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Is Reliance Jio getting unfairly blocked by Bharti Airtel, Vodafone and Idea?

telecomMukesh Ambani, India’s richest man and the chairman of Reliance Jio has given a rare interview in India’s largest newspaper accusing his telecom rivals of trying to use their incumbent power to violate the law.

He said even Reliance Jio employees are having some trouble porting from rival operators to Jio’s 4G network.

Ambani’s comments come in the wake of criticism from incumbent operators, via Cellular Operators’ Association of India, against Jio’s decision to offer free calls, saying that this would unleash a tsunami of voice traffic that will sweep India’s telecom networks away.

Ambani said the virtual blockade of calls from Jio’s networks by incumbent operators cannot be justified in any way.

“It’s essential that incumbent power is not used to deny new technology to consumers,” Ambani told the Times of India. “It’s like saying that because you are a dominant person, you violate traffic lights. You can be let off once or twice, maybe. But in the long run, you cannot take violation of legal license obligations lightly.”

VIOLATION OF LAW?

Does Ambani have a point? Is it illegal for any telecom operator to block incoming calls from a rival network by refusing to provide interconnection?

Let’s look at what the telecom license — whose conditions are binding on all operators — says.

There are three types of telecom licences that are in use by mobile operators in India today – Unified Licences, Unified Access Service License and Cellular Mobile Telephone Service license.

All three licenses make it clear that no telecom operator can block calls coming from another network to his network, or calls going from his network to another network.

While the Unified License says: “It shall be mandatory for the LICENSEE to interconnect to/ provide interconnection to all eligible Telecom Service Providers,” the Unified Access Service License says: “It shall be mandatory for the LICENSEE to provide interconnection to all eligible Telecom Service Providers as well as NLD Operators..”

Similarly, the Cellular Mobile Telephone Service license has the following clause: “It shall be mandatory for Cellular Service providers to provide interconnection to all eligible Telecom Service Provider..”

These provisions seem to leave no scope for interpretation as far as the obligation of a telecom company to provide interconnectivity is concerned.

To put this clause into force, each telecom operator, when it starts operations, also signs interconnect agreements with all other operators.

According to Mukesh Ambani, Reliance Jio’s agreement with its competitors like Bharti Airtel, Vodafone and Idea Cellular says that more interconnect points should be provided as and when capacity utilization of the existing points reach 70%.

At present, as most Jio users would know, only about 1 in 3 or 1 in 4 calls from Jio’s network to other networks manage to get through, which implies that capacity utilization has hit 100%.

INCUMBENTS’ VIEW

On the other hand, the incumbent operators — via COAI — say that they cannot provide interconnectivity to Jio because doing so will hit their earnings.

It is estimated that incumbent operators make as much as 80% of their profits from voice calls and only the remaining from data and other services.

If they are to do what Jio has done — make voice free and bill only for data — they will have to depend on data for all their profits — something they cannot do overnight.

Ambani, on the other hand, says that since voice is just data in another form, it is inevitable that voice will stop being sold as a separate commodity. In the end, he says, people will pay only for data, and voice will come free as it does in many other markets.

The dispute is more or less certain to end up in the courts, where it would be fought for months if not a year. Even if Ambani wins the court battle — as is likely — and forces the rivals to give interconnection, the court battle would have given the others time to come up with a marketing strategy to counter the free voice offering.

In addition, even as the court battle goes on, people who try to use Reliance Jio phones will find it difficult to make outgoing calls to people using other operators’ numbers. This could leave a bad impression in Jio customers’ minds, leading them to think that Jio’s voice facility does not work.

In other words, Jio’s success would depend on two things — first, getting the legal process over as fast as possible, and two — making people aware why calls are not going through.
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