RIL's 4G Broadband To Offer Exclusive Content & Spectacular Speed At Dirt-Cheap Rates

[KumaarShah 143]

NEW DELHI: In an informal interaction with ET late last year, Mukesh Ambani narrated the advice his father gave him before the launch of the then-unified Reliance group's telecom business in 2002. "He (Dhirubhai Ambani) told me our competitor was not any rival mobile operator, but the postcard (which then cost 15 paise)," said the Reliance Industries chairman. Reliance won the price line in telecom, but could not win over customers - something it will need to change to make a success of its upcoming broadband offering.

Ten years on, Mukesh is applying the same cost doctrine to his broadband rollout, which is expected in late 2012 and one of whose many pieces were put in place earlier this week when it received preferential access to all Network18 content. "We want to do in video what we did in voice," a senior RIL official managing the rollout told ET in December on the condition of anonymity.

"It will be a play on the four screens in your life," is how the official explained the planned RIL broadband offering. He said the plan, for which RIL is currently developing a 'platform-neutral technology', is to stream high-speed, cheap and exclusive content on the four screens an individual engages with: mobile, computer/tablet, TV and billboards.

A successful rollout will require the group to achieve something it has not: win over the customer. "RIL's consumer-centric and knowledge-based businesses face certain challenges, which it may need to overcome to create value," said a June 2011 report of Kotak Institutional Equities Research by Sanjeev Prasad, Gundeep Singh and Tarun Lakhotia.

For Mukesh, a Hindi film buff, broadband will be his fourth effort at transiting from servicing industrial customers to also catering to individual consumers. Each of the group's first three attempts to cross over has failed to draw consumers, either because of policy bumps (oil retailing) or the company's shortcomings in deciphering the nuances of the target set (telecom and retail).

The Reliance DNA - size, sweep and pricing - is present in what one knows about its broadband offering so far.

Reliance's Broadband Plan

"It will be a repeat of the (first) big bang," says independent consultant BK Syngal, who was the architect of Mukesh's previous entry into telecom, and headed that business from 1999 to 2002.

RIL is the only company with pan-India wireless broadband spectrum, bought for about 17,600 crore. It has also committed to invest $5 billion in the first two years. On this, it can offer fourth-generation (4G) services that reportedly have speeds of 50-100 Mbps in testing - or three times the fastest 3G services its rivals currently offer. Its main competitors such as Bharti Airtel, Vodafone and Idea are doing the rounds of regulatory forums on whether they can patch together a national presence through tie-ups, that too for 3G. The legal verdict on the 3G roaming pacts will determine if the likes of Bharti, which has 4G spectrum in 4 circles, can also offer wireless broadband services on a pan-India basis through roaming agreements.

The recent conciliatory posturing between the estranged brothers has made a tie-up between Mukesh's broadband venture and Anil's Reliance Communications - which the brothers launched together in 2002 to take on the postcard - a possibility. The two groups have been talking, says an industry executive in the know, to see if Mukesh's broadband business can use Reliance Communications' formidable infrastructure and also tie up with it to offer calls.

RIL has also grabbed the lead in content. This week's deal gives RIL preferential access to all of Network18's TV, Internet and digital content, across languages and genres. RIL is also talking to other media and entertainment companies, including Walt Disney's Indian venture UTV Software, for more gaming and entertainment content, say industry executives in the know. In November, it acquired 38.5% in Extramarks Education, a company focused on school education and digital learning, for an undisclosed amount.

And lastly, there's the RIL philosophy of disruptive pricing. According to RIL executives aware of the development, the company is looking to bundle data services at about 10 per GB, which is one-tenth of current 3G prices. It is, they say, also planning to bundle this with entry-level tablets powered by Google's Android operating system that would cost 3,000-8,000. That the demand for low-cost tablets is robust is evident from the 1.4 million bookings that Aakash, the 2,500 tablet made by UK-based Datawind and subsidised by the government of India, received in 14 days after it was put up for sale online. The RIL official quoted in the first instance says the company is also looking to offer online services in "security, health and education". So, for example, by paying, say, 30 a month, a customer can access doctors online 24X7. He said the company was also talking to the government to link up with the database of unique IDs being created for every Indian, called Aadhaar.

Nandan Nilekani, the chairman of the Unique Identification Authority of India (UIDAI), which is implementing Aadhaar, confirmed this. "We have had preliminary discussions (with RIL) on how Aadhaar and the platform can be used to offer applications," he said. "You may not have a cardiologist for every village, but a 100 of them could be available to millions through this hub-and-spoke model on the cloud (computing)." RIL is targeting these millions. Targeting millions is something RIL never did late in the last century, when its first wave of growth came as a producer of industrial goods - petrochemicals, oil refining and oil exploration.

