You are the world’s fastest growing telco. Your customer base is more than the Russian population in less than two years of launch. You have the backing of a conglomerate whose core refining business turns in profits of over Rs 32,000 crore a year. You have taken outlandish bets both at backward integration (branded phones) and forward integration (content from music to movies to TV to digital). The man at your helm deeply believes in the ‘Data is new oil’ adage and sees voice and data services as just a gateway to extracting value in tomorrow’s digital economy, not a revenue spinner.
Would you want to be held hostage to fast and tectonic changes in the digital and tech world? No, not if you are Mukesh Ambani, the richest Indian who is betting India’s largest company’s future on a wild bet called Reliance Jio into telecom and digital services spending over Rs 200,000 crore to set up an all-4G phone network. (4G is short for fourth generation, data rich telecom network.)
We need to go back five years to understand Ambani’s technology bet in telecom when he authorised the setting up of a tech outpost in Frisco – near Dallas in Texas, not to be confused with San Francisco, California. “Telecom is massive distribution channel, and many businesses can fold into it,” said a Reliance executive, who is not authorised to speak to the media. “To make that happen, Jio needs to become more of a technology company than a vanilla telecom services company.”
The Texan outpost has grown into a significant even if small-sized nerve centre for Jio, which is making investments in technologists and projects in artificial intelligence, machine learning, and blockchain technologies. “There are multiple use cases that we can build with these new age technologies,” said the source quoted above.
The office that started to develop applications for Jio and forge partnerships with large technology and devices companies such as Apple, Samsung, Qualcomm, and others is slowly becoming a spout of new technology – and patents – that the telco plans to bring to India in the years to come.
Reliance Jio Infocomm USA, the 100% subsidiary of Reliance Jio set up in 2013, has a second office in Palo Alto besides in Frisco, which is about 28 miles north of Dallas, widely considered the telecom software hub in the US. The Jio unit is one of four such overseas subsidiaries – one more in the US. and the other two being in Singapore and the UK – incorporated to facilitate Jio’s international long distance communication business.
Deep tech, but WIP still
A team of 50-odd people, largely software developers, in Texas is readying new technologies that will shape Jio’s and indeed Reliance Group’s future. “Jio will become one of the (technology) vendors to Reliance Industries,” says a second source, who is also not authorised to talk to the media.
To start with, blockchain is one new technology that Ambani is making a bet on. The second source said that Jio intends moving the distribution and management of SIM cards on to blockchain – with each card with a unique number put on the ledger. “It would make distribution much more simpler and will make it easier to manage the retail network of thousands of small merchants,” the source added.
Once implemented, the blockchain use case can be replicated among Reliance Retail’s suppliers. “Managing supply chain is a critical aspect of the retail business… there are so many parts to it. Once blockchain is implemented, it improves transparency and reduces wastage and leakages,” a third source with the company told FactorDaily, adding this deployment could take time.
Insiders have said that Reliance’s big plan is to integrate its retail network with Jio users by offering discounts and bring in tie-ups with consumer brand. It is already in talks with kirana stores to use the Jio phone network and point-of-sale machine. “We will see how to put the couponing system onto blockchain,” said the second source.
The other area where work is being done is on cash flow and credit management. When orders are placed with suppliers, for instance, some money is paid as advance. Once supplies start coming in, the remaining payments are to be made. “Managing ledger for these suppliers is a lot of work. There will be more transparency with implementation of blockchain,” the second source said.
And, why is this being spearheaded from the US? “Talent in blockchain, artificial intelligence and machine learning is scarce in India. Talent is (relatively) easily available in the US… We need to be present where the action is,” said a fourth source.
Jio is also planning to set up a unit in Estonia, news daily Mint has reported. Estonia is considered the most friendly global jurisdiction for cryptocurrency and blockchain companies and after the recent clampdown on such businesses in India, several companies are moving to Estonia via the country’s e-residency program.
Networks, people, patents
Blockchain is not the only area where Jio is making investments – a large number of patents are being filed in the area of network technology. Jio is the only 100% 4G telco in India. This means that just 15% to 20% of the bandwidth is used by voice calls, leaving the remaining for internet browsing, online shopping, watching movies, listening to music, and other uses.
Besides telecom and blockchain, the Frisco team has members with backgrounds in AI, machine learning, internet of things, among other technologies. The people heading R&D in such frontier technologies seem to operate out of the US subsidiary.
A key executive is Gautham Reddy, the director of product design at Jio since July 2013. Reddy had earlier worked at Motorola, AT&T Wireless, and Metro PCS, where he worked as the technical head of mobile devices and applications. At Jio, he was involved with the Jio Chat app, the company’s messaging application, and did work that ended in patents relating to communication processing and applications that work over Voice over Wifi (VoWiFi) and voice over long-term evolution (VoLTE) service, show patents filed with the United States Patent and Trademark Office. There are other patents Reddy and his team have filed at USPTO.
Jio has been filling for patents in India, too. According to a PTI news report, the RIL’s annual report for 2016-17 stated that Reliance Jio had applied for 54 global patents. This helps given that patents are protection given by jurisdiction. “Patents are territorial in nature and companies usually file patents when they want to protect their product in a particular territory,” says Sai Krishna, managing partner of Sai Krishna and Associates, an intellectual property legal firm.
The US unit is also working on AI projects. Research firm Markets and Markets predicts the global AI market at $21.46 billion this year and to top $190 billion by 2025 – a compound annual growth rate of 36.62%.
“That’s the future. It will help us understand what the customer wants, what’s their behaviour and how to serve them better,” the third source said. This, it is expected, will work especially in serving new user segments such as new rural cohorts of customers. “As the machine is fed with more data, and more customer interact with the platform we will be able to offer better services… it is learning that happens with time,” the first executive said.
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Visuals: Rajesh Subramanian
Disclosure: FactorDaily is owned by SourceCode Media, which counts Accel Partners, Blume Ventures and Vijay Shekhar Sharma among its investors. Accel Partners is an early investor in Flipkart. Vijay Shekhar Sharma is the founder of Paytm. None of FactorDaily’s investors have any influence on its reporting about India’s technology and startup ecosystem.