Few Annual General Meetings in corporate India elicit as much anticipation as Reliance Industries Limited’s (RIL), whose telecom business has been a showstopper lately. Today, Reliance Jio Infocomm will reveal its cards vis-a-vis JioGigaFiber, a wired broadband service that has been in beta testing for over a year.
It’s no improbable high-wire act. Instead, the industry expects a replay of Jio’s wireless service launch of 2016—high data speeds at unbelievably low prices to kill some, if not all, competition. Except, according to some Jio field executives, the exuberance is more muted this time.
In the southern state of Kerala, for instance, Jio cut down its multiple-city GigaFiber rollout to just three big cities—Kochi, Calicut, Thiruvananthapuram. It even opted for cheaper modems that allow far lower data speeds than the promised 100Mbps.
Up north, after rolling out 300-400 feeder networks in some cities, Jio understood costs wouldn’t justify the returns and shelved plans for 100% underground fibre. Instead, it has been deploying fibre aerially, too. Digging is expensive; getting right of way permission to dig is even more expensive—Rs 5,000 ($70) to Rs 1 crore ($14,100) per kilometre. And above all, the subscriber hit rate is only 25-30%. In other words, if the fibre crosses 1000 homes, only about 250-300 opt for the service, according to multiple industry sources.
The low hit rate explains why India’s third largest telco by subscriber base, Bharti Airtel, has fibre access to 10 million homes but only 2.5 million broadband subscribers, and why Jio’s promotional ad promises a quicker roll-out of GigaFiber in areas where it receives more requests for the service.
But this story isn’t about how companies rushing for wired broadband will make money. Or whether, like its wireless services, GigaFiber is addressing a supply-constrained or demand-constrained problem. It’s about optical fibre—the bundle of glass tubes in polymer sheaths that can be modulated to transfer high bandwidth light signals—which packs a huge punch for debt-ridden telcos and their stressed networks. As fibre to the curb, telecom tower, home or building, it is the only transport media scalable to current and future demands of data or content flow. No surprise why after hiving off their fibre assets into separate companies, Airtel, Vodafone Idea, and Jio are seriously seeking investments into them.
In late July, Vodafone Idea hired investment banks Morgan Stanley and Bank of America to sell its fibre assets for as much as $1.9 billion. Earlier, in April, RIL hived off its fibre asset into Reliance Digital Fibre Pvt Ltd and set up an infrastructure investment trust (InvIT) called Digital Fibre Infrastructure Trust (DFIT). DFIT now owns 51% of Reliance’s fibre company and is looking to attract investments, just like its fellow trust, housing Jio’s telecom tower business, got $3.7 billion from the Canadian asset management company Brookfield in July.