It’s like the epic scene in Jurassic Park. Some were trapped in the car for fear. A glass of water on the dashboard. Something big can make waves in it. Unseen. Its arrival, terribly inevitable. Frightening, because it could be the end for the people in the car. In today’s story, the car is India’s wired broadband space; Trapped passengers include Airtel, ACT, Spectra and others. And the looming behemoth? Reliance Geo.
When it comes to Geo, the fear we have seen in the telecom sector for the past few years is very real. With the power of Reliance Industries’ bottomless boxes, Geo can break into one location, define market dynamics in a nutshell, and easily outpace well-established competitors. In the three years since its launch in 2015, Jio already has more than 205 million wireless mobile customers. That’s 18.17% of the market.
This is achieved by reducing geo tariffs and reducing existing telecom operators. In the ensuing price war, Jio’s competitors were sidelined as they struggled to keep pace. This has led to consolidation in the industry. Prior to 2015, there were nine wireless telecom operators in the country. Today, there are effectively only three.
With a steady and ever-present grip on wireless cellular space, Geo’s ambitions to add wired broadband space have also increased. To this end, GeoGigafiber will announce its wired broadband offering on August 15th. According to the Akamai State of the Internet report, in a country with an average internet speed of 6.5 Mbps in 2017, GeoGigFiber is promising 1 Gigabit. This is a promise that excites consumers, but competitors are concerned.
And these competitors are not limited to wired broadband space. Reliance Industries Chairman Mukesh Ambani said Jio Gigafiber will provide broadband Internet, cable television and landline voice services. In telecommunication parlance, it is called triple play. One provider offers three services for the home. For cable television operators, internet service providers (ISPs) and DTH services, this effectively means Jio for everyone.
Shock waves have already been experienced. Shares of multisystem operators (MSOs) – which offer cable and broadband services – fell after the announcement. On the day of the announcement, Hathaway shares were down 15%, Den Networks and CT Networks were down 10%. Airtel is already preparing to fight Jio’s biggest rival in the telecom space – its fair use policy (FUP) on wired broadband services in Hyderabad Circle. FUP is a cap on how much data a customer can consume at high speeds, with speeds exceeding 512 Kbps.
Gio’s goal is to reach 50 million home broadband users in 1,100 towns and cities. This is huge, as the Telecom Regulatory Authority of India (TRAI) data from March 2018 shows that India has a total of 21.24 million subscribers of Wired Broadband players. The number of fixed-line telephone subscribers in India is 22.81 million. The number of active paid DTH subscribers is 67.53 million. Jio does not want to break into these categories, it wants to take over.
To make this a reality, Jio said it had allocated Rs 250,000 crore ($ 37.57 billion) to push its wired and wireless broadband. Jio has just allocated Rs 65,000 crore ($ 9.97 billion) to build its optic fiber cable network, a senior telecom analyst with the financial services company told TheCan. Currently, Geo has 300,000 root kilometers of optic fiber cable nationwide.
Ken sent a detailed list of questions to Geo, but with the launch of Gigafiber, the company was reluctant to answer questions.
At this point, existing ISPs, MSOs, DTH companies and other cable providers seem to be the crowd watching Jio’s juggernaut. After the success of its wireless cellular services, another wave of Jio-powered disruption seems inevitable. But is it really that straightforward? Away from it.