Reliance Jio to acquire VoIP licence as government panel upholds net neutrality

Reliance Jio would possibly acquire a VoIP (Voice Over Internet Protocol) licence but may not offer free calls through this route, as a government panel upheld the principles of 'net neutrality', a research note said today.

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.

(Image credits: Indiatimes)