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RIL To Offer 4G Internet Services At Rs10/GB; Tablets At Rs 3,500: Report; Our Take

Mukesh Ambani owned Reliance Industries plans to offer cheap high-speed broadband services based on a 4G network deployment by the end of 2012 , reports The Economic Times. The report cites two people familiar with the development to inform that RIL will offer tablets at a subsidized price of Rs 3,500 and will bundle data plans for as low as Rs 10 per GB. However, the company did not commit a launch date and said that it was still in the planning phase. however, in an e-mail reply to the publication, it did say that its services will be supported by a wide variety of devices from multiple vendors.

Reliance Industries had acquired 95% stake in Infotel Broadband services, after it won pan-India BWA spectrum in all 22 circles, to enter the wireless broadband space. RIL had said that it intends to deploy WiMAX, and then graduate services to LTE when it matures in two years. It had plans to invest Rs. 18,000-20,000 crore to roll out services. Infotel had acquired 4G spectrum for pan-India for Rs 12,847.77 crore.

Is Rs 10/GB Viable? Tariff war in data?

Assuming that the report is accurate, the tariffs will certainly hit other telcos banking on 3G services, the hardest. Airtel which had paid Rs 12,295 crores for acquiring 3G spectrum in 13 circles offers 1200 MB of data use at Rs 450, under a special promotional double benefit plan. So, essentially the subscriber pays Rs 384 for 1GB. Even the state owned MTNL offers 1GB data at Rs 350. Even companies like Tata Docomo and RCOM which offer CDMA- EVDO based internet dongles charge anything between Rs 650- Rs 700 for 1GB data. So Rs 10/GB sounds very unrealistic. However, it was only after the launch of Reliance’s mobile services that voice tariffs decreased across all teco players. Even Uninor’s Tata Docomo’s 1paise/second tariff became the industry standard (Thanks for correcting us!). So are we set to witness a revolution interms of data tariffs hitting rock bottom after the launch?

Playing the price card again?

While part of RIL’s investment will go in producing cheap subsidized tablet devices and internet dongles through OEMs, offering cheaper tariffs bundled with the devices, would also mean that the company would not recover its investment early-on, and would end-up shelling out a considerable amount just for acquiring new customers. Playing the price card is not new for RIL, taking into account the launch of its (limited) mobility services, where it offered handsets for as low as Rs 500. Also, the company had offered free access to data services including mobile TV on its R-World portal for years before making it paid. Although, it attracted a lot of subscribers, the company faced losses and had to write-off unpaid bills accounting to Rs 4500 crore.

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RIL’s 4G strategy

MediaNama readers would remember that telcos have time and again justified expensive data tariffs and have even said that they are necessary to prevent the clogging of data pipes. They have blamed the sparse spectrum for the low quality of 3G services. It is quite possible that 4G along with Wifi hotspots will be able to complement 3G services, diverting bandwidth use across different pipes. As we reported earlier, R-COM is all set to benefit out of one such possible arrangement. RIL has never shied away from saying that it will offer a mass market product. They have even started planning out a content eco-system surrounding the services, which is pivotal to the growth of data services, specially on devices like tablets. We still have our doubts if tablets priced at Rs 3500 will be able to offer a good user experience, and even though, playing the price card will pull-in new customers, will it lead to a sustained growth?


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