Will R Jio's mega Dec launch be a gamechanger for telecom?

A cornerstone of this strategy will involve the launch of new smartphone applications. This will happen over the next few months.

The much-awaited 4G LTE devices will be available at a price of below Rs 4,000 by the end of this year.

The services on this wireless network -- that's voice and data -- will work out to around Rs 300-400 per month.

This will also take on its rival Bharti Airtel, which has already launched operations in this space, pricing its LTE devices at between Rs 5,000 and 8,000.

Reliance Jio has already launched Rel Jio chat, which has over 10 lakh active customers. It is also working on a slew of other products including a digital payment system.

Another area that Jio is working on is Jio Money: a digital money and digital payments business, which may be rolled out in phases over the next few quarters.

The company is also readying itself to enter the broadcast distribution business.

“Earlier this year, Jio has applied for a pan-India cable television multi system operator license and has plans to enter into broadcast television distribution,” Ambani announced.

By FY17, which will mark the first full year of operations for the telecom business, Ambani expects to have covered solid ground towards achieving the target of connecting over 10 lakh homes.

Will this allout telecom push work for Rel Jio and what should be its strategy as it gears to launch what Ambani called the “one of the largest transformational greenfield digital initiatives anywhere in the world”?

CNBC-TV18’s Shereen Bhan caught up with telecom analyst Kunal Bajaj and Rajan Mathews, Director General of the Cellular Operators Association of India (COAI) to discuss.

On next page: Transcript of the interview.

Disclosure: Network 18, which publishes moneycontrol.com, is now part of the Reliance Group.

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Q: Good news for the Cellular Operators Association of India (COAI) and for companies like Bharti and Vodafone that the launch seems to have been delayed to the end of the year?

Mathew: We were all waiting in anticipation, so this news is certainly good for the customer, it is certainly good for the markets and certainly good for the operators as well because we certainly need somebody to come in and do marketing and bring those price points down on equipment and assets.

So, it is not something that we are dreading but something that we think will lift the overall market especially for data services, which is just in an incipient beginning phase, so this entry is good for the market.

Q: But would the delay benefit Bharti and Vodafone and give them enough lead time to be able to put their 4G services in place. They have already started; it gives them an edge, doesn’t it?

Mathew: It is not as if 4G has been rolled out extensively by anybody, so yes there has been some delays from RIL’s side and yes that has given folks like Airtel some headway but I don’t think those are insurmountable leads. At the end of the day, the proof of the pudding is going to be on the quality of the experience and the customer’s experience with 4G.

We are one of the leading markets in 4G so, it is not as if we are going to have the benefit of learning from others, we are going to have to learn from some of our own mistakes and trip ups and so it is going to be a learning for all.

Q: In terms of what you have heard from Mukesh Ambani on the plans as far as Reliance Jio is concerned, the commercial launch in December, they hope to cover the entire country over the next 3 years, the focus on going digital, the focus on Reliance Money or Jio Money if i could call it that. Do, you think that there is enough of a differentiator there?

Bajaj: What Mukesh Ambani has outlined today is that telecom suddenly is now going to become the key stone or the pivot point for a lot of the consumer businesses that they are looking to do. So, if you think about Money and banking is being one element of it, also the entire digital media piece they outlined, the fact that through the acquisition of Network18 they now have access to a lot of content. They spoke about getting content right for things for Jio Play, Jio video on demand and things of that sort.

So, what we see is telecom basically becomes a delivery channel for an entire consumer play which connects retail, media, banking, Money etc etc. If they are able to do that then certainly that presents somewhat of a differentiator vis-à-vis the other players that are out there.

However Vodafone, Airtel, Idea, Tata and the others who are there have not been sitting back for the past 4-5 years are aware that Jio is going to launch and they also have been working on some of their own plans for high speed data connectivity and offerings.

Q: Does it come down to pricing, this is what we are given to understand that Jio’s mobile plans will range between Rs 300-500, we don’t have details on what kind of minutes or data usage we are talking about but is this finally going to come down to price?

Bajaj: Rs 300-500 for a data average revenue per user (ARPU) is actually very good. If we look at where data ARPUs are today for the existing operators on 3G, that is not really a significant price cut. So, if we assume that the bulk of Jio’s ARPU is actually going to come from the data side, then it is essentially maintaining market status quo.

Now, if they offer a lot more gigabytes for that same price, then that maybe disruptive from a competitive sight but it is not only a price game here because when you are going after data users, there is a big element around quality, customer service, experience and all those things.

So, you may offer better prices but if you are not offering a good quality of service and a good customer experience, getting high-end users to migrate over is not easy.