Business Today

Mukesh logs in

The peace pipe of the Ambani brothers is still warm, and Mukesh enters the telecom space.

Kushan Mitra        Print Edition: July 11, 2010

On June 14,when India's convoluted auction of radio spectrum for Broadband Wireless Access (BWA) ended, there was one clear winner. A company called Infotel, which had won the right to provide over-the-air broadband services in all 22 of India's telecom circles. "Who is Infotel?" and "How does it have Rs 12,848 crore?" were the two questions everyone was asking.

Infotel was promoted by Anant Nahata, son of Mahendra Nahata, promoter of HFCL, one of India's smaller telecommunications companies. That still did not answer the second question. An hour or so after the auction ended, Mukesh Ambani's Reliance Industries Ltd (RIL) had made its move, buying 95 per cent of HFCL Infotel.

RIL would invest Rs 4,800 crore in deploying its new network. And with multiple references to the TD-LTE technology in its press release, it seemed that RIL had chosen the GSM Associationapproved technology rather than go with the Intel-backed WiMax. Infotel is not Mukesh's first foray into telecom. Even though Reliance Infocom was a project conceived by him, his brother Anil Ambani got it as his share following the family split in 2006.

Infocom had used a loophole in the policy for Wireless in Local Loop-Mobile (WLL-M) to launch a full mobility service despite protests by other operators, notably Bharti Airtel's Sunil Mittal. In acquiring Infotel, RIL is the only company to acquire all-India spectrum in either the 3G or BWA auction.

And with voice still accounting for over 80 per cent of revenues for operators, would RIL make an entry into voice riding on being an Internet Service Provider (ISP)? The fact is there are very few TD-LTE compliant handsets available in the world. In fact, voice over this "nextgeneration" technology, dubbed by some as 4G, is far from perfect. However, data speeds of over 100 megabits per second have been achieved.

So this has led to a theory that has been gaining ground. Voice over Internet Protocol (VOIP) calls between mobile phones are not allowed in India, but VOIP calls between computers are. Most modern smartphones are more computer than phone, so what if the definition of a computer changes? Even though almost a decade has passed from the time RIL entered the mobile space, market watchers remember how it entered the market. Until RIL answers these questions, or launches its service, clarity might be hard to find.

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