Ambani vs Mittal, now in AirFiber

After 4G and 5G, the fight between the country’s top two telecom operators has moved to the home broadband space.

Bharti Airtel may have made the first move in this segment by launching its services under Xstream AirFiber brand, but Reliance Jio’s launch of Jio AirFiber on September 19 is expected to be wider in coverage and more competitive in terms of pricing.

Fibre broadband services are similar to wireline broadband, but the last-mile connectivityin the former is wireless, making it possible to provide larger number of connections in a shorter time span.

“JioAirFiber uses our pan-India 5G network and advanced wireless technologies to bypass the need for last-mile fibre. Through optical fibre, we can currently connect around 15,000 premises daily. But with JioAirFiber, we can supercharge this expansion with up to 150,000 connections per day which is a 10-fold increase,” Reliance Industries chairman Mukesh Ambani said at the company’s 46th annual general meeting on Monday.

Sources in the know said Jio is expected to price its AirFiber solutions, including the monthly rental and consumer premise equipment (CPE) at a 10-20% discount to that of Airtel’s. Further, the company is expected to launch its solutions on a pan-India basis, compared to Airtel’s launch in only two cities: Delhi and Mumbai.

Another strategy which Jio is expected to follow is bundling the offering of its AirFiber with payTV and fibre, similar to the way it is offering the JioFiber broadband backup plan of Rs 198 to consumers who are already using broadband services of other operators, sources said.

With a strong response in the pilot of AirFiber solutions, Jio is now targeting to serve 200 million high-paying homes and premises over the next three years, up from 100 million it talked about earlier.

“We believe the target of 200 million homes is aggressive, given India’s overall wired subscriber base is still 35 million and would depend on pricing,” Kotak Institutional Equities said in a report on Tuesday.

In a recent note, London-based brokerage house NewStreet Research said, “We think this is Jio’s strategy for increasing the market’s fibre adoption before upselling at a later stage. We continue to think that the company can repeat the mobile success in fibre, which is a large opportunity. Jio Platforms also has strong ambition in fixed wireless access that can be game-changing for the FWA industry globally”.

Of the total 35 million wired broadband connections as of June-end, Jio had around nine million and Airtel 6.5 million, according to data by the Telecom Regulatory Authority of India.

Another reason which is expected to give Jio an edge over Airtel in the fixed wireless access (FWA) space is its intent to revolutionise the segment right from the day it bought 5G spectrum. On the other hand, Airtel has time and again expressed concern over the higher cost of consumer premise equipment or router used for FWA, analysts said.

‘Jio’s extensive fibre-based offering, now supplemented by wireless home offering, will catapult India to leadership in home broadband services in the same way that Jio took India to global leadership in mobility services,” Jio had said last year while announcing its Rs 80,000 crore acquisition of 5G spectrum.

In contrast, Airtel CEO Gopal Vittal earlier this month said, “If you see the cost for a connected home pass (with fibre) in our network today is about $90. The cost of a fixed wireless access CPE is about $150. It’s almost double of that, which means that it’s economically unattractive to go to FWA at this point in time.”

With its Xstream AirFiber, Airtel offers up to 100 Mbps speed. The monthly rental for the same has been kept at Rs 799 and consumers can get the device or consumer premise equipment (CPE) for connecting to internet at a one-time refundable security deposit of Rs 2,500. Airtel is also offering a discount of 7.5% to consumers who opting for a six-month plan.

“We note that Bharti Airtel has commenced a trial of its FWA in Delhi and Mumbai at a monthly tariff of Rs 799, with a minimum plan of six months and a security deposit of Rs 2,500. We expect RIL to price its offering competitively to drive adoption,” Nomura said in its report.

“Traction in JioAirFiber will be dependent upon its pricing versus the plan launched by Airtel and versus JioFiber plans. We believe the company will launch JioAirFiber at a discount to Bharti Airtel’s plan,” Emkay Global said.

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