On September 1, Mukesh Ambani, the chairman of Reliance Industries, did something that was simultaneously belated but also unexpected. At the annual general meeting of his mammoth company, he announced the launch of Reliance Jio, his group’s mobile network in India.
On the back of a reported $22 billion investment in setting up Jio, Ambani vowed to upend the $50 billion telecom industry using free voice calls, zero roaming charges and aggressively priced data packs.
The launch was belated because Reliance paid over $3 billion for Jio’s core – the 4G spectrum over which it runs – in 2010. Since then newspapers, telecom experts and customers have been prophesying its imminent disruption of Indian telecom.
But the launch was also unexpected because the date Ambani set for Jio’s commercial launch was December 31, a full four months away. In the interim, Jio would offer its services free of cost till then, as a free trial.
Now Reliance is not a company that telescopes its big bang launches in advance. It likes to keep its cards close to its chest till the last minute. For instance, in 2010 no one expected a little known company, Infotel Broadband, to act as a Trojan Horse on behalf of Reliance to become the sole winner of 4G spectrum across all of India for over $1 billion.
It’s possible Ambani’s hand was forced by the powerful incumbent group he was going up against – Airtel, Vodafone and Idea – the three largest telcos in India who collectively account for nearly three quarter of Indian mobile subscribers. Their weapon of choice? Points of Interconnect, or POIs.
POW to POI
At its simplest, a point of interconnect is a place where two different networks are physically connected to each other. For instance, a cable representing traffic to or from Airtel’s network with another for, say, Jio. Without these physical connections, it’s impossible for calls made by one operator’s customer to end up on another operator’s.
POIs are neither very fancy nor expensive, at least at an individual level. Sitting deep within data centers spread over the country (including multiple cities within the same state), they’re boring black boxes with numerous ports behind them, each of which takes in an “E1” cable connection.
What’s an E1? It’s a widely accepted telecom standard that translates to 2 Mbps of capacity, which in turn means 32 simultaneous voice “channels” of 64 Kbps each. At the simplest level, it means one E1 connection is capable of carrying 32 simultaneous voice calls. Because no one ever makes continuous calls through the day, each E1 can handle anywhere from 5,000 to 10,000 subscribers on average.
This is where POIs get interesting.
Telecom regulators around the world, including TRAI in India, pay special attention to POIs because of their criticality to telecom networks and competition.