China Mobile’s TD-LTE Success, Big Boost for Reliance Jio Infocomm

China Mobile TD LTEChina Mobile has finally caught up with competitors in providing high speed mobile data services to smartphone users. Using the TD-LTE network, users have reported 10x performance increase compared to CM’s legacy TDSCDMA (3G). The TD-LTE network is also increasingly ubiquitous, covering 96.7% of test locations in three Tier 1 cities, and is expected to cover 95.0% of the population by year end. More importantly, speeds of 5.4- 35.9Mbps achieved by TD-LTE are clearly a game-changing step upwards from average speeds of 0.1-1.4Mbps, which China Mobile achieved on its TD-SCDMA (3G) network. The network speeds on China Mobile’s TD-LTE (4G) are now high enough and consistent enough for seamless enjoyment of most ‘common’ smartphone usage, such as viewing social media, launching Videos and uploading Photos.

The advent of TD-LTE technology and network construction over the last 24 months has therefore allowed China Mobile to move from a disadvantaged position to a competitive position in the provision of data services. China represents the first mass-scale rollout of TD-LTE worldwide, equipment vendors have been extremely supportive of China Mobile. As a result the TD-LTE handset ecosystem in China is therefore proving to be as strong as that of FDD-LTE, and close to that of the W-CDMA ecosystem. China Mobile’s TD-LTE subscriber base having expanded from 8.109 mn subscribers as at May 2014, to 170.335 mn as at May 2015.

So Can Reliance Jio Replicate China Mobile Model in India ?
Reliance Jio Infocomm is already the Second Largest Telecom network in India. RJio has comparable spectrum as of China Mobile and we believe RJio is no longer at a disadvantage. Having waited for five years (since buying TD-LTE 2300 MHz spectrum first in 2010), we believe RJio now sees the ecosystem in place supports its business case. The analysis of data speeds and smartphone usage on China Mobile’s TD-LTE network suggests that RJio’s network, if constructed properly, should be capable of delivering internationally competitive data speeds and functionality.

RJio’s 4G deployment will also benefit from superior technology efficiency as compared with 2G/3G networks of other operators. Spectral efficiency refers to the amount of data throughput (in bits per second) that a technology can push through a given MHz of spectrum. We conservatively assume that 3G is 1.25x better than 2G on spectral efficiency, and LTE is 1.25x better than 3G.

LTE Handset No Longer a Hurdle
A year ago, the cheapest LTE phone that could work in India was priced at Rs 20,000+ and these price points have been falling rapidly, driven by China’s scale. The current price point for the cheapest available LTE phone (compatible for both 1800 FDD LTE and 2300 TD-LTE) stands at Rs5,000/- (US$ 80). This is in-line with the recent announcement at the RIL AGM that they intend to bring in devices priced Rs4,000 by the time of the launch which seems doable.

And a Gradual Transition to VoLTE for both China Mobile & Reliance Jio
According to GSMA, around 90 operators are investing in VoLTE in 47 countries. GSMA also predicts that there will also be 450 standalone VoLTE networks by 2020; in many cases, telcos are shutting down 2G/3G networks, refarming the spectrum to facilitate carrier aggregation and make a complete switch to LTE. China Mobile retains a very large legacy 2G network, and has thus far relied on Circuit Switched Fall Back (CSFB) for voice, while using the TD-LTE network for data while RJio is arguably better positioned, given that it has 2300MHz TD-LTE and 1800MHz FDD-LTE in place and will likely tie-up with RCom and Videocom others for CSFB in some circles where they do not have 1800Mhz spectrum.

It is important to have decent voice service—but that is not a match winner. So even if VoLTE is not the most elegant voice solution for RJio today, the benchmarks that it needs to meet are relatively low. In the backdrop of Net Neutrality and VoIP licensing, RJio with Unified License and Spectrum may not have much hurdle in pushing its service compared to OTT Apps providing VoIP service using the underlying Mobile Data Infrastructure of Telcos.

Reliance Jio is hiring about 15,000 people in the immediate offing to Train them for support operations ahead of the big soft launch next month and official launch at the end of 2015.

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