Critical Interconnect: Mukesh Ambani Urges Telcos to Compete on Fair Grounds

Reliance Jio Logo

Unveiling Reliance Jio 4G Services, Mukesh Ambani, chairman of Reliance Industries urged incumbent telcos in India to compete on fair grounds and enable seamless interconnection for Jio customers.

Ambani also informed that Jio customers have suffered 5 Crore call failures in the last one week due to the lack of interconnection points. Points of Interconnect or Interconnection points are the ‘joints’ between two telecom networks through which data / voice is passed along when a customer from one network calls another on a different network.

Usually, the handshake happens seamlessly, giving a good experience to customers. in the case of Reliance Jio, this is delivering a good customer experience as calls being made to other networks are not going through properly.

Ambani mentioned that blocking of interconnection points by rival operators is delivering a bad customer experience for its customers. “This gives our customers the impression that voice is not working in our network,” he said.

Mukesh Ambani went on to say that competition is good, and leads to innovation, but this must be done in a fair manner. He called on his rivals to compete in the market place in a fair manner.

“The incumbents have significant advantages over new entrants. The onus is on the incumbent operators not to misuse their market access by creating hurdles in providing interconnect points,” he added.

Airtel, COAI Welcome Reliance Jio

Welcoming Reliance Jio launch of its 4G services, in a statement, Bharti Airtel said, “We welcome Reliance Jio’s entry to the digital world and wish them the very best. We also welcome Jio’s call to leading operators to work together. As a responsible operator we will fulfill all our regulatory obligations as we have always done. Over the last 20 years, Airtel has been contributing towards building a digitally enabled India and remains fully committed to and take leadership in supporting the Government’s Digital India vision. We will continue to innovate and deliver best-in-class products and services to our customers.”

Speaking on the announcement of Reliance Jio Services, Rajan S Mathews, Director General, COAI, said, “Reliance Jio, is a valued member of the COAI, we wish to congratulate them on the announcement of the launch of their services. As a valuable member of the association we welcome them with great warmth and applaud the bold vision of Mr. Mukesh Ambani & the innovation he proposes to bring to the industry. As a thought leader and the voice of the telecom sector COAI will continue to advocate fair competitive practices with an enabling policy and regulatory environment which translates into a win-win for the industry and consumer. A stable, predictable, long-term and orderly growth of the industry is essential for a fully connected and digitally empowered India.”

Impact on Upcoming Spectrum Auction

While it is great to see Reliance Jio lunching its 4G services in a price sensitive market – at a possibly lowest price point in the world.

This development it is likely to put other operators pricing in a stressful position and prompt them to go for reductions in data tariffs in order to remain competitive. This can have an impact on the upcoming spectrum auction which is likely to take place by the end of September 2016.

Speaking on this issue, Prashant Singhal, Global Telecommunication Leader, EY explained, “For a price sensitive market like India, launch of affordable data services and free voice calls is indeed a welcome step. This is expected to drive greater data adoption across segments. The telecoms sector is currently reeling under financial stress, high debt burden and slowdown in revenue growth. Further decline in data tariffs may impact operators’ profitability and sustainability. Telcos form the backbone of ‘Digital India’ and they need to make higher investments in data network. Any market erosion, at this stage, may impact the outcome of the upcoming INR800 billion spectrum auction critical for the Digital India vision.”