The Telecom Commission's decision on Monday to allow the holders of broadband wireless access (BWA) spectrum to offer voice services as well will immensely benefit Reliance Jio Infocomm, the telecom venture of Mukesh Ambani's Reliance Industries.
The highest decision making body in the telecom ministry announced that BWA spectrum holders can now set up pan-India voice services too on payment of an additional Rs 1,658 crore. Until now, high speed broadband services loosely termed as fourth generation, or 4G, was reserved for data use without allowing voice services over it. "The decision to allow voice over 4G is distinctive. 2G and 3G already have both data and voice play," says Hemant Joshi, Partner, Deloitte Haskins & Sells. "But it is unlikely to be a big thing if there is no pan-India presence."
As it happens Reliance Jio Infocomm is the only company with BWA spectrum across the country. Tikona has BWA only in five circles and Airtel, after the merger of Qualcomm, in eight. In any case Airtel already has an extensive voice service over its 2G and 3G networks.
The decision is thus likely to see the return of Mukesh Ambani to basic telephony services. In the division of companies between brothers Mukesh and Anil Ambani during the split in 2005, their telephony operation, Reliance Infocomm Ltd, went to Anil.
The decision also comes at a time when Indian telecom industry is struggling with high losses and falling profitability. Will this move pull voice tariffs down even further? Perhaps not, as the industry is already operating at rock bottom prices. But it may well bring in another formidable competitor into voice services. Voice contributes close to 85 per cent of Indian telecom's revenues.
However, R. Chandrashekhar, Telecom Secretary, as well as Chairman of the Telecom Commission said emphatically: "This is not a promotional decision."
RIL has already paid Rs 48 billion to Infotel Broadband to pick up 95 per cent of its stake and renamed it Reliance Jio Infocomm. It is also plans to invest more than Rs 500 billion in Long Term Evolution, or LTE network. LTE is the technology which RIL will use to deliver its broadband services. Globally, however, voice over LTE has not yet taken off, being at an experimental stage in most countries. RIL has partnered with technology company Spirit, to provide voice and video calls over LTE.
RIL with a market cap of Rs 2.7 trillion is India's largest company by market value. On the day of the Commission's decision its share price closed at Rs 847.30, up by 0.29 per cent.
However, India is not infrastructure ready for voice over 4G. The ecosystem has to change before a call originating from a 2G or 3G network can land on a 4G network.