Operators round the world watch India’s Reliance Jio with a mixture of envy and fear, because of the way the new mobile entrant has disrupted the market in less than three years of commercial services.
First its low cost 4G-only services, underpinned by a low cost, greenfield network, sparked a price war and a wave of mergers and acquisitions among established MNOs. Next, it overtook first Bharti Airtel, and then Vodafone Idea, to become India’s largest mobile operator by subscriber numbers.
Most immediately, its success has been driven by its low tariffs and strong marketing. But playing the price war card can result in a Pyrrhic victory if success comes at the cost of profitability. So Jio has focused on two ways to continue to undercut its rivals’ prices while building a sustainable business model for itself.
One is to achieve very low operating costs for its network, by harnessing open systems and software-driven architectures, and working closely with device and equipment makers to drive out cost.
The other is to diversify its services so that consumers can add smart home, digital money, fixed broadband, video content and many other products to their Jio account. Each element may be cheap, but Jio aims to secure a rising percentage of each customer’s total digital spend.
Jio executives bridle when people refer to the company as an operator – they want the firm to be perceived as a digital services provider. This affects the pattern of its investments – highly software-driven to reduce opex costs and with a capex-light model in certain areas (significant amounts of asset sharing with other operators where possible); though to support a new strategic service where ownership of a superior network can provide competitive edge, Jio is very ready to spend large sums, thanks to the deep pockets of its parent, Reliance Industries (RIL). Its deployment of fiber, to enable home broadband, video and quad play services, is an example.
But it is as a mobile operator that it is currently most disruptive, and its ascent to the number one spot, which has taken only three years of commercial operations, has come at the cost of several players which have been forced out of the market – including Reliance Communications, the MNO which was owned by the brother of RIL’s chairman Mukesh Ambani, and has now filed for insolvency; and Idea Cellular, which was acquired by Vodafone, to become the largest MNO, briefly, before Jio overtook.
Jio’s low cost model is essential to its disruptive capabilities. RIL will not tolerate huge outgoings forever and Jio will always need to be able to undercut rivals in any services it launches, which means keeping its networks agile, open and cost-effective to run. It has stolen a march on older operators by taking advantage of its greenfield status, to negotiate new relationships with a varied supply chain; and to import methods and processes from the IT, digital and open source worlds.
It does not behave like a telco in terms of its network platforms or its development and operational processes. It has made heavy use of techniques like continuous development (CD) and DevOps from day one – techniques which are well established in the web world, but in the earliest stages in the telecoms market.
This approach also leads it to work with companies that are more commonly seen in IT environments than telecoms – according to LightReading, Jio uses the enterprise applications provider SAP for its business support systems, alongside HPE for service assurance. This shows Jio making use of vendors which are used to working with web and enterprise customers, rather than telcos, and can introduce best practice from those industries.
But SAP is said to have reworked its software stack significantly to support telco processes such as online/offline charging, billing and customer relationship management. This would have been worthwhile to give the German firm a rare foothold in the telecoms market, and is typical of how Jio works with its supply chain. Even in the network itself, it has a track record of choosing second tier vendors, such as its base station provider Samsung and small cell supplier Airspan – they have a greater eagerness to modify their products (and their prices) to suit Jio, than the big three OEMs.
This approach sees Jio influencing the direction of its suppliers’ roadmaps, and gaining semi-customized products for the price of off-the-shelf – its relationships are more like those seen between Japanese or Korean operators and their closest vendors.
As well as working flexibly with established vendors, Jio also plans to make heavy use of open source platforms to extend its supply chain further and reduce its costs. It has already developed its own SON (self-optimizing network) technology, called JioSON, inhouse and says it has plans to contribute it to open source, to help break the close ties that still bind many SON systems to particular vendors’ equipment.
It acquired Radisys, a software stack provider which has been a leading light in the Open Networking Foundation’s CORD (Central Office Re-architected as a Datacenter) project, which aims to define open, interopable core and RAN architectures. This means Jio has significant open source integration expertise inhouse now and says it will use Radisys’s skills to accelerate its progress in 5G, IoT and open source architecture adoption.
Jio says it will also introduce more open source elements to its OSS/BSS, alongside its conventional systems. Last year, it joined another telco-driven open source project, the Linux Foundation’s ONAP (Open Network Automation Protocol).
Its latest move is to set up an IoT taskforce, initially focusing on applications which complement its existing digital services in the smart home and connected car – in particular, it is developing home security services using NB-IoT, which Jio has started to deploy in LTE guard bands; and vehicle tracking using wideband LTE.
For these IoT applications, which may eventually involve very large numbers of devices, Jio is planning to build its own OSS/BSS, separate from that running the main mobile services, according to LightReading. This OSS/BSS would be based on open source components to allow it to scale more quickly and easily than established solutions, and to support large volumes of devices cost-effectively. The operator is currently trialling open source options for orchestration, service quality management, inventory and number management systems. If the homegrown, open OSS/BSS is successful for IoT applications, it could be extended to support other new Jio efforts such as home broadband and enterprise services, and in time the mobile network.
This is how operators are looking to redefine their costs and their relationships with suppliers, but it is not only about price competition – open source platforms harnessing modern, web-style processes and containerization will also make an operator better able to scale up, or adapt to new services, more quickly than rivals. Jio learned that lesson when it launched its mobile services in 2016 and struggled to scale up its software systems sufficiently quickly to support the huge numbers of subscriber sign-ups.
With its eyes on equally rapid take-up of future IoT, smart home and enterprise services, it will be leveraging a very different type of platform, one which its main competitors may find hard to emulate.