Jio Eyes Own 5G Kit

Huawei’s absence opens the door to fresh networking approaches

Jio Platforms, a subsidiary of Reliance Industries and owner of mobile operator Jio, is reportedly developing its own 5G networking equipment to build out its 5G network in India. Telecom operators around the globe typically work closely with suppliers like Ericsson, Huawei, Nokia and Samsung for infrastructure hardware. However, the growth trajectory and diverse talents of Jio, along with those of Reliance Industries’ family of companies, could help it succeed with a more independent approach on which it can grow further.

Mukesh Ambani, chairman of Reliance Industries, had formally declared the company’s goals in 5G at its 43rd Annual General Meeting in July 2020. He said, “Jio has created a complete 5G solution from scratch that will enable us to launch a world-class 5G service in India, using 100% home-grown technologies and solutions”. India is expected to hold a 5G spectrum auction in 2021.

Normally, wireless operators don’t build their own infrastructure equipment. But Jio has proved time and again that it’s no ordinary operator. Its track record of approaching markets with new business models built on being part of a much larger organization should always ring alarm bells for existing players.

Jio Platforms may have concluded that the geopolitical climate has created a vacuum for wireless networking equipment. Specifically, it may have clocked an opportunity to fill the void created by Huawei’s absence in a growing number of markets, as mobile operators in many countries have either banned or been discouraged from using equipment from Chinese suppliers.

Jio Platforms will have the advantage of having its mobile operator business as its first customer: with about 400 million subscribers, Jio is one of the world’s largest wireless service providers, in the world’s second-largest market by population. It’s a country forever eager for more connectivity, and given how quickly the operator grew from zero subscribers — Jio launched in December 2015 — it could build scale in 5G very quickly.

Still, its move isn’t entirely unprecedented. Earlier in 2020, NTT, parent of Japanese operator NTT Docomo, took a near-5% stake in NEC, its main network equipment supplier, in a move that we believe was motivated by efforts to break the dominance of traditional infrastructure suppliers.

Once Jio Platforms builds out a 5G network for its operator business, it may look to expand into other markets, bringing more competition to Ericsson and Nokia. Already, new technologies such as Open RAN threaten to create a wider range of network suppliers as operators search for a more diverse ecosystem.

The impressive success of Jio over the past few years has seduced partners and financial backers from around the globe including Facebook and Google, both of which have invested in Jio Platforms, and are looking to expand their services to underconnected markets (see Jio and Google Pair Up for Smartphone Push and Social Experiment). For the most part, Facebook and Google offer their services in exchange for personal data, building an information bank around regions and users, enabling marketers to optimize their sales efforts.

The potential of new business models running up and down the mobility value chain should concern Ericsson and Nokia. Jio has deep pockets and tenacity; it has proven that it can use other profit-generating family businesses to build out its wireless unit. The operator has shaken up the telecom market in the past and we believe it can do this again for the infrastructure market, working with partners to enable relentless service pricing cuts, supported by longer-term ambitions.