Here is what Reliance’s Mukesh Ambani said in 2003 about the company’s ambitious rollout plans and its strategies for future…
FEBRUARY 2003: For a company that almost missed the telecom bus, Reliance Infocomm has ambitious plans to offer a basket of telecom services, to be introduced in phase by 2005. But for now, the launch of its RelianceIndia Mobile service has triggered a heated controversy – and competition – with its cellular opponents. In this exclusive Q&A session, Mukesh Ambani, the high-profile chairman of Reliance Infocomm, clarifies the company’s position on some of the contentious issues and talks about Reliance’s strategy for the future…
Where do you see the telecom industry headed in the next five years?
We have interesting times ahead. Driven by the exponential changes in the technology, we will see fundamental changes in the services on offer and in the structure of the industry. As I said, we are seeing only the beginning of the convergence of computing and telecommunications. As they converge more and more, we will see a wider range of consumer convergence services in a seamless manner. Further, every other productive sector will look at unleashing the potential of an infocomm framework to manage their operations better, improve capital and manpower productivity and add enterprise value.
What are your projections for the total market size?
We expect the market to grow about 100 million subscribers by 2005-06. The Indian telecommunications market is very huge and only a small fraction of that market is served now. Our current teledensity is about four telephones per 100 people as against the global average of more than 20. We need to add more than 160 million phone conversations just to reach the global average.
With Reliance rolling out mega telecom services, how do you see your business being divided between wireless and wireline over the next few years?
Both markets have significant growth opportunities in India. From a directional perspective, the world is moving towards greater wireless connectivity. However, at this point in time, it is difficult to ascribe specific weightage to either wireline or wireless as we are essentially talking of an emerging market.
Is Reliance Infocomm satisfied with TRAI’s new tariff order and interconnection user charges? Has the regulator been fair to the basic service consumer?
I welcome TRAI’s new tariff regime and hope it will bring an environment conductive to the growth of telecom services.
Will the access fee recommended by TRAI increase the cost of outgoing calls on Reliance lndiaMoblie from the current Re 0.40 per minute?
Reliance firmly believes in being transparent with its customers. For calls on the Reliance network from one Reliance lndiaMobile to another, there will be no additional charges, that is, our tariffs will not increase. To all other operators we will offer symmetric zero termination charges so that the customer is not burdened. Finally, we will recover at actual from the customer whatever charges the terminating service provider imposes on us. We believe this transparent way of showing all costs recovered from the customer creates the highest customer confidence and value.
Eventually cellular service companies will also reduce tariffs to match Reliance’s low telephony rates. What will be your strength then?
Our competitiveness stems from our value proposltlon to the customer in terms of the range and quality of services offered by us. Price, of course, is a critical factor. This is an industry where the speed of technological innovation and product improvement are growing expo¬nentially. This will drive down costs and, at the same time, make it possible to introduce newer applications, which will have a dramatic impact on the way people lead their life. We are only seeing the beginning of convergence of computing and wireless communications. Better products and services at cheaper prices will be the order of the day and will define competitive advantage.
What do you perceive as competition?
This is an emerging market where technology is developing exponentially. Therefore, competition is from new technological developments. Performing well in this context calls for learning to operate in a context of continuous uncertainty and having the ability to continuously innovate. Reliance lnfocomm is alive to this facet of the industry and will continuously benchmark against the best in the world, in terms of the range and quality of services and innovations in products.
How do you see the limited mobility market emerging vis-a-vis the GSM-based cellular market?
Limited mobility has very high potential. It can provide high quality telecommunications services to a larger number of people at low cost. Technology wise, the CDMA 2000 1x platform is far superior to others in terms of capacity, data capabilities and scalability to next-generation mobile services.
How Is Reliance planning to overcome the SMS and roaming barrier imposed on limited mobility services when CDMA itself as a technology is capable of delivering so much more?
The licence permits us to offer SMS and there is no question of overcoming licensing barrier.
As far as the communications needs of travellers are concerned, depending on the frequency of travel and the need, we will offer cost effective and flexible options while remaining within the regulatory boundaries.
What is the next phase of Reliance Infocomm rollout plan?
In the first phase, we have already launched a mobile revolution, in the form of the Reliance IndiaMobile service, which will cover the length and breadth of the country. In the second phase, we will launch an enterprise revolution on through enterprise netway services during the second half of 2003. This will initially provide broadband connectivity to over half a million buildings and eventually cover millions of buildings. In the third phase, beginning 2004, we will trigger a consumer convergence revolution by providing high speed convergence networks to millions of homes.
So far, the company has focused on wireless. When does Reliance plan to launch broadband?
By the middle of this year, we will launch Enterprise Express Netway, which will provide 100 Mbps internet connecti1ity to half a million buildings, eventually covering over 10 million buildings. This will be delivered to businesses through our nationwide optic fibre networks. The advantage that we bring to businesses will be in terms of having one partner to provide all their infocomm needs in a seamless manner. Such an offering will cover the extended enterprise as well- remote offices, manufacturing locations, project sires, C&F agents, distributors, retailers, vendors, field staff, telecommuters and end-customers. In 2004, w will take broadband to millions of households across the country by providing a high speed convergence network.
What are your long- and short-term goals with regard to market share and subscriber base?
Our goal is to achieve 10 to 15 per cent market share in the short term. In the long term, we expect to achieve and maintain a market share of 15 to 25 per cent of the growing mobile phone market.
What trends do you see in the national and international long distance tariffs in the near future?
True competition will benefit consumers. With more players offering competitive rates, we expect the prices of national and international long distance calls to come down. We already have set the trend by making an STD call cost the same as a local call at Re 0.40 per minute, for a Reliance-to-Reliance call anywhere in India. On the international long distance front, we recently got authorisation from the US telecom regulator (FCC) to operate as a facility-based carrier for providing telecommunication services between the US and foreign countries, including India. Similarly, we got permission from the telecom regulator of the UK to provide facility-based carrier services in the UK and neighbouring countries. This will help us to make interconnection to those countries as well as other countries very cost effective for Indian ISD operators. This will help to bring down ISD costs for Indian consumers.
How many national players, according to you, can the market sustain in the long run?
India has the potential to sustain at least five national telecommunication service providers. The Indian market is big, about one-sixth of the world market. We have only just touched the tip of this large opportunity. It is, however, important that better quality services and innovative products are offered at affordable prices.