Jio effect - Airtel, Vodafone squeezed out, telecom industry's on brink of VoLTE revolution
Mukesh Ambani-owned Reliance Jio entered the telecom sector with a bang, promising not just ultra-fast mobile broadband, but also unlimited voice calls via the network – an offer that analysts claim helped it win far more users than its data services.
The bold move changed the game completely at a time when other telecom operators charged users hundreds of rupees every month for making calls over their networks. Backed by the deep pockets of Mr Ambani, Jio's promise of free voice calls pushed its competition to a corner, forcing them to engage it in a cut-throat price war.
Established players moaned, even complained to the Telecom Regulatory Authority of India in an attempt to stop this impending bloodbath, but when all failed, Vodafone and Airtel jumped into the fray to counter Jio's aggressive price strategy.
These players came out with Jio-like plans of their own that offered free voice calls bundled with high-cost data. But, analysts say, this came at a steep price.
As Jio's "sustained predatory pricing" continued to bleed its competition dry, annual revenues of telecom companies fell to Rs 1.88 lakh crore (from Rs 1.93 trillion the previous year). The country's largest telecom operator Bharti Airtel also reported its lowest quarterly profit in four years as its net earnings fell 72 per cent in January-March.
Jio's free voice calls a thought-out move
As it turns out, Jio's use of Voice over Long-Term Evolution (VoLTE) technology to provide voice calls to its customers proved to be the real reason behind its free voice calling punt. This technology not only allowed it to provide superior clarity over calls to consumers, but more importantly, it enabled the company to use data packets to deliver calling service at a fraction of what it would have cost to use traditional voice call technology.
Additionally, its focus and initial investments to build a data first network helped it bring down the cost incurred on voice calls even further. VoLTE-backed voice calls hence gave it a huge advantage over its competition, helping it bleed the competition dry as they used the traditional high-cost voice call technology to compete with Jio's offerings.
But what exactly is VoLTE?
Unlike traditional technologies used by operators such as Airtel and Vodafone, that treat voice and data separately, VoLTE network allows for compatible mobile phones to make voice calls using data.
Using VoLTE, the caller's voice, instead of being routed through a separate channel, is transferred as packets of data to the receiver phone and vice-versa. With fibre optic networks improving at a brisk pace and data becoming increasingly cheap, using data for calls becomes a more cost-effective method for consumers.
What is the industry doing?
With new VoLTE-enabled phones set to enter the market soon, incumbents have finally woken up to the benefits of the new technology, and as it appears, increased competition in the market has led us to the brink of a VoLTE revolution in the country.
According to a report published in The Economic Times, these established operators have decided to cut their costs over voice calls and are preparing to roll out VoLTE services on their networks by September.
VoLTE-backed state-of-the-art networks will not only bring better and more affordable voice-calling to users, but adoption of this technology will also help operators improve the overall health of the industry.