Reliance Jio’s Extended Field Test Leaves Telecom Regulations on Trial

COAI Vs Jio tussle

The Reliance Jio logo is displayed on a board in a shop in Mumbai (Photographer: Vishal Patel/BloombergQuint) 
The Reliance Jio logo is displayed on a board in a shop in Mumbai (Photographer: Vishal Patel/BloombergQuint) 

The extended beta tests undertaken by Reliance Jio Infocomm Ltd. has the industry questioning both the regulator and its regulations. Reliance Jio has gradually extended its 90-day trial to nearly 2 million subscribers across the country, by offering unlimited downloads, free of cost.

No Regulations for Trial

The current regulations of the Telecom Regulatory Authority of India are silent on the scope of trials that can be undertaken by a new entrant in the industry.

The Reliance Jio test phase is a full-fledged commercial launch in the garb of testing, says Rajan Mathews, Director General Cellular Operators Association of India in an interview with BloombergQuint. Jio refutes the charge and accuses the COAI of favouring the incumbents.

When Reliance Jio opened up its 4G services for the general public, it said it was doing so on a trial basis. While the service was initially available for select handset owners, Reliance Digital outlets eventually started giving free sim cards in limited numbers daily to anyone with a 4G handset. Through the trial period, a consumer got free 4G data and voice calling service for 90 days. The company in its annual report of 2015-2016 said it aimed to expand its reach 90 percent of the country and already has about 1.5 million test users on board.

Did Jio Play by the Rules?

Industry experts believe that’s a tough call to make as the lack of clear guidelines leaves the field open to interpretation.

“ is a grey area. In fact, I think Department of Telecom has now spoken to Telecom Regulatory Authority of India to define the scale, duration of the test, the telecom interconnection issue, the subscriber issue, how many people should you have etc. But, as such, there are no guidelines which say you can do a pilot launch only for so long. That is not being defined at all. So this particular case is subjective,’’ says Romal Shetty, Head of Telecom Practice at consulting firm KPMG India.

While the lack of guidelines is certainly an issue, Rajan Mathews says Reliance Jio’s current activity does not qualify as a trial, based on prior experience. ‘’We have represented that the activity being conducted by Reliance Jio is a commercial service. So the TRAI and DOT have been requested to clarify the licence conditions or the regulation,” he adds.

The telecom regulator did not respond to BloombergQuint’s queries on the issue, refusing to be drawn into the ongoing tussle between the incumbent telecom operators and the new entrant, Jio.

Data War?

Meanwhile, existing telecom service companies are in a hurry to expand their high-speed 4G network and have been quick to react to Jio’s extended trial service. Bharti Airtel on Monday slashed 4G and 3G mobile internet charges by up to 80 percent to as low as Rs 51 per gigabyte under a special scheme. Airtel in July started offering up to 67 percent more data in existing 4G and 3G schemes, which was followed by Idea Cellular and Vodafone.

The current incentives offered by the incumbents are not just a marketing exercise but are also indicative of an imminent price war, says Mahesh Uppal, telecom analyst and director of consultancy firm Com First India.

The state-run BSNL, which recently announced a drop in its data tariff rates, claims it is the only telecom operator that can sustain a price war right now.

“We are at this time offering the data rate at the cheapest. Reliance Jio launch is definitely going to impact the market. BSNL will be the only company which will sustain that kind of price war on data because of our data revenue from the landline and optical fibre network, where we are head-and-shoulder above other operators. We will match the Jio rate step by step on whatever they offer,” according to Chairman and Managing Director Anupam Shrivastava.