Bharti Airtel acquired a huge psychological advantage over its competitors by launching 4G services in around 300 towns and cities earlier this year. However, the initial response to the service can at best be described as mixed. While there are customers who are satisfied, there are equal numbers of disgruntled customers (See: Telecom Talk Reviews Airtel Hotspot.)
There have been reports of Airtel 4G being a patchy service and the company is also facing some integration issues between the different networks (2G, 3G and 4G). At the same time there are bound to be a few dissatisfied customers whenever a new service is launched. Part of the problem is also that 4G ecosystem is yet to be fully developed anywhere in the world.
Is It More Than A Marketing Move?
The question, which everyone is asking is whether Airtel’s commercial launch is anything more than a marketing advantage of being the first one to launch 4G network in the country?
“I would say it is too early to say anything right now. From a marketing perspective, of course, it is a big advantage but from a perspective of an actual user, they might still take some time to prove their worth,” says Deepak Kumar, Founder Analyst, BusinessandMarket.
Being a first mover, Airtel is in a position to gain valuable experience, which will come handy once competition also launches 4G. Initial customer feedback will also help the company to rectify the problem areas as well as tune in to what customers are actually looking for.
On the other hand, Reliance Jio would need to integrate its network with that of Reliance Communications’s 2G and 3G networks so it is in a position to use Circuit Switched Fall Back (CSFB) technology option to offer voice. Recently Anil Ambani, Chairman of Reliance Communications had said the company is in advanced talks with Mukesh Ambani’s Reliance Jio for a spectrum sharing and trading pact. This means significantly more technical issues for RJio than those faced by Airtel.
“Airtel is using its own network for CSFB technology and even then it is facing a number of issues. So it is safe to assume that integration with a different company [Rjio and RCom] would be far more difficult than it is for Airtel,” explains Kumar.
It is important to remember that Airtel with so many years of experience is facing so many technical issues, so it is logical to believe that Reliance Jio, being a Greenfield telco is also likely to face similar or probably more issues once its 4G network is launched.
Initially Airtel had launched 4G in 2300Mhz frequency band but is now using a combination of other frequency bands to offer 4G services. The 2300Mhz band is not ideal for the Indian environment and leads to a number of in-building issues. The company acquired significant quantity of 1800 Mhz spectrum in the last two auctions and is now in a position to offer a much better 4G coverage. The global 4G device ecosystem is also more developed for 1800 Mhz band.
The Problem of Tariff
What is beyond doubt is that Airtel and other incumbents would be forced to reduce tariff once Reliance Jio enters market later this year. Whenever a Greenfield player enters a mature market, it is likely to shake things up.
Airtel’s 4G launch is of course extremely relevant in keeping with the forthcoming launch of its archrival, Reliance Jio. In fact, that would be one of the key reasons that Airtel decided to launch 4G services even when the network is far from developed.
With its scale and deep pockets, there is little doubt that RJio is a formidable player. Nobody knows this better than Airtel as it has suffered earlier when Reliance’s previous avatar, Reliance Infocomm launched Monsoon Hungama package for as little as Rs 501. Airtel and other incumbents were left with little choice but to dramatically bring down the tariffs. Clearly, Airtel would not want to be in a similar position this time around. The company would want to gain as much lead as possible against RJio.
Besides RJio, Vodafone India and Idea Cellular are also planning to launch 4G services in the coming three-six months. Tikona Digital Services, which owns 2300Mhz spectrum in five circles, plans to launch broadband services in 30 cities in the first half of 2016. However, Airtel’s biggest competitor is Reliance Jio.
Airtel’s 3G network would be a key pillar in its fight for garnering biggest share of India’s mobile broadband market. Expansion and upgradation of its 3G network means that the company would be able to offer seamless coverage The 3G device ecosystem is also more developed than that of 4G. Airtel would need to take innovative steps to defend its customer base. The ongoing call drops controversy does not augur well for Airtel as well as for the incumbents.
The company has been beefing up its 3G coverage across the country and this will come handy in its fight with Reliance Jio. It is also steadily going in for IPfication of its network. Airtel has recently signed a four-year agreement with Nokia Networks to deploy 3G networks in five new circles. It has already launched 3G network in Kolkata and Mumbai using 900 Mhz spectrum. This momentum to expand 3G network will come in handy in its fight against RJio. Airtel is planning to spend around Rs 64 billion on expanding its 3G network. A better 3G coverage means more satisfied 3G customers, who might be reluctant to move when RJio strikes.
Also read: Airtel 4G plan details
It is not just mobile market where the fight between RJio and Airtel will take place. The company stands to lose customers in home broadband business as well as RJio is likely to offer fiber-to-the-home customers. Airtel should brace itself for erosion of DSL customer base.
Going forward, the quality of service is likely to become an important parameter to retain customers. A player who is able to offer a truly intelligent network and seamless data coverage will have an upper hand.