Ever since the 4G telecom auctions, the focus has been on the biggest winner, Reliance Jio Infocomm Ltd, which bagged the pan-India unified license. Last month Reliance Industries Ltd chairman Mukesh Ambani reiterated his company’s push in the area with a commitment to invest ₹ 70,000 crore in the business. The rush for 4G services is understandable, given the scorching growth of smartphone usage in India. What has been less obvious is why Reliance Jio’s 4G services are being linked to a parallel content strategy, almost as if the two go hand in hand. Even when Reliance Industries bought out promoter Raghav Bahl and took over media conglomerate Network18 Media and Investments Ltd, speculation had been rife about how this would fit into its business plans because Network18’s various properties would provide content for the telecom business.

In his speech at the company’s annual general meeting, Ambani did refer to the acquisition but did not call it a content play, merely dubbing it “one aspect of the digital services play" aimed at differentiating and strengthening its “4G business at the unique intersects of telecom, Web and digital commerce, and the media through a suite of premier digital properties."

Just why would Reliance Jio need Network18’s content? The media company’s content would be important for Reliance only if it were then made available to customers exclusively through Reliance Jio. Which means Network18 would not allow its channels to be accessed through other cable and DTH providers, and would not allow its websites to be accessible through other ISPs.

In the other case, if Reliance Jio decided it would carry only Network18 (and other Reliance-owned) content and not that of any of its rivals, there could be a justification for the acquisition as a source of captive content. Of course, Reliance Jio has the third option, of pursuing both of the above.

But would it? In all three cases, the value of Reliance Jio to customers would be drastically reduced with any such exclusivity. What sense would this make?

Worldwide there is no signal carrier (TV or Internet) which believes that the pipes it builds must carry its own content. It isn’t as if no one has tried. There were a few early attempts but none that met with any success. Among the spectacular failures was the one which resulted from the disastrous marriage in 2000, when AOL purchased Time Warner for $164 billion. At the time, the strategy seemed smart enough—together, the two market leaders would provide AOL’s customers with proprietary access to Time Warner’s rich and diverse content. This would give the merged entity a clear differentiator in the Internet service providers (ISP) space, leading to many more customers for AOL and simultaneously providing a revenue stream for the digital content. What drove that business model was the assumption that AOL customers considered proprietary content a big deal.

It seemed like a win-win but very soon it became evident that such exclusivity was the kiss of death. Two years later, AOL Time Warner reported a loss of $99 billion and the marriage was well nigh over. Time Warner chief Jeff Bewkeslater dubbed the AOL merger “the biggest mistake in corporate history". Synergy aside, the belief that a carrier could enrich its service by offering captive content, led to a serious erosion of its customer base.

If Reliance Jio becomes the behemoth it wants to be, it will have a vast audience of paying customers, all presumably thirsty for its branded content. But how far would the company take this strategy of owning its own content? Would it for instance, create an exclusive social network called Relbook, an exclusive search engine called Reloogle or even a microblogging network called Relwitter whose members call each other Releeple, all available exclusively, only on Jio? It makes as much as sense as Bharti Airtel Ltd or Vodafone India Pvt. Ltd providing customers with people to have conversations with.

Instead, the speed which 4G will offer to users suits such services as live TV, video-on-demand as well as online storage. In addition, Reliance’s biggest asset for its fledgling 4G foray is sitting in its 1,691 stores across 146 cities. Shopping is the third most popular category of search after email and social networking with over 70% of smartphone users in India accessing online shopping websites, while also comparing products and prices. All the indicators show that digital commerce is gaining massive traction with Indian smartphone users.

Reliance Jio and other 4G players will certainly need a content strategy to woo customers and push usage. That content may, however, need a redefinition.

Is content exclusivity a viable business strategy? Tell us at views@livemint.com

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