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The war between Reliance Jio and incumbent operators is following the same old path, with new arguments

Manoj Gairola, Editor - TelecomTiger
 
  Manoj Gairola |  | 12/09/2016

The fight between Reliance Jio and the existing operators has become interesting, even if it is on expected lines. Airtel, Vodafone and Idea Cellular, the three large incumbent telecom operators do not want to give Reliance Jio enough Points of Interconnection (POI). A new operator can’t launch seamless services if the incumbent operators do not provide it PPOIs.

 

This is not the first time that the telecom sector is witnessing such a war. Whenever new telecom operators launch services, they face opposition from the incumbent players. When the private players launched services for the first time, about 20 years ago, they faced the same problem with Bharat Sanchar Nigam Ltd (BSNL). The government-owned telecom operator created all sort of problems in giving POIs to them.

 

Later, the same private players became incumbent operators and they opposed the entry of CDMA players Reliance Infocomm and Tata Teleservices when they wanted to operate pan-India services. When the former telecom minister A. Raja gave new telecom licences, the incumbent players opposed so vehemently that it resulted in a spectrum scam that engulfed the whole sector.

 

Let me explain what is POI? Whenever a subscriber of one network (Airtel) makes call to a subscriber of another network (Vodafone), the call travels through POI. All the networks are linked through POIs.

 

If the existing operators do not provide enough POIs to Reliance Jio, the subscribers of Reliance Jio will not be able to call subscribers of Airtel, Vodafone and Idea Cellular. It is clear that initially most of the subscribers will be at the networks of incumbent operators. So it will be a great inconvenience for the subscribers of Reliance Jio as will not be able to talk to the subscribers of existing mobile Operators.

 

Reliance Jio aims to acquire 100 million subscribers in one year. Even if it is able to achieve its target, about 90 per cent subscribers will still be with incumbent operators. So without enough POIs, its subscribers will not experience good quality of service.

 

Reliance Jio has also sought 12,000 POIs. The incumbent operators have, however, given it only about 1200 POIs. Naturally, there are frequent call drops when you talk to any network outside Reliance Jio.

 

Now the big question is – What do the regulations say if the incumbent Operators do not provide enough POIs to a new Operator? As per telecom licence conditions, the incumbent Operators can’t decline POIs to new Operators. The existing Operators know the legal position very well. So what do they want to prove by delaying POIs?

 

Reliance Jio has changed the whole tariff structure in the sector. It has made voice free and is charging only for data. Hence the incumbent players believe that there would be ‘tsunami’ of incoming voice traffic. This will choke their networks. It is to be noted that all the networks are facing scarcity of spectrum. Presently, per minute realization for an incumbent operator is 30-40 paise, it will decline to 22-25 paise when Reliance Jio launches its services. Moreover, the volume of traffic will be such that the quality of services will be poor and the networks may collapse altogether.

 

Does it mean that the incumbent operators want overall review of the existing Interconnect Usage Charge (IUC) regime? Whatever the case be the war has become interesting. Hope the customers get good quality of services at low rates.

    
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