Friday 6 March 2020

Jio going it alone for 5G Development

In September 2016, Reliance, an Indian conglomerate owned by Mukesh Ambani  launched a new mobile carrier and broadband network in India called Jio. It has become a phenomenal success, become the largest telco operator in India surpassing old horses like Bharati Airtel and Vodafone.

Reliance Jio began its services by offering free of cost SIM cards, free voice calls over a 4G network, and dirt cheap data at Rs. 22 (33c) per GB. Because of these early offerings, the telco’s subscriber numbers crossed the mark of 100 million in just 170 days.

As its user base grew, the company offered cheaper data plans. As of today, some of its plans offer data at Rs 3.17 (5c) per GB, which is the cheapest in the world. Jio also offers free content through a bunch of apps including JioTV, Jio Cinema, Jio News, and Jio Saavn (previously Jio Music).

The telco has had a crucial role in fuelling India’s mobile internet boom. A report by the Economic Times suggests after Jio entered the market it forced competitors to slash their prices; bringing data rates down to Rs 15 per GB (22c) from Rs 250 per GB ($3.63) on an average. It also notes that Indians now consume 3.7 billion GB data per month as compared to 200 million GB per month, three years ago, representing an 18.5x increase.

Reiance Jio now seeks the the government's permission to undertake 5G trials in India using its own technology and design. With this, Jio has emerged as the first Indian telecom major to seek 5G trials based on self-designed technology.

The operator had previously applied to carry out 5G trials with Samsung. Now RJio wants to end its dependence on Samsung and use its own gear, network architecture and infrastructure for 5G trials.  If those are successful, it may outsource the technology for manufacturing.

Few operators develop their own mobile technology from scratch, however Jio did previously set up  its 4G network and has shown an inclination to develop its own infrastructure as much as possible.

For several years after RJio procured 4G spectrum in 2010, 4G technology was not ready for commercial deployment in India. Over this period, Rancore Technologies, a subsidiary of RJio parent company Reliance Industries, carried out 4G research and trials in a bid to develop the 4G ecosystem and prepare for a commercial launch.

 Besides hiring Samsung, RJio also teamed up with Bell Labs (later Nokia Bell Labs) to explore ways of providing voice services on the 4G network.

All this demonstrates RJio's track record of conducting its own research and trials before launching services. It now seems eager to emulate its 4G experience in 5G, finding the best technology options before launching 5G services. The 5G tests look like a step in this direction.

Now a part of RJio, Rancore Technologies seems likely to play a significant role in these 5G plans. And it is not the only vendor that has been subsumed into the business. In 2018, RJio bought Radisys, a US systems and software vendor, to support what Akash Ambani, RJio's chief strategy officer, described as a push for "global innovation and technology leadership in the areas of 5G, IoT [Internet of Things] and open source architecture adoption."

As India's newest telco, RJio has made investments in a highly sophisticated, all-IP network that should provide a good foundation for 5G. Of similar use will be its fiber network, now India's most extensive at about 1.1 million kilometers. These assets put RJio in a better 5G position than its rivals.

RJio's strategy of conducting a 5G trial based on its design is also in keeping with the government's Make in India policy to promote local manufacturing. The Telecom Regulatory Authority of India (TRAI) has been asking telcos to opt for India-made gear. It has even provided incentives based on three categories: designed in India but manufactured abroad; designed and manufactured in India; and designed abroad but manufactured in India. RJio's initiatives are likely to fall under the first two categories.

After a court ruling that went against them, India's other operators, Bharti Airtel and Vodafone Idea, are busy scrambling for resources to pay off historical licensing fees they now owe the government. That leaves RJio relatively free to take a lead in the 5G space. Its trials, if successful, will clearly set a precedent.

On the 5G front, the biggest roadblock for Jio, or for that matter any operator, is going to be steep spectrum prices. The base price of the 5G spectrum (in 3,300 megahertz to 3,600 megahertz band) is highest in India. At TRAI's recommended reserve price of Rs 492 crore per MHz, operators will have to pay around Rs 50,000 crore for 100 MHz pan-India spectrum - that's the minimum spectrum required to deliver 5G services (in sub-6000 MHz bands) as per global body ITU. The government has also said that it's not planning to reduce the base price for the 5G spectrum.

Another major issue is the greater urgency for Jio to acquire more 4G spectrum than 5G spectrum at the moment. For two main reasons: some of the Reliance Communications' spectrum (in 800 MHz band) that Jio uses is expiring in July/August 2021. Then, the spectrum holding of Jio is lowest amongst the private operators. For instance, Jio's spectrum holding is 1480 MHz as compared to Vodafone Idea's 1850 MHz and Airtel's 1727 MHz. Given that it's the largest telecom operator in the country at present - with 370 million subs as on December 2019 - and it's adding nearly 7 million subs per month, Therefore one can conclude that Jio needs to first focus on its current services and subs before taking a plunge in the next-gen 5G.

Globally, the development of 5G ecosystem (devices, equipment) has suffered a huge setback due to coronavirus. China, which is expected to lead the market with mass-scale production of affordable 5G handset/equipment, has literally stopped the production lines. It is likely to push the 5G launch forward by a few quarters. Jio's vendor partner Samsung would likely be affected as South Korea is one of the worst affected countries from coronavirus.

In India, as the deadline to launch 5G trials keeps shifting (the recent buzz is April-June quarter), an expert says that Jio can be unpredictable with its moves too. "They might want to buy 5G spectrum with an intention of leading the market in launching the new technology, and benefit from the first-mover advantage," says analyst.

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