Reliance Jio is planning to get VoIP Licence : Bank of America-Merrill Lynch

Jio Chat
With a government panel upholding the principles of net neutrality, Reliance Jio will possibly look at acquiring a VoIP (voice over Internet protocol) licence but may not offer free calls through this route, a research note said on Friday.

Besides, international revenue of telecom operators may remain under pressure as traffic would continue to move to VoIP players who offer free calls barring nominal data charges.



"Given R-Jio's lack of traditional voice offering and considering that its Vo-LTE (4G) offering may not be mature immediately, we see a possibility that Jio may look to acquire a VOIP license," Bank of America Merrill Lynch (BofA-ML) said in a research note.

"In such a scenario, we do not see the possibility of free VOIP calls being offered," it added.

An official panel on net neutrality has proposed regulation of domestic calls on Internet-based apps like Skype, Whatsapp and Viber by putting them on par with services offered by telecom operators.

Commenting on this, BofA-ML said this is slightly positive for existing telcos like Bharti/Idea, "as cannibalisation of voice revenues from VOIP uptake will likely be slower".

According to BofA-ML, existing OTT (Over the top) players like Skype, Viber, WhatsApp and Google Talk may give OTT license a miss as these companies are not telecom service providers and may not make an exception for one country.

"However, the home grown OTTs like Jio chat/Hike may possibly opt to take the license which may allow them to gain traction in the messaging space which is currently dominated by foreign OTT players," it added.

The report however noted that since VOIP traffic is difficult to monitor, the arbitrage opportunity between international VOIP and domestic VOIP may lead to increase in illegal VOIP traffic.

"VOIP traffic (whether it is domestic or international) is difficult to monitor, and the arbitrage opportunity between international VOIP and domestic VOIP may lead to increase in illegal VOIP traffic," BofA-ML added.

"Let me make this very clear that this is not a government report. What I said in Parliament that Narendra Modi government is committed towards providing non-discriminatory Internet access to all the citizens. The details of the architecture are being worked out," Prasad said on the sidelines of Infocom 2015 event organised by ABP Group.

Telecom operators, which have hailed the report, contend that they are under financial distress and there should be a level-playing field between them and Over-the-Top (OTT) players like WhatsApp and Viber, as these apps are eating into their revenues while using their infrastructure.

The pricing difference is around 12.5 times in the case of a voice call and 16 times for messages between services offered by telecom operators and OTT players, data put together by TRAI showed.

For a one-minute phone call, a customer is charged around 50 paise, but a call made using Internet costs 4 paisa to customer, according to TRAI calculations.

They added that "a non-level playing field can adversely impact investments telecom operators are making".

Indian telecom operators have said their cumulative investments in the sector stand at approximately Rs 7.5 lakh crore and further investments of around Rs 5 lakh crore will be required in the next five years to meet the demand.

OTT players, on their part, have said their service has led to a boom in Internet business, which is providing "robust growth to the business of telecom operators".

The panel has opposed projects like Facebook's Internet.Org, which allow access to certain websites without mobile data charges, while suggesting that similar plans such as Airtel Zero, which heated up debate on net neutrality, be allowed with prior clearance from TRAI.
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