Marketing consultant Harish Bijoor says there are distinct differences between a B2B (business to business) and a B2C (business to consumer) company in terms of management and operating styles. "You can see it if you speak to a Hindustan Unilever and a RIL executive," says the CEO of Harish Bijoor Consults. "While the manufacturing guy will be more focused on back-end strategies, precision in product quality, timely implementation, processes, systems and receivables, the consumer company is geared towards the front-end."

Several other prominent industrial groups, including the AV Birla Group and the Mahindras, have traced this arc from industrial to individual. "Ours is a consumer-driven economy," says veteran banker Deepak Parekh. "No matter what business you are in, consumer interests have always played a big role for all industry, irrespective of the genre."

Consumers are what Mukesh was after when he launched the group's telecom operations in 2002, through what was then called Reliance Infocomm (now Reliance Communications, and steered by brother Anil since June 2005, after the brothers split). Its maiden 'Monsoon Hungama' scheme offered handsets at 501 and a tariff of 40 paise per minute for calls made to Reliance phones. In 10 days, it had 1 million users.

"Everything was in place before the launch," says Syngal, senior principal, Dua Consulting, who headed Reliance Infocomm till its launch. "The planning started in 1999 and a decision was taken to roll out 90,000 km of fibre and invest 32,000 crore with a peak negative cash flow of 20,000 crore. Such plans were massive compared to other players in the sector then."

By 2005, Reliance Infocomm had dislodged Bharti from the top spot. But its customer orientation was fraying at the edges. It suffered from a downmarket image, billing complaints from customers were frequent and it faced regulatory action for alleged 'illegal' routing of international calls. "By the time we launched, most of the high-end customers were already taken," says Syngal. "Next, customers soon realised that, while the service was very good, it was restricted to cities." Dealing directly with consumers is a different ball game, says a veteran industrialist from the auto sector, not wanting to be identified. "Such companies need skills in marketing, advertising, and have to constantly reinvent themselves," he says. Adds Bijoor: "The biggest disadvantage in a transition is that a B2B company has to learn to say, 'I do not know my customer', which they are not used to."

Retail is the other consumer-centric business that RIL moved into, in 2006. "The results have not been encouraging so far," says Arun Kejriwal, head of Mumbai-based investment consultancy KRIS.

Speaking on the condition of anonymity, the CEO of a leading retail chain that competes against Reliance Retail says the latter initially thought that since modern retail is under-penetrated, throwing capital would fetch immediate results. "But they did not realise that capital is not a substitute for competencies in merchandising and store operations," he says. "They are now beginning to get things right."

Will its ability to draw and keep customers in the broadband business be better? Harminder Sahni, managing director of Wazir Advisors, a retail consultancy, thinks so. "RIL is good at managing consumer businesses where the service offering is more centrally decided and driven, and the competition is among a few organised players," he says. Telecom and broadband fit that profile, retail doesn't.

Link Courtesy: http://economictimes...ow/11393924.cms

[csmart 472]

i read this article. and was about to post. but then there is nothing exciting or new in it. it seems more sort of PR work from RIL. i feel RIL might be looking to raise money or coming out with something big time. there is no discussion of how the 4G rates and how it iwll be there. whatever mentioned in the article is already published many times over.

[KanagaDeepan 1,084]

Way toooo many trailers... Now the question is "When will the main picture come???"... Better they don't late anymore, otherwise next question will be "Whether the picture will come or NOT???"...

Personally I don't want blah-blah-Dr-pack for Rs30 a month (they will activate that anyway without our consent) and so-so-great-video-content... Give us a decent speed internet for atleast half-decent price... We know what content to watch and where to get the same...

[commonman 228]

the big question is how long will the customers wait. the Indian customers are now grabbing cheaper datawind/Chinese tablets and also getting data services to run that. once they already have them, they would compare the total cost of shifting from this combination to any offer from RIL. and we all know how price sensitive the Indian customers can be.

[inception 75]

@csmart

It is almost sure that RIL can not roll out LTE/4G before june, 2012. In between Augere & Airtel may get started with LTE - soft launch to offer services to enterprises or total commerical launch. There is no news from Aircel and Tikona.

To cut the first mover advantages from others, RIL is creating some buzz via national media like ET & Business-Standard. It helps to create hype over Infotel and these news - all are more or less same come to ET at a regular interval with nothing new stuff. It will help them pre-roll out customer addition, i.e. some people will wait for Infotel even if other BWA players roll out 4G services.

[me_saket 73]

I agree with inception,

all news on ET r nearly same.

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