At the launch of Reliance Jio commercial services in India, Reliance Chairman Mukesh Ambani requested incumbent telcos to provide infrastructure support for making seamless Reliance 4G calls. Specifically, the request asked telcos to release necessary interconnection points to establish a reliable network of voice calls across India. Unfortunately, Reliance Jio is now facing major hurdles as the telcos have refused to release Points of Interconnect (PoI) to Reliance Jio.
At the Reliance Industries’ Annual General Meeting, Ambani acknowledged that in one week alone Jio’s customers had far suffered over five crore call failures to other networks because of insufficient interconnect capacity. In a statement to Times of India, Ambani says he is optimistic that this problem will be solved in a few weeks and added –
“In the long run, you cannot take violation of legal licence obligations lightly. It’s like saying that because you are a dominant person, you violate traffic lights. You can be let off once or twice, maybe…Our view is that interconnect is an issue of a few weeks. You cannot break the law beyond that. It is there in the licence that you are supposed to provide inter connect, irrespective of traffic.”
The rejection by Operators Association of India (COAI) comes just a day after the annual general meeting. In its letter to Nripendra Mistra, Principal Secretary at PMO, COAI made it absolutely clear that it is in no way obliged to comply with Jio’s request for interconnect plans. Stating that the existing telcos lack the required network and financial resources to comply with Jio’s request, the COAI warned that the telcos would hit liquidation before the reduced weighted average voice realisation is reached. The letter specifically reads – “Unloading tsunamis of asymmetric incoming voice traffic from a (potential) 100 million Reliance Jio customers can lead to the weighted average voice realisation of existing operators plunging from 30-40 paise per voice minute to 22-25 paise per voice minute or even lower.”
Warning that the offloading abundance of asymmetric voice traffic will financially destroy competition, COAI Director General Rajan Mathews in his statement to Economic Times said-
“Reliance Jio may well make up some part of this massive voice cross-subsidy by way of data revenue realisations, by way of customer acquisitions/churn, but it becomes abundantly clear that the overwhelming burden of this free lunch is sought to be passed on to rival operators through tariff manipulations, which exploit the Interconnect Usage Charge (IUC) regime, and offload tsunamis of asymmetric voice traffic that will choke and financially destroy competition.”
Considering the disruptive plans and offers announced by Reliance Jio, it comes as no surprise that the telcos are refusing to offer interconnect infrastructure support to Reliance Jio. Ambani’s 45-minute speech at the AGM cost Bharti Airtel a whopping Rs. 12000 crore. Not just that, Reliance Jio plans and offers have already started a tariff war among the key players in Indian telecom space, including Airtel, Vodafone, and Idea Cellular. It remains to be seen how Reliance Jio, with its ambitious goals of acquiring 100 million subscribers, will handle the hurdles it’s currently facing.