The audacious pricing of Reliance Jio, notwithstanding, mobile phone won't empower the mass of Indians unless government puts its money where its mouth is
By Anand Parthasarathy
Bangalore, September 7 2016: Shortly before he passed away in 2002, Reliance Group founder Dhirubhai Ambani coined a memorable phrase -- "Roti, Kapda, makaan aur Internet" ( Food, clothing, shelter and Internet) to dramatise his vision for empowering India's aam janatha. It was left to his son Anil to launch the communication business of the group which by then had been split between Dhirubhai's two sons. When Reliance Communications was launched a year later, the new entity took as its mantra another Dhirubhai vision: "Make the cost of a phone call cheaper than sending a post card and you will transform the lives of millions of Indians!"
Reliance was indeed a disruptor in its time, helping crash the cost of a mobile call to a fifth of what was then prevalent. Other large operators like Airtel played their part to ensure that mobile tariffs remained the world's cheapest for many years.
I remember Sunil Bharti Mittal speaking in a panel of cellular phone company heads at the Mobile World Congress discussing how low the ARPU or average revenue per user could go before the business became unviable. Companies like Verizon and AT&T threw numbers like 10 to 15 dollars. Mittal drew a gasp when he said Airtel ran a successful business with an ARPU of one dollar -- then worth about 50 rupees. That is all an average Indian user spent on mobile recharge in a month. Things have improved -- but the challenge in India remains: how to empower a population exceeding a billion people whose ability to spend on things like personal communications was so pitifully low even as their aspirations were limitless.
The mobile handset has become the symbol of such aspirations -- but in the decade and more since the Ambanis upset the telecom market with disruptive pricing, a subtle technology-fuelled reworking of the goal has become necessary. So- called Feature Phones ( a cynical branding for phones with minimal features) could be had for well below a thousand rupees and indeed they served well for millions who learned to innovatively use its simple voice and texting features in a manner that ensured 'paisa vasool' and more.
International television crews for some months descended on a small tea shop in the crowded Chikpet market of Bangalore, where the owner was on call to serve tiny lotas of chai to hundreds of nearby cloth shops, without their having to spend a paisa to place an order. All they did was make a 'missed call'. The tea stall owner maintained a directory of all the phone numbers and a boy was despatched to the customer within minutes with a kettle of tea. The free 'missed call' phone is just one example of jugaad or frugal innovation that Indians have overlaid on their mobile phones. Today even banks encourage the technique -- though in their case the service provider does not lose revenue.
For all its versatility -- and a prepiaid recharge as low as Rs 20 -- the mobile phone hits a wall without a new and increasingly crucial umbilical: Internet access. After some ideological dithering the present government in Delhi has put its full weight behind the Aadhaar ID system and this has made it easier and safer to use the mobile handset as a tool for financial transactions. India has been slow to realise the potential of microbanking -- till Bangla Desh showed the way with Grameen Bank and the African continent gave it a mobile edge with solutions like Mpesa. But push has come to shove here too, thanks mainly to private enterprise. From taxi aggregators to hyperlocal kirana suppliers to doorstep medical diagnostic tests, innovative Indian companies have rolled out plethora of services all of which need a 'connected' mobile phone app as its lynchpin. The tail is wagging the dog: data which used to be a small and costly adjunct to voice calls, is now the necessary and sufficient technology which truly makes the mobile phone a tool of empowerment.
When 3G morphed to 4G this tilted the balance in favour of data over voice. Indeed the latest technology being rolled out in India -- VoLTE or Voice over Long Term Evolution-- uses the data speeds of LTE( another name for 4th generation mobile communication), to carry voice traffic on its back. The logical conclusion to this to charge for data usage and throw in voice for free --- and that is precisely what the 'other' Reliance company, the one controlled by Mukesh Ambani did a few days ago when it formally launched its brand Reliance Jio with the premise: Voice calls free, no roaming charges, only pay for data consumed.
And what data tariffs? At the Reliance Industries AGM in Mumbai, Mukesh Ambani said Jio would offer best rate of Rs 50 per GB. Admittedly this is only in the Rs 5000 per month subscription slab, but even if extrapolated to lower usage plans, this is once more a case of history repeating -- and India offering the world's lowest cellular data service. That is all good news. Now for the obverse side of the coin.
For such compelling prices to be commercially viable ( not just for one player with deep pockets but for all telecom service providers big and small), the basic resource -- spectrum -- needs to be available at a reasonable cost. Since it is everywhere owned and controlled by governments, the impact of spectrum cost can be a maker or breaker of mobile usage. Sadly, for at least a decade now, successive Indian governments have looked on spectrum as a cow to be milked for all its worth and the floor prices set at recent and upcoming auctions are rapacious and self defeating.
Government which trumpets its many initiatives for the aam janatha, all rolled out through mobile phone apps, is throttling the very mechanism of service by overpricing the only part of the ecosystem it owns.
The biggest ever auction of spectrum is due to be held starting October 1 and industry estimates that it will have to pay Rs 5.56 lakh crore to get the bandwidth it requires. This is a windfall for a government. How much of this is it ready and willing to plough back to the tax payer and citizen as its contribution to empowerment through technology? If past experience is a guide -- very little.
India’s Internet user base is already greater than that of the US and the second largest after China. When India's development story in the 21st century is written, a big chapter must speak of the role of Internet and the mobile phone and the part they played in the lives of 1.2 billion people. The hundreds of Indian companies whose enterprise and innovation made the revolution possible, will form a proud segment of the story. But it is as yet not clear, if the record will reflect that successive governments, helped accelerate the process of change -- or merely made a fast buck in the process.
This article appeared first appeared on the website of THE WEEK