Reliance Jio Infocomm has acquired spectrum in 800MHz band (in 10 service areas) in the recently concluded spectrum auction in order to solve its 4G conundrum by providing cost-effective coverage on LTE. Though technologically it is feasible to offer LTE services with just 2×1.4MHz spectrum, to offer a meaningful LTE experience, a minimum of 2x5MHz of contiguous spectrum is needed. RJio has 2x5MHz contiguous 800MHz spectrum in only four (out of the 10 areas where it acquired spectrum in Mar’15) service areas, while in other service areas it has contiguous 2×3.75MHz spectrum except for Bihar where it has contiguous 2×2.5MHz spectrum.
RJio can do spectrum sharing with RCOM, which has contiguous 5MHz spectrum in the 800MHz band in almost all service areas (there are a total of 22 service areas in India), hence getting pan-India contiguous 2x5MHz of 800MHz spectrum but Auction prices have to be paid to get the spectrum liberalized.
Now, the key question is, will 850MHz be a game changer for Reliance Jio? We believe the answer to the question lies in a broader question: Is India ready for LTE services? We believe the LTE ecosystem is still not mature for mass market adoption in India. In our view, data growth in India is likely to be led by 3G over the next 2-4 years. Hence, we do not see 800MHz driving LTE adoption in India.
800 Vs 900 Vs 1800 Spectrum Band for 4G LTE Data Services
In the LTE ecosystem the deployment of 800Mhz spectrum is not very encouraging which has only 7 deployments even behind 900MHz, which has 11 network deployments. 1800MHz is the preferred band globally, with 176 network deployments. Also, on the device front, there are 551 devices supporting 850MHz band compared to 1,322 devices supporting 1800MHz. Thus in this backdrop, we do not think 800MHz provides any competitive edge to Reliance Jio as 1800MHz is the globally preferred band for LTE deployment and market leaders have sufficient liberalised 1800MHz to deploy LTE services. Further, Airtel, Vodafone and Idea can also deploy their 900MHz for LTE services in the event LTE ecosystem develops faster than expected.
It will be interesting to see as the Mobile Data story unfolds, but on thing is for sure, incumbents are in a comfortable position and will Mukesh Ambani be able to disrupt the market again like he did a decade ago ?