Mukesh Ambani's Reliance Jio is believed to have signed an agreement with brother Anil Ambani's Reliance Communications to use the latter's 800MHz spectrum in ten of the country's telecom circles (or service areas).
The two companies are apparently planning on taking advantage of recently introduced rules allowing two service providers to share spectrum in a circle provided both control airwaves in the same band. Reliance Communications Ltd. and RJio each own 800MHz licenses in the circles of Mumbai, Uttar Pradesh East, Orissa, Madhya Pradesh, Bihar, Assam, North East, Haryana, Himachal Pradesh and Jammu and Kashmir.
Significantly, RCom has already asked regulatory authorities if it can "liberalize" spectrum in these circles. At the moment, these frequencies cannot be used to support 4G services -- only CDMA ones -- but the approval of its application would give RCom the flexibility it craves. It would, however, need to pay an additional license fee of about 18 billion Indian rupees (US$275 million) to reflect the increase in the value of its spectrum following these changes. (See Spectrum Sharing: Mixed Bag for Indian Telcos.)
Spectrum sharing would allow RJio to improve quality of service and even deploy the FDD version of LTE, which is more widespread than the TDD technology it is launching through the use of its pan-India 2.3GHz license. Well aware that CDMA technology ran out of steam when competing against the much bigger GSM ecosystem, Mukesh Ambani will be keen to avoid throwing all of his resources behind TDD when that standard could similarly lose out to FDD in future.
Ambani may also have had an eye on Bharti Airtel Ltd. (Mumbai: BHARTIARTL)'s spectrum-related difficulties. When India's biggest operator previously launched 4G services in the 2.3GHz band, it encountered a number of technical challenges, including problems with indoor coverage and relatively weak signal strength, necessitating the rollout of additional towers.
This seems to have driven RJio to build up its 800MHz resources during India's last two spectrum auctions. The combination of 800MHz and 2.3GHz capabilities should allow the operator to provide high-quality 4G services in a variety of conditions. It would also help RJio to differentiate itself from rivals on the basis of service quality, giving it a major advantage.
At the same time, a spectrum sharing agreement might give RCom access to RJio's 4G network in the ten circles in question. Besides striking a deal with RJio, RCom is rumored to be in talks about acquiring MTS India, a much smaller mobile operator that owns 800MHz licenses in nine other circles. The separate moves would clearly help RCom to fortify its mobile broadband position.
There is a possibility that RCom and RJio look to extend a pact to cover areas other than 4G. Indeed, thanks to separate deals, RJio is already using RCom's towers and fiber assets to support its network services. Together, the companies would boast one of the best telecom networks in the country.
Some commentators reckon RJio may look to use RCom's network to offer voice services to its customers. Although the launch of VoLTE would allow RJio to provide voice services over its own network, the operator may be concerned the relatively immature technology is still not ready for commercial deployment in the Indian market. A tie-up with RCom could be the perfect short-term solution.
— Gagandeep Kaur, contributing editor, special to Light Reading