Reliance Jio, which today announced another quarter of strong growth in its 4G wireless services, reiterated its commitment to working with small cable operators as it rolls-out broadband-cum-IPTV network GigaFiber.
The company also said that it is in the process of connecting homes to its fiber-to-the-home service, based on the requests received via its website. It had opened booking for the GigaFiber service last year.
It said its wireline offering is seeing “overwhelming customer interest” in the 1,400 cities where booking has been opened.
Even as it has started rolling out connections, the company is yet to complete its recently announced acquisition of Den Networks and Hathway Cable, two of India’s largest cable networks. It said it has not got all the required regulatory approval for the deal.
The two cable operators supply their signals to over 2 crore homes in India.
The problem, however, is that the overwhelming majority of these homes are not connected directly by Den or Hathway. Instead, the signal is provided to a local cable operator or LCO, who in turn carries it on his own network to his customers.
Jio’s plan is to replace or complement this network — owned and operated by the local cable operator — with fiber to the home.
However, local cable operators are extremely touchy about allowing their business partners to lay cable or fiber to their customers’ homes.
On the other hand — without laying fiber — Jio will find it very difficult to get the kind of network speed and connectivity needed to push its next-generation services such as IPTV, video-conferencing etc..
COOPERATE OR FIGHT?
This means that the local cable operator has two choices — co-operate with Jio and become part of Jio’s ecosystem, or terminate their feed-sharing agreement with Den and Hathway, and sign up with another feed provider.
However, the second option does not mean Jio will not enter their territory, as the company has a pan-India license for its cable and Internet service provider arms.
Moreover, the company provides services that make the traditional cable connection unnecessary and obsolete. Its GigaFiber box, for example, will come with an IPTV service that will not only offer high-quality live TV, but also features such as rewind, video-on-demand etc..
In other words, a large part of customers are likely to subscribe to such services, whether or not the local cable operator is ready to partner Jio.
‘HAND OF FRIENDSHIP’
In its statement today, the Mukesh Ambani-headed telecom operator today again indicated that it was not looking for a fight with LCOs, but for cooperation.
It said that its aim is to “strengthen the business model of 27,000 LCOs that are aligned with DEN and Hathway across 750 cities”.
Doing so, it said, will “create multiple future opportunities with new services and platforms” for the LCO.
Another point of negotiation will be the revenue sharing. Cable operators currently keep about half of the total money paid by a subscriber every month, while passing on the other half to Den and Hathway to be passed on to content suppliers.
However, under GigaFiber, the monthly payment of a subscriber will be higher — in the range of Rs 500-2,000 — instead of Rs 200-400 at present.
As such, cable operators will have to agree to receive a lump sum or a fixed amount per household, instead of a percentage, and serve as the maintenance and business development team for GigaFiber.
It remains, therefore, to be seen how Jio plans to further its business plans in this lucrative, but fragment business.