Roti, kapda, makaan aur mobile? Yes & no!

reliancve2152 Reliance Industries Chairman Mukesh Ambani, his wife Nita Ambani and son Akash Ambani arrive for the company's annual general meeting in Mumbai | AP

The audacious pricing of Reliance Jio, notwithstanding, mobile phone won't empower the mass of Indians unless the government puts its money where its mouth is

Shortly before he passed away in 2002, Reliance Group founder Dhirubhai Ambani coined a memorable phrase—"Roti, kapda, makaan aur Internet" (Food, clothing, shelter and Internet) to dramatise his vision for empowering India's aam janatha. It was left to his son Anil to launch the communication business of the group which by then was split between Dhirubhai's two sons—Anil and Mukesh. When Reliance Communications was launched a year later, the new entity took the onus of achieving Dhirubhai's another vision: "Make the cost of a phone call cheaper than sending a post card and you will transform the lives of millions of Indians!"

Reliance was indeed a disruptor in its time, helping crash the cost of a mobile call to a fifth of what was then prevalent. Other large operators like Airtel played their part to ensure that mobile tariffs remained the world's cheapest for many years.

I remember Sunil Bharti Mittal speaking on a cellular phone company heads panel at the Mobile World Congress that was discussing how low the average revenue per user (ARPU) could go before the business became unviable. Companies like Verizon and AT&T threw numbers like 10 to 15 dollars. Mittal drew a gasp when he said Airtel ran a successful business with an ARPU of one dollar—then worth about 50 rupees. That is all an average Indian user spent on mobile recharge in a month. Things have improved in India, but the challenge remains: how to empower a population that exceeds a billion people with pitifully low ability to spend on things like personal communications, though their aspirations are limitless.

A mobile handset has become a symbol of such aspirations. However, in the decade since the Ambanis upset the telecom market with disruptive pricing, a subtle technology-fuelled reworking of the goal has become necessary. So-called feature phones, a cynical branding for phones with minimal features, could serve the purpose for millions of users who learn to innovatively use its simple voice and texting features. And, these phones cost well below a thousand rupees, assuring full 'paisa vasool'.

In the crowded Chickpet market in Bangalore, a small tea shop owner got calls to serve tiny lotas of chai to hundreds of nearby cloth shops, without them having to spend a paisa to place the order. All they did was make a 'missed call'. The tea stall owner maintained a directory of all the phone numbers and a boy was dispatched with a kettle of tea to the customer within minutes. The free 'missed call' phone is just one example of jugaad or frugal innovation that Indians have overlaid on their mobile phones. Today, even banks encourage the technique—though, in their case, the service provider does not lose revenue.

For all its versatility, and a prepaid recharge as low as ₹20, the mobile phone hits a wall without a new and increasingly crucial umbilical: Internet access. After some ideological dithering, the present government in Delhi has put its full weight behind the Aadhaar ID system. This has made it easier and safer to use the mobile handset as a tool for financial transactions. India has been slow to realise the potential of micro banking till Bangladesh showed the way with Grameen Bank and Africa got a mobile edge with solutions like Mpesa. But push has come to shove here too, thanks mainly to private enterprises. From taxi aggregators to hyper-local kirana suppliers to doorstep medical diagnostic tests, innovative Indian companies have rolled out a plethora of services that need a 'connected' mobile phone app as its lynchpin. The tail is wagging the dog. Data, which used to be a small and costly adjunct to voice calls, is now the necessary and sufficient technology which truly makes the mobile phone a tool for empowerment.

When 3G morphed to 4G, it tilted the balance in favour of data over voice. Indeed the latest technology being rolled out in India—VoLTE or Voice over Long Term Evolution—uses data speeds of LTE (another name for 4th generation mobile communication), to carry voice traffic on its back. The logical conclusion to this is to charge for data usage and throw in voice for free—precisely what the 'other' Reliance company, the one controlled by Mukesh Ambani did a few days ago when it formally launched its brand Reliance Jio, with the premise: voice calls free, no roaming charges, only pay for data consumed.

And, at what data tariffs? At the Reliance Industries annual general meeting in Mumbai, Mukesh Ambani said Jio would offer best rate of ₹50 per GB. Admittedly, this is only in the ₹5,000 per month subscription slab, but even if extrapolated to lower usage plans,  this would be a case of history repeating itself and India offering the  world's  lowest cellular data service.  That is all good news.

Now, the obverse side of the coin. For such compelling prices to be commercially viable (not just for one player with deep pockets but for all telecom service providers—big and small), the basic resource—spectrum—needs to be available at a reasonable cost. Since everywhere it is owned and controlled by governments, the impact of spectrum cost can be a deal maker or breaker for mobile usage. Sadly, for at least a decade now successive Indian governments have looked on spectrum as a cow to be milked for all its worth and the floor prices set at recent and upcoming auctions are rapacious and self defeating.

The government, which trumpeted many mobile phone app-based initiatives for the aam janatha, is throttling the very mechanism of service by overpricing the only part of the ecosystem it owns.

The biggest ever auction of spectrum is due to be held starting October 1 and the industry estimates that it will have to pay ₹5.56 lakh crore to get the bandwidth it requires. This is a windfall for a government. How much of this is it ready and willing to plough back to the tax payers and citizens as its contribution to empowerment through technology? If past experience is a guide—very little.

India’s Internet user base is already greater than that of the US and the second largest after China. When the story of India's development in the 21st century is written, a big chapter must speak of the role of Internet and the mobile phones, and the part they played in the lives of 1.2 billion people. The hundreds of Indian companies whose enterprise and innovation made the revolution possible will form a proud segment of the story. But it is as yet not clear, if the record will reflect how the successive governments helped in accelerating the process of change—or if they merely made a fast buck in the process.

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Topics : #Reliance

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