More on Reliance GSM

Posted on | June 13, 2006 |

Reliance Communication’s decision to start GSM services has created quite a stir in the industry. It is likely to have upset the strategies of not only its competitors but also its partners like Qualcomm.

The comments on my earlier post regarding cross-leverage of spectrum for CDMA and GSM are worth reading.

If Reliance does play the GSM game seriously, it might end up saving on royalties that are payable to Qualcomm for CDMA chipsets.

“The cost of offering GSM services is definitely much lower. Thanks to the larger volumes (because of more players), equipment costs are lower,” pointed out Kobita Desai, principal analyst, telcom at research firm, Gartner. Apart from the greater freedom in choosing handsets, GSM handsets have not required any subsidies by the service provider so far.

For Reliance, it’s a win-win situation since the back-end infrastructure remains more or less the same and needs only a little tweaking, its GSM foray in new circles would not require much investments. Yet the upside is that it can attract a larger number of subscribers. More subscribers mean more spectrum since the amount of spectrum doled out is linked to the subscriber base.

ET quotes unnamed rival telco officials claiming that the Reliance move is aimed at blocking other operators from getting more spectrum and may not actually start services for a long time, but just apply for the spectrum. But telecom analysts disagree.

This would be a very expensive way of ensuring that others do not get spectrum. Apart from the spectrum cost, Reliance would have to roll out services which will again require investments,

Category: Reliance

Comments

Leave a Reply

Name (required)

Email Address(required)

Website

Comments