RIL's Motive To Participate in 2G Auction

Reliance Industries Ltd. (RIL) is all set to participate in the upcoming 2G auctions, reports Economic Times.

This is likely to shake up the market, to say the least. The company has a pan-India Broadband Wireless Access (BWA) spectrum which it has decided to use to offer Long Term Evolution Time Division Duplex (LTE TDD) services. Himachal Futuristic Communications Ltd. (HFCL) is reportedly deploying optic-fiber network for RIL for the forthcoming launch of 4G services.

The main reason of RIL's participation in the 2G auctions could be that they have figured out voice offerings will continue to be the key for some more time. Though data services will become popular, the LTE ecosystem is not yet developed and the slow uptake of 3G services suggests that the mass uptake of data services is still some time away. Which means RIL would need to offer voice services for mass the appeal.

Even if RIL participates in the forthcoming auction, it will be some time before the company is able to set up the network to offer voice services. The company might be thinking of acquiring additional 1800-MHz spectrum which can be used for offering both 4G and 2G spectrum now.

Since only 10 MHz of spectrum is being auctioned, the price of the spectrum is likely to go up significantly, much to the delight of the government. A high price will set up a precedent for the forthcoming auctions as well.

Entry of a giant like RIL in the voice segment will be a disruptive move and is likely to change the contours of the industry. Bellwethers like Bharti Airtel Ltd. and Vodafone India must be holding their breath and watching!

Gagandeep Kaur, Editor, Light Reading India