Jio vs Airtel: Which one will offer faster and more reliable 5G services?
Reliance Jioand Airtelare both gearing up to launch 5G services, after the 5G spectrum auctions concluded earlier this month.
- Mukesh Ambani-led
Jiohas bought spectrum worth more than twice that of Airtel, spending nearly ₹40,000 crore.
- Here, we try to decode why
Mukesh Ambaniwent all-in on 700MHz and what he might use it for.
AdvertisementThe 5G spectrum auctions are behind us and India’s leading telcos – Reliance Jio and Airtel – are eager to launch their 5G services. But one telco has left its rival, analysts, and even the government befuddled with its spectrum bids.
Jio’s 5G spectrum bids amount to a little over ₹88,000 crore – more than twice what Airtel spent. However, only one spectrum band is responsible for doubling Jio’s total bid – the Mukesh Ambani-led telco acquired 10MHz of spectrum in the 700MHz band, costing it over ₹40,000 crore alone.
Both Airtel and Vodafone Idea stayed away from this band as it’s expensive.
Reliance Jio, whose parent Reliance Industries is sitting atop cash reserves and surplus of nearly ₹4.65 lakh crore, went all-in on 700MHz and paid nearly as much as Airtel did, for just one band.
The only question is, why? We try to understand the possible motivating factors which have pushed Jio in taking a leap that its closest rival did not.
Will Jio 5G be faster and better than Airtel 5G?
Jio’s 5G strategy is to combine coverage with high speeds – without one, the other is useless. Imagine having access to 5G with low speeds, or a high speed 5G network that loses signal every time you blink.
The 700MHz band gives Jio coverage, the 3.5GHz band gives it capacity and the 26GHz mmWave band gives it speed. Put together, these bands make for a 5G network that is fast and reliable, both.
Airtel, for now, is relying on its mid-band spectrum acquisitions to allow it to offer 5G services. Along with the 3.3GHz band, the telco has enough to get started, but analysts believe it might need to acquire spectrum in the 700MHz band at some point in time.
Why did Jio buy spectrum in the 700MHz band?
The 700MHz band is amongst the best when it comes to coverage. Its range extends up to 8-10 kms from tower to tower. This can prove to be extremely useful for quickly expanding coverage in rural and remote parts of the country, and it also offers superior indoor coverage.
“With Jio acquiring 700 MHz, we believe that the company is well placed to roll out standalone (SA) 5G. The advantage of SA 5G is that the company would be able to offer the true low-latency applications, such as slicing. This is difficult for its peers to offer, given the lack of spectrum (telcos cannot roll this out on 4G bands),” a BofA Securities report said.
The downside to the 700MHz band is that not many smartphones in India support it yet, which means Jio will have to help develop the ecosystem in coordination with smartphone companies.
“While 5G SA still lags in terms of handsets, equipment and application, we find Jio better placed than its peers to offer differentiated services. This could help the company poach high-end customers from its competitors – likely increasing competition at the high end,” the report added.
What is the use of the 700MHz band?
The 700MHz band offers low latency, enabling Jio to use the 5G network for things like remote surgery, drone applications, robotics and other machine-to-machine functions.
This sets up the telco in a good place to offer its services to the enterprise segment, which experts believe will bring in most of the money.
Also, the 700MHz band offers drastically longer range at 8-10KM when compared to the 3.5GHz band which offers 1-3KM range, and the 26GHz band which offers a range of up to 200 meters. This will allow Jio to roll out its 5G network much faster since it will need fewer towers to begin with, giving it a competitive edge over Airtel and Vodafone Idea.
What are the analysts saying?
A Kotak Institutional Equities report said Airtel will have to acquire 700MHz spectrum in the future if its coverage and network quality lags behind Jio. This might work out for the Sunil Mittal-led telco, since it frees up cash reserves in the present.
“From a purchasing power parity (PPP) perspective, 700 MHz pricing looks expensive for India, but it gives Jio a massive first-mover advantage in SA 5G rollout, which could help it poach high-end customers from peers,” the BofA Securities report added.
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