Reliance Jio aur Na Jeene Do ki Kahani!

We live in a world where unfortunately the distinction between true and false appears to become increasingly blurred by manipulation of facts, by exploitation of uncritical minds, and by the pollution of the language.” —Arne Tiselius

The story of deceit and manipulations by Reliance began on 24th May, 2010. The auctions of BWA (Broadband Wireless Access) spectrum were conducted over a period of 16 days from May 24, 2010

Infotel Broadband Services Private Limited (IBSPL), promoted by Anant Nahata, son of Mahendra Nahata (of Himachal Futuristic Communications Limited fame), allegedly acted as a “front” for the Reliance group. This company was bought by Reliance after the auction and it became the subsidiary of Reliance. This subsidiary was renamed Reliance Jio.

On 2nd September, 2016, a day after Reliance Industries’ Mukesh Ambani kicked-off his company’s ambitious telecom venture, India woke up to full front-page advertisements of Prime Minister Narendra Modi in what appeared to be an advertising campaign for Reliance Jio.

The advertisement stated:

“In the journey of time, there come a few life changing moments. Our honourable Prime Minister’s inspiring vision of a Digital India is one such movement. Jio is dedicated to realising our Prime Minister’s Digital India vision for 1.2 billion Indians. Jio Digital Life will give the power of data to each Indian, to fulfil every dream and collectively take India to the global digital leadership…,” reads a paragraph of text that comes just below an image of Modi in dark blue jacket, which is incidentally the same colour as Jio’s logo.

“A liar is always lavish of oaths.” –Pierre Corneille
It was a clear signal to all the authorities in the Government to do, what not do, when it came to Jio.

Rio manipulated rules all the way to reach a stage as on 1st September, 2016

And it left in its trail for everyone to see but they keep quiet. How did a small company like IBSPL, afterall,  manage to get a  huge amount to participate in the auction?

At the time it entered the auction, IBSPL had a paid-up capital of Rs 2.51 crore, a net worth of Rs 2.49 crore, and just one single leased line client from which it earned Rs 14.78 lakh. It also had no more than Rs 18 lakh in the bank and was ranked 150th in the list of Internet service providers(ISPs) compiled by the Telecom Regulatory Authority of India (TRAI).

Nevertheless, IBSPL managed to meet the financial requirements for bidders – an earnest money deposit in the form of a bank guarantee from Axis Bank of Rs 252.5 crore, a sum that was a hundred times its net worth.

IBSPL was declared the winner in June, 2010.

Meanwhile, on June 11, at an extraordinary general meeting of its shareholders called at short notice, IBSPL raised its authorised share capital by 2,000 times, from Rs 3 crore to Rs 6,000 crore by issuing 75% of its shares to Reliance Industries Limited (RIL), a listed company and India’s single biggest corporate entity in the private sector, making itself a subsidiary of the latter.

On June 19, 2010, IBPSL ceased to be a private limited company and became a public limited company. On January 22, 2013, the company was renamed Reliance Jio Infocomm Limited.

The serious issues related to auction:
(a)  IBSPL had not declared its relationship with Reliance Industries as an associate or partner in its application for participating in the auction for 4G spectrum when details of all applications were disclosed on the website of the DoT on April 6, 2010.

(b)The DoT failed to recognise the tell-tale sign of rigging of the auction right from [the] beginning of the auction” in which a small ISP, Infotel Broadband Services Pvt Ltd (IBSPL) emerged as the winner of pan-India broadband spectrum by paying 5,000 times of its net worth.

(c)The government should get the matter investigated even at this juncture, fix responsibilities on the bidders, which violated the auction conditions/rules prescribed and cancel the allotment of the BWA spectrum along with exemplary punishment on the colluding firms,” the draft report stated.

(d) The auction was for BWA i.e, to provide broadband over spectrum but the license was changed later to allow Reliance to provide voice.

Though IBSPL had entered the 4G auction as an ISP (Internet Service Provider), which is the licence that remained in effect in its new incarnation as Reliance Jio, Mukesh Ambani’s company applied to the DoT in 2011 for a “mobile country code” and a “mobile network code” that would enable an operator to set up a “public land mobile network” – a network that is operated either by the administration or an accepted agency for the purpose of providing land telecom services.

This was after the DoT had already clarified, first in 2008 and again in 2010, that voice services were permitted only using second generation (2G) and 3G spectrum. The TRAI had recommended that 4G or BWA spectrum should be utilised for faster diffusion of broadband and data services only. According to the Telecommunication Engineering Centre, a branch of the DoT, the technology platform that Reliance Jio wanted to use – long-term evolution (LTE), a 4G broadband wireless technology – had capabilities that were “much wider in scope” than those permitted in the ISP licence.

In April 2012, at the request of the DoT, the TRAI furnished guidelines on changing the licensing framework and replacing it with a new Unified Licence regime, which went on to facilitate the migration of internet service providers into full service operators offering voice services. The TRAI guidelines were deliberated upon by a DoT committee and subsequently by the Telecom Commission. Thereafter, two more committees were constituted to debate different aspects of the issue, one in August 2012 and one in September of the same year.

The upshot of these deliberations was that in February 2013, the conversion of ISP licences to the new unified licence was approved and Reliance Jio was the first to take advantage of this decision.

The company paid an “entry fee” of Rs 15 crore and a “migration fee” of Rs 1,658 crore in August 2013 and was granted a unified licence on October 21, 2013, formally authorising it to provide voice services.

Corporates do not believe in free lunch.  Free Voice announced by Jio is misleading.

Voice is being bundled with data. Jio has announced that their data charges will be as low as Rs 50 per GM. But the low rate of Rs 50/GB will be available if one gets a monthly pack of Rs4999 per month. Further in the pack of of Rs 499 one gets only 4GB and which is Rs 100 per GB.

It would not be easy for Jio to sustain for long unless it rejigs its packages.

While the unlimited voice  for as low as  Rs 149 per month is attractive. But what is the ground reality?  Most of the mobile users, especially among the blue collared , are actually prepaid users with free lifetime validity connections, upon which they regularly recharge Rs 20-30 which usually lasts for almost a month for them. There are many who hardly make outgoing calls. Even if they make an outgoing call, it would not last for more than a minute. Such people tend to use only Rs 30-50 talk time per month, for which only Rs 50 top up recharge is sufficient. While other private operators provide unlimited validity, Jio has 28 days validity. For a person who is used to topping up by Rs 20-30  every month , he would not opt for Jio as Rs 149 money outgo will be Rs 1800 on annual basis. Majority of current uses will opt for Rs 20 top ups and hence few would opt for Jio Rs 149 pack.

Hence, Jio will continue to manipulate rules to be business. And they have already started doing that .It is lobbying hard for ending, termination charges.

The Telecom Regulatory Authority of India in August, 2016  created a major storm by issuing a consultation paper to review termination charges, favouring “bill and keep”, which means zero rate from the current 14 paise per minute.

Since termination charges are paid to the operator on whose network a call terminates by the originating network operator, a lower or zero rate favours newer operators compared to the incumbents.Any move to lower the rate at this point of time will favour Reliance Jio, which is scheduled to start its services later this year, and, therefore, the incumbent operators are up in protest.

If Jio really believes in bringing digital revolution, with PM on its advertisements, then it may as well declare its telecom project as CSR.

Categories: Opinion

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