The telecommunications industry is made up of companies that make connectivity possible on a wide perspective, whether through the telephone or the Internet, through airwaves or cables, cellular or wireless. These companies have developed an infrastructure that allows data in words, speech, audio or video to be sent anywhere in the world. Telephone (wired and wireless) networks, satellite companies, cable companies and Internet service providers are the main companies in the market. A Cellular or Mobile Network is a radio network spread over land-based areas called cells, each served by at least one fixed-location transceiver, known as a cell site or base station. Each cell uses a different set of signals in a cellular network from the adjacent cells to avoid tampering and to provide bandwidth in each cell.
The most critical resource needed for mobile networks to be offered is Spectrum. Given that spectrum is a limited resource, it will be directly proportional to the concentration of operators to have the same availability. Therefore, the greater the number of service providers, the lower the amount of spectrum available to each of them. The scheduled process of 4G spectrum in one of the main factors which affects the dynamics of the industry. Given, on the one hand, the highly competitive nature of the Indian telecommunications industry and, on the other, the restricted licensing of the 4G network, the possibility of unfair bidding by service providers has increased. There is a chance of delay in the allocation of the proposed spectrum to service providers that have successfully tendered for the 4G spectrum.
Tapping the rural population in India is one of the most difficult task as there is lack of proper telecom infrastructure in these areas. By covering these areas the telecom companies would be covering a huge market. However, this becomes possible only they the service providers would incur huge costs in enters these service areas as the infrastructure includes high logistics risk, trained personal in rural and semi-rural areas, building of towers etc.
Jio Platforms inherited Reliance’s telecommunications arm, Jio Infocomm, and the largest market capitalization firm in India turned the telecommunications sector into a digital company. At the heart of Jio Networks is Jio Infocomm with approximately 400 million users, which is what makes the digital venture so valuable. Network access is the basis for the provision of digital services to millions of Indians. The business provides cellular, home broadband and enterprise broadband services through its telecommunications arm. When jio was unveiled in the year 2016, the commonly announced that it included mobile data, video and voice call. Customers are also provided with various Jio’s applications like JioTV, JioCinema, JioMusic and various others for free until the end of that year which was later extended by three more months of the next year (2017). Reliance also introduced 4G smartphone at cheaper rate making it affordable for people of low-income groups. The company’s vision was to ensure that digital services and broadband services were available to all as it has become a basic necessity. This can be considered as step taken by the company to help the government towards digitalizing India. Jio is considered to be one of the biggest telecommunications provider with more than 330 million subscribers as of mid-1919. Presently, jio runs on 4G network. Upgrading to 5G would be easy for Reliance due to their advanced infrastructure while lot of other service providers in the market are still struggling to spread their 4G services. Therefore, it is safe to assume that Reliance jio has the first mover’s advantage when the government allows rolling out 5G for customers. The best thing about Jio is that it’s always progressing. This will indeed make a significant difference.
Bharati Airtel is involved in the telecommunications networks and services market, in passive infrastructure services and in home services. Airtel provides it service for both national and international communication and has received Cisco Gold Certification. As the largest provider of mobile telephony services and the second largest provider of fixed telephony services in India, Airtel India is also a provider of broadband television and subscription services. Airtel, one of India’s largest telecommunications companies, has expanded extensively over the past two decades. The company is known for its high-quality and value-added smart range of services. Airtel has expanded far and wide to become the world’s third largest international telecommunications company with operations in 18 countries throughout South Asia and Africa, as well as in the Channel Islands, with its 19 + years of prosperous telecommunications experience in the industry. Airtel is considered to be one of the companies which has high brand equity and a colossal subscriber base. Strategic partnership is essential in this industry. In the future to secure stable earnings and a wider user base, the company can partner with smart phone companies which would be a great strategy for Mobile Number Portability in India. Airtel can move towards vertical segmental for distinguishing itself from its competitors. It becomes necessary to establish Value added services. This would ultimately raise their margin.
Comparison between Bharati Airtel and Reliance Jio
The competitive intensity in India’s telecommunications industry is one of the strongest in the world and has contributed to a gradual decline in realization for service providers. A decline in ARPUs has resulted in extreme competitive pressure and cut throat pricing. Jio has showed a decline in its ARPU while Airtel has showed a strong growth. Jio’s de-growth in ARPU can mainly be attributed to subscribers’ higher base and decrease in use as Jio undertook price hikes. As a result, Jio’s rising subscriber base but decreasing use resulted in negative ARPU rise.
