Once before, the Ambanis (Reliance) disrupted the Indian telecom market, and in the process changed the dynamics of markets across the developing world. This was the “fixed mobility” stunt they pulled off around 2000, when CDMA phones were sold as being usable only within defined areas. But they were actually mobile phones and the company made it possible for the phones to be used across multiple areas. On unintended (or perhaps intended) consequence was to drive down the costs of CDMA network equipment and handsets dramatically. CDMA, which did make sense for Sri Lanka in 1999, made eminent sense in 2003.
Indian government has endured stormy opposition when Videsh Sanchar Nigam Ltd (VSNL), its international telecoms arm, was privatized in early 2000. Since then, through merger and acquisition along with new build-outs, the Indian carriers – Tata, Reliance and Bharti – dominate the global connectivity business. Moreover, each submarine cable linking Asia with the Middle East, Africa and Europe hops in India due to its location. Therefore, like Japan in transpacific and the United Kingdom in transatlantic routes, India could emerge as a formidable transoceanic telecoms connectivity hub in the region. That has not happened, primarily, due to the Indian carriers’ mindless obsession for dominance.
Both the horses are to be similar in size and strength while pulling a carriage. That was missing between India’s Universal Service Obligation Fund (USOF) and Reliance. As a result, Reliance has walked out of its rural mobile coverage project under the scheme of USOF. The issue dates back to 2007 when a scheme was launched under the USOF to provide subsidy support for setting up and managing 7,871 infrastructure sites, or telecom towers, in rural and remote areas in 500 districts of 12 states. RCOM and RTL had entered into an agreement with the USOF in June that year, under which they took responsibility for setting up nearly half of these towers.
All submarine cables connecting the Far East with Europe and Africa transit at India. It has made 12 submarine cables (six owned by consortiums and six privately-owned) hopping into 10 cable landing stations (CLS) at the Indian seashore. Voice and data traffic of 27 international long distance operators (ILDO) are processed through the 10 CLS. Four (Tata, Airtel, Reliance and BSNL) out of the 27 ILD providers own respective CLS in India. The ILDOs who don’t own CLS told TRAI that Tata Communication and Bharti Airtel together enjoy a 93% market share.
Asia’s median wholesale price of Internet bandwidth is now more than four-times expensive than Europe’s. In LIRNEasia I have been working with ESCAP to formulate a Eurasian terrestrial cable initiative. The objective is making Asia’s submarine cables highly resilient by adding a meshed transcontinental overland optical fiber network. It will make Asia’s wholesale IP-transit bandwidth cost either at par or lesser than Europe’s. Broadband in Asia, regardless fixed or mobile, will grow like mobile voice.
The Indian mobile market has added 20.55 million new customers in the first four months of 2007 – less than the 20.96 million recorded in the same period in 2006. There are two reasons for this shortfall. Firstly, in April 2006 Reliance Communications made an adjustment to the way it counted mobile subscribers, including its fixed-wireless customers in the figures for the first time and boosting its ranks as a result.
Qualcomm has come under some pressure recently when Reliance, with one of the fastest growing CDMA-based networks in the world based on Qualcomm’s patented technology, announced that it would provide mobile service using GSM technology and criticised Qualcomm’s high royalty and licensing fees. The inference was that Qualcomm’s fees were resulting in higher costs for handsets which is preventing Reliance from offering affordable service to low-income subscribers. Qualcomm claims that CDMA handset prices in India were already some of the lowest in the world and that royalty was only about $2 per handset. It further argues that Reliance’s move into GSM has to do with flawed spectrum policy of the Indian Telecom Ministry (DoT) that provides more than twice the spectrum to GSM operators compared to CDMA operators like Reliance. This is because according to Qualcomm, GSM technology allows only a finite number of subscribers in a cell whereas the CDMA technology on the other hand poses no such restrictions.