMS, Internet, and MP 3 services; and specially imported handsets. You name it. Reliance had it. And all these without a formal launch and without a formal announcement except for one interview by Mukesh Ambani. The actual launch was somewhat different—though not less aggressive. Prices went up a bit due to TRAI regulations. And the Prime Minister replaced the chief ministers.

“GSM operators will have to make settlements in the context of the announcements that have been made”

Shyam Malhotra

Reliance pulled out all the stops in a grand display of economic and marketing firepower.

What is more important than the numbers is the market redefinition that’s taking place. What Reliance is attempting is to make the telecom revolution more real for the average Indian. The mobile services of the past have been directed at the upper crust of the society with a filter downwards. Reliance is directing its efforts at the base of the pyramid with some 10 million subscribers being aimed for initially. That’s a huge number considering the total base amongst all operators collected over the last 5 years of operations. Coming in as a late entrant, Reliance had to be different and it has done precisely that. New technology, low pricing, countrywide reach, multiple services, and more.

And not just the mobile telephony, but a whole range of goodies have been thrown in—digital TV services, Internet access, video-on-demand, web stores (which will double up as coffee corners). All through a countrywide distribution points that will also double up as gas agencies.

Reliance has gone direct to the people. For the ICT space, this is a first and is likely to shake a number of people.

GSM operators are likely to be impacted the most. They have been fighting a series of battles against the license conditions for the WLL operators. The WLL service was initially planned as an extension of the wireline services as a means of providing quick access in areas that are otherwise difficult to address. Technically, there is nothing limited about the technology. CDMA can provide all the mobility that GSM can provide. In fact, the US has worked for years with the CDMA technology across the country. Neither is the service intrinsically cheaper. These are artificial conditions that have been imposed by the terms and conditions under which licenses have been granted. GSM operators (all the mobile operators) contend that the license fee that they are giving to the government should also be demanded from the new entrants. They argue that this is not a cheap service since the options being provided (three-year plan by Reliance at Rs 15,000) odd are much more expensive then the GSM handsets. And so GSM operators want those licenses to be cancelled. Considering the huge investments made that is an unlikely scenario.

GSM operators are threatening that they will not interconnect i.e. the CDMA subscriber cannot talk to a GSM subscriber and vice-versa. As usual, the courts are being approached to solve problems caused by policies that have been inconsistent and improperly framed to start with.

The limited mobility CDMA services are also a threat to the fixed line service providers if the pricing is comparable and the services better.

Of course, the size of the market is huge because of the low teledensity at which India operates. But the current picture, with moving playing fields, makes the job of service providers bumpy to say the least.

Eventually there will have to be settlements to make everyone happy or at least satisfied. In the meantime reliance has put its hat in the ring and raised the ante with its aggressive launch. Settlements will now have to be made in the context of the announcements that have been made.

The customer should of course gain by way of more services and better pricing—provided he can make out what is better for him in the current maze of pricing and options that change on a monthly basis. At the same time, there is no such thing as free lunch and eventually the telecom business needs to be profitable to sustain itself. As of now, everyone is making losses and betting on the future. Hopefully, for the industry, that future won’t remain a mirage. 

Shyam Malhotra, Editor-in-Chief, VOICE&DATA