{"id":4061,"date":"2016-03-04T15:20:34","date_gmt":"2016-03-04T09:50:34","guid":{"rendered":"http:\/\/13.201.39.237\/?p=4061"},"modified":"2016-03-04T15:20:34","modified_gmt":"2016-03-04T09:50:34","slug":"how-worried-should-we-be-about-indias-telecom-sector","status":"publish","type":"post","link":"http:\/\/13.207.105.184\/?p=4061","title":{"rendered":"\u201cSir, Jio Nahi Chal Raha\u201d: How Worried Should We Be About India\u2019s Telecom Sector?"},"content":{"rendered":"\n

W<\/span>e\u2019ve lived through some dynamic times these past two <\/p>decades<\/span><\/a>. From the screeching, scraping agony of the 56Kbps modems, we now pluck Wi-Fi signals from thin air. Data now flows freely from nearly every outlet, as unlimited plans become more common with each passing month. No one tries to change the topic when you ask for their Wi-Fi password anymore. <\/span>\n\nAs consumers we\u2019ve visually experienced the telecom evolution through the media. We watched as Hutchinson (now Vodafone) took a questionably bred canine and turned it into a national icon, resulting in a breeding frenzy for pugs. We giggled as ZooZoos announced the arrival of 3G in India. We prayed for mercy under the angst-ridden rants of the Airtel girl, and later watched befuddled as she calmed down between the overs of subsequent <\/span>cricket<\/span><\/a> matches. With each ad campaign, we were a little more spoilt, a little more aware of how much there was on offer.<\/span>\n\nThe truth is that behind all the rosy consumerism, there is a dark financial tale playing out with the promise of a sinister ending. The arrival of Jio has only worsened this.<\/span>\n\nEven before Jio turned up like a bully on the playground, telecom companies were reeling under mountains of debt. The way the industry works is such that if you don\u2019t invest forward in technology, you may as well dismantle what infrastructure you have and get a head start into the scrap metal business. Between the 2G and 3G auctions, the other players \u2013 Airtel, Idea, and Vodafone \u2013 took on so many loans that hiking tariffs seemed the only way they were going to survive. Around this time, <\/span>Mukesh Ambani<\/span><\/a> jumped out from behind a nearby telecom tower yelling, \u201cDhan dhana dhan, bitches!\u201d and Jio has been making life miserable for its competitors ever since. <\/span>\n\nThe reason Jio was able to do all this goes back to the fact that they come from an industry that makes telecom look like a fun <\/span>hobby<\/span><\/a>, rather than an actual business. We usually refer to this as \u201cdeep pockets\u201d \u2013 something that Reliance\u2019s petrochemical business allows for. Imagine a kid runs a lemonade stand and his neighbour across the road \u2013 a full-grown man with a beard and a proper job \u2013 decides he also wants to sell lemonade. The man is happy to lose a few thousand rupees in his pursuit to corner the <\/span>neighbourhood<\/span><\/a> lemonade market, which he eventually does by giving the lemonade away for next to nothing. The child goes away crying, vowing to never start a telecom company (he does end up starting an <\/span>airline<\/span><\/a>, but that\u2019s another story altogether). This, in a nutshell, is how Jio has trampled on the rest of the industry. By slashing tariffs (indeed, offering them for free initially), Jio has not only made it impossible for other players to recoup their 2G, 3G, and 4G investments, they have made it even tougher for them to move forward and acquire that elusive 5th G.<\/span>\n

We usually refer to this as \u201cdeep pockets\u201d \u2013 something that Reliance\u2019s petrochemical business allows for.<\/blockquote>\nIn case anyone is wondering how Jio is actually making a <\/span>profit<\/span><\/a> in all this, they really aren\u2019t. True, they have turned an \u201coperating profit\u201d this past year, but that\u2019s because of some nifty accounting calculations (as if we would expect anything less from the crafty lads at Reliance). If you build a bridge and charge people for crossing over, it looks like you\u2019re raking in the cash, as long as you ignore what it cost to build the bridge in the first place. They have also benefited tremendously from a TRAI ruling slashing how much telecom companies can charge one another for piggybacking of each other\u2019s infrastructure. As a relative newcomer, Jio needs to piggyback a lot more on other networks than they do on Jio\u2019s. Getting favourable rulings from authorities is, after all, another Reliance specialty.<\/span>\n\nBut what does this mean for consumers? Surely offering rock-bottom tariffs is a good thing for us. After all, the airline industry is also tottering under colossal losses and no one complains. Competition has driven <\/span>airfares<\/span><\/a> so low that rich and poor alike now get to be abused by Indigo staff. It\u2019s the kind of equality we always dreamed of.<\/span>\n\nThe way Jio is moving, it looks like they might be the only private player in the Indian market within the next five years. The state-run firms will hobble along as they have, while the other private players will either sell out (like Reliance Communications did) or fade away in obsolescence. The Vodafone-Idea merger was a <\/span>marriage<\/span><\/a> borne out of the desperation to survive the Jio onslaught, although it does not seem to have helped tremendously. Two drowning swimmers don\u2019t exactly become one Michael Phelps just because they cling to one another.<\/span>\n\nFrom a purely economic perspective, this should worry us. Reliance is not a company prone to altruism. Once they rule the roost, they will prioritise profitability and shoo away competition with the rabid enthusiasm of a <\/span>Sabarimala<\/span><\/a> priest. Given their expertise at managing regulators, it is unlikely that any new entrants would be welcomed easily. Tariffs will increase and the threat of MNP will be rendered largely impotent.<\/span>\n
Reports surfaced this month of Jio practicing its own brand of censorship, despite TRAI ruling in favour of net neutrality.<\/blockquote>\nEqually vexing is the issue of <\/span>net neutrality<\/span><\/a>. Reports surfaced this month of Jio practicing its own brand of censorship, despite TRAI ruling in favour of net neutrality. The lightning quick speeds and easy data have made the internet a wonderful place. Streaming services and online gaming are more accessible than ever. <\/span>\n\nBut just like that clear-eyed photographer at <\/span>Isha Ambani\u2019s pre-wedding shoot<\/span><\/a>, who yelled \u201cSir, Jio nahi chal raha\u201d, keep an eye on the horizon. If things keep going down the same path, you might not be too happy with the videos and games you\u2019re allowed to stream and play.<\/span>\n","protected":false},"excerpt":{"rendered":"

We no longer change the topic when someone asks us for our Wi-Fi password. We are even closer to acquiring that elusive 5th G. But the truth is that behind all the rosy consumerism, there is a dark financial tale playing out with the promise of a sinister ending.<\/p>\n","protected":false},"author":309,"featured_media":4062,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[197],"tags":[3200,7414,7415,7191,7416,7417,7143,3215,3216,1683],"class_list":["post-4061","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-technology","tag-airtel","tag-idea","tag-indigo-airlines","tag-isha-ambani","tag-jio","tag-mukesh-ambani","tag-reliance","tag-telecom","tag-trai","tag-vodafone"],"yoast_head":"\n\u201cSir, Jio Nahi Chal Raha\u201d: How Worried Should We Be About India\u2019s Telecom Sector?<\/title>\n<meta name=\"description\" content=\"We no longer change the topic when someone asks us for our Wi-Fi password. We are even closer to acquiring that elusive 5th G. 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