Reliance Infocomm

Reliance started a virtual war when it entered. With the largest user base in the country in mobile segment, it is on a breakneck speed in expanding its offerings across the country. The recent news in the media was abuzz with the announcement that it is planning to spread its network to over 5000+ cities and towns across India including four lakh villages.

Reliance has played its card absolutely right. Even though the analysts have figured out that rural market remains only cyclical, falling tariffs are only going to spur the demand from those “low income areas”. Reliance knows the first mover advantage, on the same lines that BSNL set up its mobile services in the rural areas. I believe that much of the need is derived from the voice calls rather than fancy value added services that have not much utility otherwise. Who would want to download games anyway? The other side of the argument is to allow the market to mature and then create a demand for the same.

It was with this idea that Reliance set up its portal R-World which is a step in the right direction. Airtel, in all its wisdom realized the value much later when it introduced its Airtel Live! portal after introduction of EDGE services. Mobile services are going to see demand based on Value added services, but only after the markets mature.

I believe that Reliance’s portal is in house. This gives them the edge over the content and consequently any service related issues are ironed out. Compare and contrast the other service providers who have outsourced the same. I am aware of Airtel having done that. Over the past one year that I have been on this service (Reliance), I have never ever faced any downtime with the same.

Reliance needs to roll out its broadband services. In the press conference held recently, the chief of the wireless division mentioned that it would be rolled out soon. Much in the nature of the earlier announcements, it could be either a few weeks from now on or perhaps next year. One never knows.

The most exciting part is the terabit optic fiber cable that criss crosses the entire nation. Reliance has bet big on the data services, something that other operators took for granted. I have read first person accounts of highflier imbeciles who claimed that Internet has no scope in this developing nation. Part of their cynicism stemmed from the fact that means to access via personal computers remained very expensive. Alas, these are the very same people who talk of making India an IT superpower. Sure, they have guts for double speak.

I am not enamored of Reliance. They had indeed raised a lot of expectations but fell flat on the billing process. Much of the initial enthusiasm over the Monsoon Hungama scheme was because people with low common denominator of intelligence failed to read the fine print and the monthly outgo on the same. The billing system simply collapsed because it could not take a massive load at once. Compounding the problem were the private agents that the company had deployed to sell connections on their behalf. They sold out a huge number of invalid connections. Much in the wisdom and foresight, the company recovered the same from the insurance.

I hope that the current fiasco between the brothers ends soon and the task of building the excellent infrastructure begins. The elder brother did a lot of financial engineering and invested paltry sums of money to get huge returns. This remains out of scope here as to how he did it. The fact of the matter is that this falls in the realm of corporate governance and it is for those idiots on the job who claim that Reliance is the most admired company.

It is an open secret that they run the corridors of power through proxy. Ultimately, as far as telecom is concerned, their focus is to become the choke points and the final access for all services. They have invested in huge sums of money to get in the cable distribution business. They have set up a huge bandwidth to cater to other telecom service providers and now own the international gateway through their acquisition of Flag Telecom. In fact they want to replicate the same issue as in they did for the petrochemicals division. This in effect means that they would be able to raise the prices at will or monopolize the services (cable TV distribution) once they have a sizeable share.

Until the time it does not happen, let us hope for a better telecommunications market.

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This post was submitted by Dr. Abhishek Puri on the Broadband Blog on Techwhack.