Ambani Faces Broadband Challenges
So says Heavy Reading senior consultant Berge Ayvazian, a wireless broadband specialist who recently presented at the Mobile Broadband India 2010 events in New Delhi and Mumbai. (See Top Indian Operators Set Out Broadband Agenda, India's 3G Players Ready for Swift Launch, Qualcomm Names India LTE Investors , and NSN Back in Love With WiMax.)
The Indian telecom industry is abuzz following the return of Mukesh Ambani, chairman and managing director of RIL, to the sector. Under his leadership, Reliance Infocomm kick-started the current mobile services revolution in 2002-03 by offering mobility at cheap rates to the masses, but exited the industry because of a bitter family feud.
Now Ambani is back, following Infotel Broadband's success in India's recent BWA (broadband wireless access) spectrum auction: It was the only bidder to secure 2.3GHz capacity in all of India's 22 circles (service areas), and was subsequently acquired by RIL to form Reliance Infotel. (See Oh Brother!, India's BWA Auction Ends in $8.2B Drama, and WiMax, 3G to Dominate India's Broadband Future.)
But Reliance Infotel has a lot of key decisions to get right if Ambani is to make another major impact on India's communications services sector, believes Ayvazian.
Critical to Reliance Infotel's success will be its network infrastructure strategy -- specifically, whether it uses WiMax initially before migrating to its preferred technology, TD-Long Term Evolution (LTE). The operator is yet to announce its network rollout plans, but analysts believe the company will deploy WiMax first and migrate to TD-LTE in about two years time. (See India's Still Hot for WiMax, Says Forum .)
"Reliance Infotel needs to rapidly deploy a wireless/mobile broadband network using immediately available and economical WiMax equipment that can be upgraded to TD-LTE in two years without significant cost or service disruption," says Ayvazian. (See India's Billion-Dollar LTE Question.)
The operator also needs to consider a broad range of end user devices if it is to fulfill its vision of enabling "rapid growth in data usage, in both rural and urban markets, propelling India into global data leadership."
"Reliance Infotel should not trap broadband inside a smart handset, but leverage wireless technology to deliver real broadband to the mass market with many devices and in multiple locations," believes Ayvazian.
To address the mass market, Reliance Infotel will need to collaborate with device manufacturers to create a low-cost WiMax modem for the market that can connect with existing TV sets. For every 100 people in India (which has a population of more than 1.1 billion), there are 6.12 television sets and only 0.7 PCs. The lack of a device ecosystem is a major issue being faced by the operators looking to increase the country's broadband penetration. Currently, there are fewer than 10 million broadband subscribers in India.
Since Reliance Infotel aims to increase broadband penetration, not just in urban centers but in rural areas, too, it has to come up with a pricing strategy that appeals to the rural customers and their disposable income. Analysts believe the company needs to offer a monthly subscription rate below 1,000 Indian rupees (US$21.40) to address the mass market.
Reliance Infotel will also need state-of-the-art SPIT systems, particularly a transaction-based service platform to monetize the traffic generated. (See The SPIT Manifesto.) "Through this, subscribers can be charged for locally cached premium multimedia content, and revenues can be shared with third-party providers in a multi-dimensional business-to-business-to-consumer market," says Ayvazian.
In addition, Reliance Infotel will need to source relevant, local content and applications to be successful, according to Ayvazian. "In order to appeal to the mass market, Reliance Infotel will need to offer a wide range of content and applications leveraging Indian entertainment media, video chat, multi-player gaming, sharing, and social networks."
It remains to be seen whether Mukesh Ambani can repeat his earlier success in addressing the mass market. But if past history is anything to go by, his involvement in India's wireless broadband market entry is likely to be a game changer for the country's broadband prospects.
— Gagandeep Kaur, India Editor, Light Reading