Bharti, Reliance gear up for battle over 4G frontier

New Delhi: By launching its 4G (fourth generation) services in Kolkata, Sunil Mittal has given Bharti Airtel, India’s No 1 telecom company, the first-mover advantage. It is not clear how fast he will be able to roll out services in some of his other circles, but there is no doubt his main rival will be Reliance Industries, which has a national licence for 22 circles against Mittal’s four - Maharashtra, Kolkata, Punjab and Karnataka.

Industry experts suggest that Reliance may be delaying its launch to achieve two things: watching the reaction to Bharti’s offering (which has only data and no voice) even as it forges tieups for equipment and voice services. Unconfirmed reports suggest that Reliance (which will run 4G through Infotel Broadband) has already begun 4G trials in Jamnagar but a formal rollout could be six-eight months away.

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All eyes are on Reliance’s next step since it is the only operator holding a pan-India 4G licence. The other rivals are the state-owned BSNL and MTNL, Aircel, Tikona Digital, Qualcomm and Augere, apart from Bharti.

[caption id=“attachment_272757” align=“alignleft” width=“380” caption=“By launching its 4G services in Kolkata, Sunil Mittal has given Bharti Airtel the first-mover advantage. Reuters”]  [/caption]

The only constraint Reliance faces as of now is inability to offer voice services in addition to data under 4G. The industry buzz initially suggested that Mukesh Ambani is in talks with Aircel for a voice tieup; later reports suggested that the two Ambani brothers may team up for a mega 4G play since Reliance Communications can offer voice services to Reliance and, in turn, improve its own bottomline. The Reliance Communications (RCom) network was set up by Mukesh Ambani, but in the business carve-up of 2005 post-separation, RCom went to Anil Ambani.

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RCom itself is not in the 4G space but plans to bid for the 700 mhz spectrum for 4G services as and when it comes up for auction later this year.

Phani Sekhar, a fund manager with Angel Broking, says that pure data services do not have a big enough market as of now and so Reliance definitely needs a tieup to bundle data and voice together. He also notes that high-value customers - most of whom are with players using GSM services - are the ideal target audience for premium services like 4G. They are already getting voice as well as data under 3G services.

“Reliance needs these high-value customers to migrate to its service under 4G but this will only happen when it finalises a tieup for voice services,” says one industry source.

Meanwhile, Bharti also needs more tieups, since it has 4G permits for only four circles and needs access to key markets like Mumbai and Delhi. The Economic Times reported on Wednesday that Bharti is in talks to buy 4G licences from Qualcomm for Rs 6,000 crore and this would allow it access to Mumbai and Delhi. Apart from the two metros, Qualcomm has licences for Haryana and Kerala.

The service launched by Bharti in Kolkata on Tuesday offers data speeds that are more than 10 times faster than 3G but at nearly the same tariffs - between Rs 999-1,999 monthly for free downloads in the range of 6-18 Gb. Speeds after this limit is reached will fall to 128 Kbps.

While Reliance will be watching to see how customers respond to Bharti, another Mumbai-based analyst says the company could be planning to bundle a low-cost handset or tablet with 4G services - a smart move since 4G services are seen as premium and, therefore, unlikely to attract a large customer base initially. “India is a very price-sensitive market where typically voice rentals are in the range of Rs 100-150 whereas data rentals are Rs 100 per 100 Mb downloads. By this yardstick, Bharti’s prices in Kolkata are a bit steep,” this analyst said, requesting anonymity.

At the launch of Bharti’s services in Kolkata, Communications Minister Kapil Sibal said that the benefits of 3G are yet to be seen by the common man even as 4G is being launched - again indicating that 4G is a little ahead of its time right now. A Business Standard story notes that 3G services have not picked up in India for various reasons, including high cost and poor network availability.

Even for 3G services, handsets are not yet affordable. This is why Reliance could be trying to bundle a handset or tablet with its 4G service to give itself a big bang launch.

As for the others in the fray, reports suggest that Augere may launch services in July (it has only one circle) while Tikona Digital may take anywhere between 12-18 months for a full rollout.