Archive for August, 2015

Reliance Jio’s Business Strategies to Revolutionize the Market

August 27, 2015

Reliance Jio’s Jyotindra Thacker recently received an award of Technology Senator of the Year at the Express Uptime Champion Awards 2015. He talked about the plans and strategies of the company.

Plans of Reliance Jio

According to him, the cost of manufacturing the cash exceeds the cost of its value. Digitization is the only way to solve this issue. The Reserve Bank of India (RBI) is also implementing ways to promote digitization. Besides, digitization and online transactions will also reduce the black money. Reliance Jio is leading in this revolution of digital money.

He also confirmed that the payments bank will remain a priority for the company. Keeping that in mind, the company will work on its prepaid wallet application, Jio Wallet, which was launched earlier. Depending on the requirement, Reliance Jio will decide whether to continue the application or not.

Reliance Jio will release bandwidth for people who are waiting for affordable bandwidth since a long time. Many devices and smartphones will also be offered at cheap rates. This will push start-up businesses in the country. Reliance Jio wants to spread an intelligent network all over the country. Hence, the company came up with applications and an economy. The company is hopeful that these will attain success in the long run. The alignment of applications and bandwidth will offer a sensible proposal to the users.

Launch of Reliance Jio

Reliance Jio will be commercially operational from December, this year. The company will launch devices like dongles, smartphones, Wi-Fi tablets, etc. The tablets will be operating on Android, and Windows will be introduced later. Besides, it will also sell MiFi cards and MiFi devices with seamless connections and long battery life.

He expressed that the launch has been delayed a lot. The reason for this was devices, handsets and chipsets did not meet the price point that the company wanted. Meanwhile, Reliance Jio bought newer spectrum bands. Therefore, it again had to work on its business strategies. The company had bands of 2300 MHz, 1800 MHz and this year bought 850 MHz band. After this, it began to design handsets that will support all of these three bands simultaneously. The company got the support from Qualcomm, its chipset partner and vendor, for this.

“If you want to launch a business, and if you can’t create a large enough dent, like a revolution, as we would like to call it, then there’s no point in doing it,” Thacker said. Creating handsets at a price affordable for the Indian masses was very important. Therefore, the company was waiting for the right time to roll out its venture.

Currently, Reliance Jio has the maximum amount of spectrum bank compared to any other telecom operator in India. The company has learnt lessons from countries like Japan, Korea and USA, and understood that a wireless operator needs a massive amount of spectrum to establish its place as a dominant player in the market.

Summary

Reliance Jio’s Jyotindra Thacker talked about payments banks, spectrum holdings and Jio’s impeding commercial launch at an event recently

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Reliance Industries and 10 others to open Payments Banks

August 20, 2015

11 entities have received an approval from the Reserve Bank of India (RBI), yesterday to initiate payments banks. These payments banks will expand the reach and benefits of banking services. It will also help the government to achieve its aim of financial inclusion.

Organizations chosen

RBI chose large companies and telecom operators for this venture. It said that organizations which have experience are picked from varied fields. These organizations have different capabilities that may result in different models.The approval from RBI will be valid for one and a half year. If the organizations abide by RBI rules, they may receive formal licenses after this period.

41 organizations had applied for payments banks. Out of these 11 were chosen. These include Reliance Industries Ltd., Airtel M Commerce Services Ltd. (subsidiary of Bharti Airtel), Department of Posts,Tech Mahindra Ltd., Aditya Birla Nuvo Ltd.,Cholamandalam Distribution Services Ltd.,FINO PayTech Ltd., National Securities Depository Ltd. (NSDL), and Vodafone m-pesa Ltd.(a part of Vodafone India). The list also consists of 2 individuals – DilipShanghvi and Vijay Sharma. Shanghvi is the Founder of Sun Pharmaceutical Industries Ltd. and Sharma is the CEO of One97 Communications.

