Reliance’s decision to launch broadband services will benefit consumers

After having disrupted voice and data mobile telephony, now Mukesh Ambani-led Reliance Jio has extended the competition to the Rs 60,000 crore broadband services market.

Ambani’s announcement at Reliance Industries annual general meeting to launch fibre network based broadband services across 1,100 cities will mark a big change in the way television is viewed at homes and video streaming, e-commerce and digital businesses consumed.

Jio GigaFiber is expected to usher in a spanking new paradigm turning Indian homes into theatres with voice and video-based phone calls between two subscribers becoming common. Similarly, the giga-bites speed internet will allow television viewers to access over 600 channels seamlessly.

This will not only challenge rivals like Bharti Airtel, state-run BSNL, Atria Convergence, Hathway, Den Networks, GTPL, Siti networks, Vodafone – Idea Cellular but threaten the existence of most direct to home (DTH) and cable operators.

Fibre-linked internet based broadband services will also give a big fillip to small and medium enterprises (SMEs) with a strong technology platform back up to offer their products and services at consumers doorstep. While vision and ideas are cheap, the criticality of delivering consumer facing business with zero defect will be a challenge for RIL.

Large companies can also leverage these services at full cost given that tariff concessions otherwise available to households and SME connections may not be accorded to them.

With Jio GigaFiber set to enter the market beginning August 15, broadband tariffs will go southwards and consumers should enjoy benefits.

While Reliance Jio’s fibre to the home (FTTH) services has targeted 50 million connections, BSNL (9.24 million subscribers) and Bharti Airtel (2.2 million subscribers) may be targeted to poach apart from building its own loyal customer base. Reliance Jio’s 215 million mobile customers may be offered attractive broadband deals that would be difficult for its rivals to match.

Bharti Airtel fired the first salvo with lifting limits and curbs on data consumption for its broadband customers on Friday. Sunil Bharti Mittal’s team would have lined up more freebies to not only retain their existing customers but acquire new 10 – 12 million afresh. Bharti Airtel bolstering its broadband infrastructure backbone with an investment of Rs 24,000 crore was yet another indication that it would not allow a free run for Reliance Jio in the intense war for market dominance.

Given the stringent competition between four top players in the space, internet and mobile services may never be the same again. Through broadband warfare, the slugfest has only extended to domestic news and entertainment services.

Reliance Jio with its deep pockets is bound to spread its tentacles to e-commerce space. The company, run by Isha and Akash Ambani will also challenge the Amazon and Walmart — Flipkart dominance with its technology driven consumer services and products. Though that will  take time, given the edge that these companies draw from servicing existing developed markets.

Hydrocarbons to telecom major, Reliance has dropped enough hints that its appetite to take the expansion beyond Indian borders to South and South East Asia thereby bringing about a big churn in these markets for mobile telephony, internet based broadband services and e-commerce. But this will not be easy for each of these markets is developed and protected — Singtel dominates Singapore, Hutchison Whampoa Hong Kong etc

Stiff competition, mergers and acquisitions during last two years, has turned voice mobile services virtually free. Even data services tariffs have turned competitive and affordable for consumers.

With possible launch of 5G services in next two years, the face of mobile and fixed line broadband services would see a massive transformation. While high value data services with industrial applications will become part of the ecosystem, evolution of cloud and internet of things (IOT) is likely to lay the foundation for the next phase in this highly competitive and attritional war.

With fast-paced changes in technology, services and competition, policymakers and regulators need to keep pace. Financial architecture necessary to support the expanding technology needs to be developed.

Given India’s aspiration to log double-digit economic growth (something that we have been waiting for since the mid 2000s), overseeing the industry’s development with an independent regulator will be imperative.