Inside Reliance Jio’s game plan for 5G

In March, press reports created a buzz in the Indian telecom industry: Reliance Jio has replaced Nokia and Oracle’s 4G voice technology with their own components, and built end-to-end network gear for 5G, the reports said, illustrating how India’s largest telecom operator is now capable of building network equipment.

However, no major swap had taken place, Nokia’s Chief Marketing Officer Barry French clarified on the company’s website. Jio had replaced only one among the dozens of Nokia’s components in its core network and the European company’s technology continues to power Jio’s infrastructure.

Four months later, at Reliance’s 43rd Annual General Meeting in July, Jio’s chief Mukesh Ambani formally declared the company’s ambitions: “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.”

The company, however, has yet not shared details on how it transformed itself into an equipment provider with the capacity to build network technology from scratch, and how it solved India’s decades-long challenge of boosting local telecom manufacturing—90% of telecom gear is currently imported.

Interviews with 5G researchers, telecom engineers, industry analysts and a review of public statements by Jio officials suggest it is unlikely that the telco is building a network from scratch with 100% indigenous technology. “Jio is not going to be ‘making in India’,” said Shiv Putcha, founder of Mandala Insights, an analyst firm focused on networking technologies. “Jio has made acquisitions and investments that will help them build the network, but they are not getting into manufacturing per se,” he said.

Instead, Jio is integrating different components of the telecom network, building some on its own, procuring the rest—a strategy made possible by a global push towards open standards and softwarisation of telecom networks.

“The electronics and component manufacturing ecosystem is not quite ready. It will take several years for India to get there,” a senior Reliance Jio executive said on the condition of anonymity. “Even if we accelerate, it will take time for end-to-end manufacturing.”

“What is possible for now is design locally and build components in Taiwan or Korea,” the executive added, explaining that Jio aims to control design and Intellectual Property. But even with that, he said, “our strategy would be a mix of buy and build.”

What also matters is the version of 5G Jio wants to build in the near future: the company is lobbying to push a deployment strategy in telecom standards called Option 6, which, experts said, can’t exploit the full potential of 5G. It will save costs for the company, allowing it to leverage parts of the existing 4G network for providing 5G service, at least initially. The outcome will likely be a better version of 4G with higher capacity, rather than the “true 5G” the world is anticipating.

Jio did not respond to Mint’s detailed questionnaire.

Homegrown networks
There has been a growing call worldwide for homegrown telecom networks. While China leads the world in 5G, there is reluctance to use Chinese products, owing to the suspicion that Huawei and ZTE deploy backdoors in their equipment to snoop on data on behalf of their government. The US, UK and Australia have already banned Chinese products in their network gear. While India has not announced a formal ban, it practically remains so, especially following the escalating Indo-China border dispute.

For Jio’s perspective, European vendors like Nokia and Ericsson, which appear relatively trustworthy, are expensive. The market is heavily concentrated among the big giants, leaving little choice for telcos. “Equipment vendors sold end-to-end network devices, both software and hardware, as fully-integrated proprietary solutions,” said Dr. SaiDhiraj Amuru, adjunct assistant professor at IIT-Hyderabad. “Telcos realized that this dependency was hurting them and they had no bargaining power,” he said.

Vendors enjoyed this power because telecom networks involve complex engineering. It has two major parts. One, the radio access network, or RAN: the primary wireless component which connects your phone to the nearest base station, and includes hardware components like antennas and towers. Second is the core network: once the signals arrive at the base station, it connects to a more software-focussed core that links to the wider internet.

As the dominance of vendors started pinching operators, they accelerated the process to find alternatives, culminating in an open source movement called Open RAN. The idea is simple in theory: instead of buying the entire network from one company, get each component from a provider of your choice, and integrate it at your end.

This shift—which is fundamental to Jio’s ambitions—is best illustrated through the radio part, which consumes a bulk of the capital expenditure that is required to build a wireless network (estimates range from 60-80% of the total capex costs). “Open RAN aims to break the big black box of telecom networks into several small black boxes. You can pick individual boxes from different vendors or build your own,” Amuru explained.

The key thing is for the boxes to have the ability to talk to each other through established standards, which Open RAN aims to accomplish for the first time with 5G deployment. In December 2018, Jio joined the ORAN Alliance.

Jio’s version of 5G
The focus on Open RAN is important for another reason: it is linked to the version of 5G Jio wants to build for India in the near future. Broadly speaking, there are two deployment modes: standalone and non-standalone, and each has variants depending on how the radio part of the network connects with the core.

Most 5G deployments plan to begin with one of the non-standalone mode options, where a 5G radio co-exists with 4G radio, and both connect to the 4G core—this is option 3. That came up because operators wanted faster deployment, and did not want to wait long enough for core development to finish to roll out 5G. A software upgrade in the 4G core will allow the network to understand messages coming in from 5G radio.

Eventually, the idea is to move to a standalone mode, where 4G components are phased out, and a 5G radio connects to a 5G core.

