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Voice-Over-LTE Won't Disrupt the Market Yet

Reliance needs more than the government’s nod to actually offer voice services over its 4G network

Published: Mar 15, 2013 06:20:20 AM IST
Updated: Mar 15, 2013 08:18:24 AM IST
Voice-Over-LTE Won't Disrupt the Market Yet
Image: Prasad Gori for Forbes India
Reliance Industries is the only operator with 4G LTE spectrum across India

On February 18, the Telecom Commission announced that holders of 4G LTE spectrum would be allowed to offer voice services after paying an additional Rs 1,658-crore fee to the government for a universal services licence. This gave rise to collective cries claiming that voice-over-LTE (VoLTE) is set to disrupt the telecom industry.

The company that most analysts think may cause this disruption is, of course, Reliance Industries, the only operator with 4G LTE spectrum across India.

But that disruption is not going to happen. Not now. Not next year. Not even in five years. Without an existing 2G or 3G telephony network, it is both technically and commercially impossible for Reliance Jio Infocomm, as the telecom venture is now called, to offer voice telephony.

With no reliable global VoLTE standard, Reliance could offer voice communication to future subscribers through either specific devices or apps. But, that would be like you and your friend using Skype on your smartphones to talk to each other. It won’t work when there’s no data connectivity. It means you are allowed no calls when you are driving or outside city limits.

But, what if Reliance smothers the country with 4G airwaves? Would it work then?

Unfortunately for them, the 2,300 MHz spectrum, for which they paid about $3.5 billion, is one of the worst when it comes to creating a large area network. To provide the same kind of coverage in a city that, say, Airtel or Vodafone do for their subscribers, Reliance will need to put an exponentially higher number of towers in one shot.

“Voice, because it’s ubiquitous, requires a better quality of experience. A data subscriber rarely notices fluctuations in speed, but a user in a moving vehicle will expect the same call quality throughout. Thus, for data services you can make initial investments and expand incrementally afterward, but for voice telephony, you need all investments up front,” says Alok Shende, founder and director of Ascendus, a telecom consulting firm.

The one way VoLTE might make commercial sense is if Reliance acquires or partners with an existing mobile operator, such that its current 2G or 3G network becomes the fallback network that will carry voice calls or data when 4G airwaves aren’t around.

Reliance might do it if it wants loyal customers. Because most data subscribers are fickle, and tend to quickly migrate to the next competitor who offers better speed or lower prices.

(This story appears in the 22 March, 2013 issue of Forbes India. To visit our Archives, click here.)

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  • Anil Lalwani

    isn\'t it true that reliance jia is going to get 700 MHz band...

    on Sep 26, 2013
  • Anuj Sharma

    Why would Reliance want to pay Rs 1658 crore for a voice service if it is going to be sub-standard than the existing services? Or Why did they invest $3 billion if voice was not going to be a part of their offering? Coz they don't think like the journalist who wrote the story. If 3G can offer all services of 2G and more, 4G can offer 2G, 3G and more. So they will argue that the 4G technology encompasses all the earlier technology and in fact, one component of 4G will be a 2G service offering voice in the same frequency. If CDMA spectrum is cheap, they may even bid for a license if pushing the 4G argument cuts no ice. If you look at all the specs of LTE handsets available in Verizon or elsewhere, they have chips for GSM 2G/3G networks and CDMA too. It's like wi-fi 'n' being compatible with a,b

    on Mar 20, 2013
  • Mona

    Absolutely agree with the views. CSFB is a proven solution today, while VoLTE will take some time. Besides the investment required to get ubiquitous coverage on a 2.3GHz network will be significant.

    on Mar 20, 2013
  • Anonymous

    \"With no reliable global VoLTE standard, Reliance could offer voice communication to future subscribers through either specific devices or apps.\" - This statement does not appear to be correct. VoLTE and its handoff to 2G/3G technologies using CSFB or SRVCC is clearly defined in 3GPP standards. Handoff is only one part of the puzzle, the bigger problem that Telecom Commission has addressed, related to ability of an ISP VoIP subscriber to call a 2G/3G PSTN subscriber. It was not allowed earlier thereby preventing ISPs to offer voice services. With the new rules, an ISP subscriber can make calls to a friend using 2G/3G cellular services and vice versa. This is the big change and without this it was impossible for a BWA ONLY player to launch voice services.

    on Mar 19, 2013
  • Ap

    They almost certainly will partner with the Anil Ambani\'s Reliance GSM network for voice while VoLTE stabilizes. CSFB is the only way an LTE service is viable right now.

    on Mar 15, 2013