Reliance Com Joins India's 3G Club

Reliance Communications Ltd. has launched 3G services in four major cities in India, in doing so becoming only the second private carrier, after Tata Teleservices Ltd. , to offer 3G services in the country. (See Reliance Launches 3G and MTNL, BSNL Prep for 3G Battle .)

The operator has launched its initial 3G services in New Delhi, Mumbai, Kolkata, and Chandigarh. It plans to launch 3G services in the nine other circles (service areas) in which it holds 3G licenses by the end of March 2011. (See Reliance Builds 3G Services Portal , India's 3G Auction Ends, Raises $14.6B, and Reliance Sets Out Its 3G Stall.)

Reliance is planning to offer its 3G services throughout all of India's 22 circles, and is currently engaged in reciprocal roaming deal talks with other 3G license-holders in an effort to achieve countrywide coverage.

"All our subscribers who [already use] 3G devices have automatically been upgraded to the 3G network," stated the president of Reliance Communications, Mahesh Prasad, at the operator's 3G services launch in New Delhi. "The tariff for voice remains the same but there are different price points for data. We have adopted the strategy of sachet pricing for 3G, which would give an opportunity to all our subscribers to use 3G services," added Prasad. Reliance estimates that about 25 percent of consumers in metro cities already own a 3G device.

Though the company has launched 3G services, video calls are not yet included, as India's government has yet to provide security clearance for such services. Prasad said he is hopeful the security issue will be resolved soon.

Reliance's strategy is different from that of India's mobile market leader, Bharti Airtel Ltd. (Mumbai: BHARTIARTL), which has stated that the high cost of the 3G spectrum means 3G services will not be affordable for the masses. Reliance's focus on affordability could, in theory, lead to a tariff war in the coming months, but Reliance refuted this. "We don't expect a tariff war in 3G space since the prices have stabilized in 2G as well," said Prasad.

Bharti and Vodafone India are likely to launch their 3G services by the end of December, followed by Aircel Ltd. in the first quarter of 2011. (See Bharti Gets a Makeover Before 3G Launch, Vodafone Unveils India 3G Timeline , and Aircel Earmarks $500M for 3G.)

Reliance might have an advantage over its rivals if they are unable to launch their 3G services by January 20, 2011, which is when Mobile Number Portability (MNP) will be implemented in the entire country. Most of the high-net-worth subscribers are believed to be in the metros, and may be tempted to churn to a network that is offering 3G services. (See MNP, Finally!.)

— Gagandeep Kaur, India Editor, Light Reading

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