But Jio has a unique problem. In September 2019, at a conference hosted by the Indian Council of World Affairs (ICWA), Satish Jamadagni, vice president, network planning engineering at Reliance Jio, and vice chair of Telecommunications Standards Development Society, India (TSDSI), made a revealing statement: The non-standalone mode is not suitable for India (at least Jio) as the 4G network is running at almost full capacity due to an exponential rise in user base.

“In our country, LTE [4G] cells are 90-98% clogged,” Jamadagni said, in contrast to other countries which are at 5 to 40% capacity. “We are already clogged.” “We are being forced to move into something called a standalone option,” he added. Jio doesn’t want to invest in a 5G core in the near future and is pushing for Option 6 deployment: a standalone strategy where 5G radio connects with 4G core.

“The whole 5G core is a sham,” Jamadagni said. “Why should I be willing to pay 500 million to 1 billion dollars for it? Why would I want to deploy it?” he asked. 5G core is functionally the same thing as a 4G core—especially if you virtualize it—and brings no additional benefits, he claimed. “You please advance in your technology. We want to be behind. We are happy with being behind. If it takes a billion dollars, we are perfectly happy being behind,” he said, in reference to 5G core.

Independent experts don’t agree with Jamadagni’s characterisation.

Shivendra Panwar, a professor at New York University and a researcher at NYU Wireless, said: “You can’t get all the advanced 5G features with a 4G core. There are too many delays built in and you can’t get low latency communication,” he said with regard to Option 6. One can expect improvement in broadband applications—like video streaming and downloads—which would keep subscribers happy, he said, and that may be all that Jio wishes to do for now.

Sandeep Nag, director of 5G at Capgemini, and a former employee at Jio, echoed Panwar’s concerns about Option 6: “Enhanced mobile broadband will be possible but you can’t guarantee end-to-end slicing that delivers quality of service for mission critical use cases like remote surgery and time sensitive industrial manufacturing,” he said. “Vodafone India is doing trials on option 3 with Nokia,” he said.

In an emailed response, Jamadagni said his remarks don’t constitute “Jio opinion” and were made in his capacity as vice chairperson of industry standards body TSDSI.

The patents puzzle
But even to create this version of 5G with homegrown tech is not an easy task. To build the radio box, for instance, antenna and chipset suppliers are required, among others. How will Jio build each of these components from scratch, using 100% homegrown technology?

Huawei spends around $20billion annually in research and development—45% of its workforce (~80,000 employees) doing just that. A recent study found that six companies (Huawei, Samsung, LG, Nokia, Ericsson and Qualcomm) owned 80% of the most closely connected patents to the 5G standards. Huawei has the highest count: 2,386. In contrast, Jio has just 29 patents—all technologies included. It is not clear how many are 5G related.

At the ICWA conference, Jio’s Jamadagni argued that the firms developing the new process architectures are small startups: “If we shell out about two hundred million dollars, we can buy off a few companies in the US and we are done. We are on par with anybody on the computer side.”

Reliance has begun to do just that. In 2018, the company acquired US-owned Radisys which has a presence in Bengaluru. The startup, which had built expertise in open systems and virtualisation, is now working on Jio’s Open RAN software stack, analysts said. “The Radisys acquisition was the first signal that Jio wanted to be more than a telecom network and wanted to create bits of the network on its own,” said the UK-based technology analyst Dean Bubley, founder of Disruptive Analysis, a consulting firm.

India also has an emerging ecosystem of companies specialising in network equipment and software: SignalChip, Saankhya Labs, Tejas Networks, Sterlite Technologies, VVDN Technologies, among others. Technology built by these Indian companies can contribute to different parts of the Indian 5G network stack.

But how far can Jio go with its 100% homegrown technologies claim and how does it want to pace it? “There is going to be more localisation of some pieces, but everything cannot be localised. You still need Silicon; you still need antennas. The network will have these physical components,” Bubley said. “It ultimately depends on how you define what is a national supply chain.”

In the eyes of the industry, the company’s trajectory closely resembles that of Rakuten, rather than Huawei. Rakuten is a Japanese e-commerce giant which is now embracing Open RAN to get into the telecom business. There is even a common link between the two firms: Tareeq Amin, the CTO of Rakuten, earlier held a senior position at Jio, which he joined in 2013 and left in 2018.

Engineers Mint spoke to said that while Rakuten and Jio appear to be on the same track, their public messaging is different: Rakuten is clearly saying they are partnering and integrating, but Jio is claiming they are building all on their own. “Jio is integrating. They are optimising the cost which is a smart business move. But there are no technological breakthroughs,” said an engineer on condition of anonymity.

To be fair, the complete Jio playbook will unravel in greater detail in the coming years. Industry insiders say that Jio’s announcement has boosted the momentum for self-reliance in telecom . With the alignment of geopolitical and business interests, this could be the moment the industry has been waiting for.

But NYU’s Panwar feels India needs to look ahead. “If India truly wants to get in the business, it needs to jump ahead to 6G and do R&D right now, and get international patents. 5G is over in terms of intellectual property,” he said. Live Mint