How Jio's network kicks ass!

Jio just announced that they're ready for 5G deployment by next year. How can they be ready so quickly when the rest of the sector is busy evaluating whether it even makes sense to do so? Let's understand how.

Leapfrogging - Generally bigger well-established companies improve their services/profits through small incremental changes. However sometimes, other companies come up with a new technology and that disrupts the whole space, leaving the previous incumbents in dust.

Jio has done the same with telecom.

Before figuring out how Jio leapfrogged others, it's important to understand how telecom systems work. In simple terms, there are two legs of a telco system.

The first one is the network station which connects with the mobile devices (which we fondly called 'tower').

The second leg is the backbone of the system connecting different 'towers' into a network. Traditional networks have a network of switches while Jio has a fiber-optic backbone.

To enable 5G speeds, each telco has to setup 5G enabled 'towers'. They also have to buy the spectrum to enable it. That would take care of the first leg.

But the backbone is where Jio beats everyone else.

Jio is the world's first and largest all-internet telco infrastriucture. So, when you call a friend, your voice is converted into small data packets and sent over to your friend just like a photo or video on internet. Reliance has spend 150,000 crores building this fiber-optic network over several years.

Other players have 'a network of switches'. When you call a friend in another city through a traditional network, you're connected to them through a series of switches. Imagine having a direct wire connected between you and the buddy. Whatever you say is output to them directly. Your connection is direct in a way. But this also means the network can support limited people and speeds. So, in order to catch-up, other players would have to invest huge amount of money.

The double whammy is that they're already under 150,000 crores of debt load while Jio just reduced their net debt to 0. It's fairly clear who's going to lead the Indian 5G story.