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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: John Biddle who wrote (32965)	2/28/2003 5:21:24 PM
From: John Biddle	Read Replies (1) \| Respond to of 196631

A Paradigm Shift Naresh Minocha, 3-Mar-2003 asiatele.com India's largest private sector group, Reliance, is belatedly making its presence felt on the telecom services market with a big bang-tumbling tariffs and rattling competitors. The group's catch-lines in full-page advertisements in the dailies have attracted the nation?s attention. The eye-catchers: "Make a phone call cheaper than post card", "call national, pay local" and "free" tag to offerings such as Internet access service and imported CDMA 2000 1X mobile handsets. The tariff for national long-distance offered by Reliance's CDMA-based mobile service is dirt cheap-Paise 40/minute (US$0.83/min) for national long-distance calls made within the Reliance network. Apart from triggering a tariff war, Reliance is set to take the market closer to convergence ahead of the proposed regulatory regime for convergence licences and services. At present, Reliance is flexing its muscles with a pre-launch campaign for a converged set of voice, data and video services. The services are to be offered initially in 600 cities through a 60,000km optic network of terabit capability and CDMA-based wireless network. It will have national footprint covering 90-95% of the country's population. No other private sector group has laid such a vast, integrated network at one go with a budget of Rs250 billion (US$5.23 billion). Reliance's marketing initiative is also unprecedented in size and grandeur. It is now luring subscribers through 100,000 field agents and 10,000 retail outlets through attractive tariff options. In addition, it is also enrolling and nurturing an army of 100,000 software developers and content providers who would facilitate a slew of value-added services as video games, movies and news through digital networks. The next two years will show whether Reliance?s penchant for doing things in a big way work in the services as it did in manufacturing. The group's flagship company, Reliance Industries Limited (RIL), operates one of the world's largest refinery-cum-petrochemicals complexes. It also figures in top global market rankings in certain segments of petrochemicals. Group chairman Mukesh Ambani is bullish about Reliance Infocomm's capability. Says Ambani: "Reliance will achieve the same success, if not more, in the Infocomm initiative." Critics argue that the group is trying to make up for its lacklustre performance in cellular arena with a marketing blitz for a set of converged services across the nation. Reliance Telecom Limited (RTL) has had 500,607 cellular subscribers in 15 states. This amounts to a market share of 4.77% of the country?s cellular subscriber base of 10,480,430. Ambani, however, points out that Reliance's cellular business is probably the only one in the Indian industry that is making profit. And now Reliance Infocomm is aiming to earn a profit in the first year of its operations. Even as competitors rolled out one network after another and one service after another, Reliance sat on licences for Internet access, national long-distance telephony (NLDT) and international long-distance telephony (ILDT) and fixed service during the last two years. All this would be history when Reliance Infocomm Limited launches commercial services by end-March, with initial focus on CDMA-based mobile service, also known as wireless local loop, under the licence for fixed service. On paper, the mobility is limited to local charging area that may be as large as Delhi, which is the creamiest market for mobile service. In practice, the fixed service providers (FPS) can get around this limitation technically as well as commercially to provide mobility rivalling cellular mobile service. This maneuvering gives any FPS a big advantage over cellular as the entry fee for FPS licence is fixed and thus much lower than competitive bidding-determined entry fee for cellular licences that have so far been built around GSM technology in India. WLL mobile also enjoys other advantages over cellular mobile. Reliance is thus cashing in on policy and regulatory turf that is skewed in favour of FPS licencees. If the ongoing litigation by cellular operators results in a level playing field between cellular and WLL mobile, then Reliance might lose one of the key elements of its winning strategy. Another element of its strategy is the nationwide optical network through which it would provide broadband TV, voice, and high-speed Internet access. This advantage can be offset by infrastructure providers that are creating more transmission capacity than the potential demand. What cannot perhaps be matched by anyone is Reliance's unique selling proposition. And that is the wealth-creating magic of the group's founder, Dhirubhai Ambani, who became a legend by the time he died in mid-2002. The entire campaign for Reliance Infocomm is woven around the legend. The field agents are thus called Dhirubhai Ambani Entrepreneurs (DAEs). The software and content developers are dubbed as Dhirubhai Ambani Developers (DADs). The best value tariff plan is named Dhirubhai Ambani Pioneer Offer. The logo for Reliance India Mobile service carries the founder's photograph with the slogan: "My dream, everyone?s dream." Ambani says: "Making a telephone call cheaper than sending a post card was the dream of my father, Dhirubhai Ambani. Reliance Infocomm has been able to translate this dream to reality by aggressively focusing on capital costs, which we believe are among the lowest in the world."