In the July 3rd issue of Outlook, there is an article on Reliance Infocomm branching out into GSM technologies in Delhi and Mumbai. Apparently Reliance does have a 2.6 million GSM base covering states like West bengal, Assam, MP, Orissa, Bihar and also parts of Calcutta. If it is popular in these areas, I certainly have not heard of it.
The obvious question that is gonna be raised is, "Why the hell is Reliance, which is a hardcore CDMA based company dabbling in GSM, which already has major players like Bharti, Orange, BSNL and to some limited pockets Idea, BPL, Spice etc?"
The first reason that is quoted by the article is the Anil Mukesh rift. Seems Anil wanted to chart his own course in the telecom sector, and when he wrested control of Infocomm from a CDMA obsessed Mukesh, he immediately chartered a cruise in the GSM seas. The second one is that, since Reliance already has a small GSM base, it hopes to pick up from that and have a massive advantage when it comes to a situation when the whole world converges to the future common standard called WCDMA. They also plan to use the existing CDMA basic infrastructure as a base for the GSM equipment. A few things that I can think of are towers, billing centres, outlets, call centres etc. Of course, some tech differences will surely come up.The clinching factor for Reliance would be the higher returns per customer from GSM as compared to CDMA (Rs. 362 vs Rs.256). Not to discount the smart choice of Delhi and Mumbai..the two richest cities in India. Having stayed at both places, I can be a guarentee for the richness quotient of some Delhiites and some Mumbaikars.
But, the reason for me writing this blog, is to bring to my friend Kirankumar H. N's (Loco's) notice that this could possibly be a means of taming Qualcomm into submission as regards royalty. Indian CDMA players pay a royalty of 7% to Qualcomm for using the CDMA standards set by them, whereas markets like China and S. Korea pay 2% and 2.9% respectively. And of course, since USA is the home of Qualcomm, no royalty funda exists. Supposedly, Reliance accounts for 8% of Qualcomm revenues, and Anil obviously aims to use this to his advantage by threatening a move to GSM. As of the article going to print, Qualcomm had not blinked and said that the question of reducing royalties did not arise.
As is the norm, sceptics do exist who say that Reliance should have gone on the acquisition path, going for Spice, Aircel and Idea who are marginal so called "5th players"; instead of starting afresh. Also, there are doubts about whether they would be able to sustain the massive competition.
Finally, the article concludes by saying that this GSM journey is a test for Anil, specially to get rid of his "playboy image" and to prove that he is a hard-nosed and smart entrepreneur.
My take: GSM or CDMA, as long as it benefits you, for as long as you have a choice, and for as long as there exists the concept of fine print, you are the king who is at the mercy of kingmakers. You will be subject to the same connectivity which fails enmass when something like 11/7 occurs. You will end up paying the same amount as bill inspite of companies' efforts to be different. But, the spirit lies in sticking to your choice and caring a damn for whoever criticises your choice of network provider!!!
PS: Since I don't have internet connectivity at home and I can't do extensive surfing at office, there are going to be a spate of articles which are not researched extensively on the net. The articles will be based on what i read or see, which in any case has been the norm. I somehow have lost the enthu to link to others and comment upon what they have written. And providing hyperlinks seems to have become an alien art!!!!
Anyway, this entry is going to be posted on two locations
1. My own blog 'From the Capital'
2. The Bangys of NITK 2004 blog, 'Chappargaandus': this is because of the Qualcomm connexion in the form of the roly-poly Loco, the IT CR of 2003-2004................dude, mebbe when u go to US, u can talk to ppl to remove the royalty bullshit!!!!!!!