By offering free 4GB high-speed 4G data, Jio gained a lead. This allowed Jio to initially draw large numbers of subscribers. Moreover, free voice calls were also provided by Jio. All these freebies led to a price war between Jio and his rival, Bharti Airtel, and Vodafone Concept (Vi). Consumers were the only winners since Jio was the champion in terms of doling out freebies and burning cash, while each of these three major players battled together to gain market share.
Jio has rendered in-road services in the Indian telecommunications sector, including wireless and broadband services. This was made possible perhaps because of Reliance’s deep pockets and marketing budgets. On the contrary, Airtel’s services and product ranges are much stronger and the business is expanding rapidly and even more effectively in broadband and DTH.
Airtel infrastructure is designed and operated by Ericsson, Huawei and Nokia networks, while Amdocs provides IT support. The transmission towers are operated by Bharti subsidiaries and joint ventures, including Bharti Infratel and Indus Towers in India. Jio expenditure is relatively lesser in maintained of its network infrastructure. Reliance In the maintenance of its network infrastructure, Jio invests less than the old operators. Techniques of circuit switching are used by the incumbent telecom service providers.
Sony Ericsson, Nokia, Singtel and recently Apple are the leading investors in the company. These strategic partnerships lift the product’s reputation and the company’s bottom line.
Airtel is under high debt when its acquisitions turn out to be poor investments and credit is high and the margins are weak. Airtel doesn’t have the deep pockets like Jio. Mukesh Ambani’s RIL was in the oil and gas industry prior to joining the tech sector. Before Jio became self-sufficient, he had made enough money to invest in Reliance Jio.
A whole ecosystem surrounds Reliance Jio. Not only does a customer get a SIM card when he buys a Jio SIM, he also gets Jio TV, Jio Cinema, Jio News, Jio Antivirus – all for free. Other companies also have eco-systems of their own, but they are not as robust as Jio’s. Even before Jio’s entry, some of Airtel’s digital offerings existed. But only in the past three to four years did the big drive to improve their service and momentum arrive. Cases in point include Airtel Wynk (music streaming) and Airtel Digital TV (DTH or direct-to-home service). Airtel has made sure to be available in certain segments where Jio is present, in combination with the Airtel Thanks app, the Blue Jeans (video conferencing) collaboration and edtech offers via start-ups and the DTH service. But the big difference is that e-commerce has always been maintained by the Airtel board.
In 13 out of 22 telecommunications service areas, Airtel lacks a national 3G spectrum license. The LTE mobile broadband network of Airtel is still restricted to only four cities in India. Reliance is a network of just 4G. But there are a large number of people in India who still use phones with 2G features. So it’s not possible for Dependency Jio to make them its clients. Has the benefit at this Airtel. A rural teledensity of just 15% points to the fact that most Indians still do not have access to telecommunications services. Rural India seems to have remained unnoticed by the telecommunications revolution seen in recent years. This fact is reiterated by a massive ‘digital divide’ evidenced by the immense 74 percent gap between urban and rural teledensity.
Reliance doesn’t provide the customers with new mobile packages for various occasions. Whereas Airtel continuously introduces new mobile packages.
It is well known that Airtel has been targeting the upper and middle class who value speed and quality network. Airtel focuses on differentiated marketing where jio uses mass marketing and micromarketing (local and individual marketing).
Indian Telecom Industry – Heading Towards Duopoly?
The telecommunications industry is one of the few industries in the coronavirus pandemic that has fared better than others. The telecom industry played a key role in keeping people linked with the aid of voice and data connection, with people restrained in their homes. The industry has also attempted to engage subscribers with entertainment choices, such as video streaming apps, online gaming, etc. This, coupled with the tradition of ‘work from home’ for workers, has resulted in increase of average consumption of data.
In India, Reliance Jio is not the only one emerging strong now. Although the RIL telecom arm was the only operator to gain market share just a year ago, Airtel is also making a powerful comeback with the telecom industry now moving towards being a duopoly instead of a monopoly once feared. Both Reliance Jio and Bharti Airtel have now witnessed an increase in their subscriber base. The telecommunications industry has undergone significant changes over the past few years. The market has consolidated from more than 10-12 players to just 3 players. We assume that, in a two-player scenario, Bharti Airtel will emerge as a key beneficiary of further market consolidation.
Malavika M (VIT Chennai Campus)