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When Reliance enters any field of business, expectations tend to soar to stratospheric levels. There could still be months, if not a year, before the 4G services from Reliance actually get launched, but we are already hearing about an innovative 4G tablet that the company would offer to its customers. According to market rumours, this feature packed 4G tablet is going to sell for mere Rupees 8000. That is less than one fourth of the price that we are currently paying for a 3G tablet! Sounds unbelievable, doesnt it. Market rumours also state that close to 15 Taiwanese firms are in queue to submit prototypes for the Rupees 8000 tablet. RIL has decided to go in for LTE technology for its mobile broadband services.
The trails that the company has conducted at its base station at Navi Mumbai have yielded download speed of 80 Mbps and upload speed of 20 Mbps. This is phenomenally higher than the around 7 Mbps that you get from a 3G dongle and of 3.1 Mbps that you get from 2G. If RIL is somehow able to carve out this magical combination of dirt-cheap prices and super high performance, then it might become unbeatable in the broadband space. Who wont want to go in for a 4G tablet that costs only Rupees 8000 and offers scorching high download and upload speed! RIL does have the money and the muscle to lay down its network in time and procure as many tablets as it needs to break-even.
RIL has a reputation for predatory pricing. So we can expect some price related fireworks in the market as soon as the companys 4G services get rolled out. High-definition video streaming while on the move and live mobile TV could become more affordable and thereby accessible to a larger group of users. However, the users of mobile broadband might not be as cost-sensitive as voice users generally are. So the success or failure of RILs 4G plans will depend on the performance of its network. The speed of 20 Mbps is still less by global 4G standards. The International Telecommunication Union has already upped its 4G standards by setting a speed requirement of 100 Mbps while travelling and 1 gigabit per second while stationary.
Ultimately RIL and other mobile broadband players in India will have to match the global standards of more than 100 Mbps of download and upload speeds. RIL entered the mobile broadband space by acquiring 95% stake in Infotel, which was the only company to bid successfully in all of the 22 circles during the BWA auction. For the 95% stake, RIL paid Rs. 4,800 crore to Infotel by way of creating fresh capital. On top of this amount, the RIL also paid Rs. 12,872 crore to the government towards spectrum fees. Currently the company is said to be looking to enter into partnership agreements with global telecom biggies for the broadband and 4G rollout in India.
RIL is said to be in talks with the likes of Verizon, AT&T and France Telecom. A mighty partner in the 4G space makes lot of sense for RIL because of the fact that mobile broadband can take up lot of capital and it also requires cutting edge technology, which the international partner must have access to. Except for Vodafone, not a single global major has been able to secure a foothold in the Indian telecom market. A partnership with RIL could pave way for another global telecom firm to expand its presence in the fast growing telecom market in the country. Partnership with Indian telecom companies like Reliance Communication and even BSNL seems quite likely. Capex can be reduced through infrastructure sharing.
It is being estimated that RIL will have to spend up to Rupees 20,000 crore over next five years in building its broadband network around the country. As far as the users in the country are concerned, RILs entry in the telecom space means good news, as it is likely to push prices down further.
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