Reliance Jio: Telecom companies must up their game

The established telecom companies have always been worried about the entry of Reliance Jio as they feared it would start a price war and upset the cosy relationship they had established with each other on charges, etc. It was no surprise, therefore, that since Reliance Jio started testing its network from December, the industry body, Cellular Operators Association of India (COAI), has accused it of rolling out a full-fledged service in the guise of a pilot project. This does not hold water, as the Mukesh Ambani group does every thing on a huge scale. So Reliance Jio has justified the pilot project, which covers 1.5 million people, as it has set a target to reach out to 100 million subscribers. Therefore, it needs to see whether its network is working robustly and is scalable while in the pilot mode.

But the COAI says this is choking its network and is more incensed because Reliance Jio has kept the industry guessing about its pricing. However, the pricing need not be announced in the pilot stage. The Trai, which has been caught in the crossfire, has been accused by the COAI of favouring Reliance Jio. But it has cleverly passed on the buck to the department of telecommunications saying it only gets involved if there is contravention of any regulations.

This development is good for the subscribers who will be the ultimate beneficiaries of Reliance Jio. Reliance Jio has the advantage of being a late entrant as it can avail of new technologies. Besides, it enters with a lot of financial power. There has long been a suspicion that telecom companies have been overcharging consumers and can certainly cut costs. Even the quality of service has been unsatisfactory due to persistent call drops — subscribers have to make about five to six calls to complete one call. When Trai proposed to charge them in order to compensate the subscribers, the COAI challenged it in court and got a favourable verdict.

Telecom companies have been growing and acquiring a large number of subscribers without increasing their network. With Reliance Jio joining the fray existing operators will face a threat to their dominant position. They will have to improve their efficiency and cut costs if they want to retain their subscribers as mobile number portability is a facility available to subscribers today.