Partnership between Reliance Industries and SBI

Reliance Industries is partnering with State Bank of India (SBI) to form the payments bank. SBI has asked for 30% stakes in the partnership. Chairperson of SBI, Arundhati Bhattacharya expressed that the strengths of two India’s Fortune 500 companies will be combined through this partnership. The companies are “committed to making a transformative impact on India’s financial inclusion landscape.” She further said that the license is an opportunity for them to encourage financial inclusion and offer banking services to under- banked, unbanked and small businesses.

Facilities from the bank

These banks will offer services like payment, deposit, savings and remittance. A customer may deposit a maximum amount of Rs. 1 lakh. The banks are specially designed for people that do not have access to the usual banking system. The main target of these banks will be low-income households, small businesses and migrant workers. These banks will not be offering lending facilities. Hence, they will also be away from the risks that other banks face.

The banks will operate with point-of-sales devices and through business correspondents. They have the potential to revolutionize retail banking in the payments space. They will boost the number of cashless transactions. Besides, the banks will also be instrumental in encouraging the habit of savings.

Union Finance Minister, ArunJaitley expressed that payments banks licenses given by RBI is a vital step. These banks will reach to people in rural areas, too.

Other government initiatives

The present National Democratic Alliance (NDA) government has made financial inclusion, its priority. It launched the Pradhan Mantri Jan-DhanYojana (PMJDY) so that every house in the country has a bank account. The scheme offers easy money transfer, life insurance cover of Rs. 30,000 and an accidental insurance cover of Rs. 1 lakh. The PMJDY website mentions that 175.7 million bank accounts have been initiated under this scheme as of August 12, 2015.

Summary

11 organizations including Reliance got an approval from RBI to open payments banks.

Telecom Companies to Share Spectrum

August 13, 2015

The Union cabinet has now permitted telecom operators to share their spectrum space with each other. This will help the companies to improve their network quality. It will also lower their operational costs as they will be able to utilize the unused airwaves.

As per Telecom Regulatory Authority of India (TRAI), call drops on 2G networks have increased twice and 3G networks have increased by 65%. This decision by the Union cabinet will help telecom companies to reduce the call drops.

Rules of spectrum sharing

The spectrum bands of 2G, 3G and 4G all may be shared. This includes the ones that may be obtained through trading or were allocated. In one circle, only two companies are allowed to share their spectrum. They may share it partially or completely.

On sharing the spectrum, the licensee will have to pay an additional charge that will be half a percent more of the average gross revenue. Telecom companies may pay the charges depending on how they use the airwaves and how much revenue they earn from it.

If any one of the telecom operators has obtained the radio waves by auction or through liberalized spectrum and the other company has spectrum allotted administratively then they both may share the spectrum only after a payment is made to liberalize the allocated spectrum.

If companies are sharing the 800MHz band, which was bought in March 2013 auctions, then the companies will have to pay the difference as per the latest prices.

Spectrum caps will be liable to both the companies, separately. A licensee’s spectrum holding, on sharing, will be evaluated after adding 50% of the spectrum, which is acquired by the other company in the band. This will be determined as an additional spectrum. This evaluation process has been introduced so that companies have 50% spectrum caps in a band and 25% of the total spectrum.

The companies are not allowed to lease the radiowaves or trade the spectrum bands. Besides, companies sharing radio waves need to follow some restrictions in the use of technology. Depending on the lower-end services obtained by the companies, the technology will be determined.

Reliance Jio’s telecom services

Mukesh Ambani-led Reliance Jio Infocomm will roll out its commercial telecom services from December, this year. The long awaited Reliance Jio’s launch of high-speed 4G data will change the landscape of telecom industry in India. Experts predict that the company’s entry will affect the business of many major telecom companies.

Reliance Jio will give its data services in half the price of the current market charges. It will offer services like live TV, music streaming, instant messaging, movies on demand, digital payment platform, etc. It will also offer applications related to the education and healthcare sectors. Its instant messaging app, Jio Chat has already been rolled out.

The Chairman, Mukesh Ambani, feels that Reliance Jio’s high-speed broadband services will play a significant role in propelling Prime Minister, Narendra Modi’s Digital India initiative.

Summary

Telecom companies such as Reliance Jio have now been permitted by the Union cabinet to share their spectrum space with each other