Until Reliance Jio started, people were joking about Mukesh Ambani’s second foray into the world of telecom as being an unfruitful exercise. There is no doubt that Reliance Jio has had to climb over several technical obstacles on the way towards launching such a massive telecom project across India in a day. The sheer size and population dynamics of India make it an extremely challenging country to launch any product, let alone a product that is intended to be used by a 100 million people. And as such, Reliance Jio has had fairly glitch-free launch, the most notable issue being a potential leak of customer information.
Earlier one used to get data warning messages every month, that one have overused so much data and must buy top-up packs at extortionate prices. And if you are always on your smartphone like we all are, one had no option but to pay. Jio has changed that. For the last year and half one have discovered that one does not have an issue playing streaming music or video over a cellular network. Not just with the stability of the data network, but also the amount of data one consumes. Seriously, watching video over a mobile network was something one would only do if they were absolutely desperate. And one have forked over thousands of rupees to other telecom companies on excess data charges. And no matter what image people had of Mukesh Ambani before Jio, he has certainly transformed that after Jio’s launch.
Jio has swept the Indian telecom market by storm in a short span. Impact is so huge that other Telcos might be pondering for mahagathbandhan to stop the Jio applecart (Idea already planned to merge with Vodafone). But to be fair, more than services, this huge demand can be attributed to the free voice and data Jio offered. Real loyalty test of subscribers will now be seen when the service become chargeable. There are some people who frowns what Jio is providing, murmur their crony government connections and yet enjoying the services they are offering. Well my personal 2 cents on this is Reliance group are the true telecom revolutionaries for India not once but twice.
Two phases of Reliance superiority
There was a time when not only outgoing calls were damn expensive but incoming calls also incurred a hole in pocket. One wrong number and choicest curses were hurled to the caller. Owning a mobile phone was luxury and even invited Income Tax scrutiny (remember VDIS?). In came Reliance with vision of 40 ppm call and dream of providing cellphone to common man. Though they faltered initially at postpaid but then provided such irresistible offers on CDMA sets with prepaid plans which shook the entire foundation of call tariffs. Free calls @440 initiated and nurtured so many love stories, college goers with red eyes were a common phenomenon due to obvious reasons. Jokes apart, that was the actual time when cellphones reached common man. From luxury it became the utility when other operators bowed down to lower the sky high tariffs. Advantage consumers.
There are 2 eras here: Pre Jio and Post Jio. Pre Jio was the era where mobile data speed sucked so badly, it was better to enjoy the nature keeping phone at home. Forget video calls even voice calls over Messengers were such a pain. 1 GB of constipated speed @250 something, they used to call it 3G. In came Jio with plethora of offers and making mockery of existing data plans. Free calls, free data.. Well this ploy could only be executed by deep pocketed Biz house but it succeeded in the plan: making users used to the 4G speed, kill the competitors and then make it chargeable. It created panic across all operators, they cried foul, blocked Jio’s connectivity, few of them left the field, some merged to stay strong but collectively they had to kneel down and offer competitive tariffs to survive. From 1GB constipated 3G data @250 + call charges to upto 28 GB unlimited 4G data @300-500 with unlimited calls… isn’t it a colossal advantage to users! It is also worth pondering how much profit Telcos were minting with data plans which stands exposed with Jio’s entry to the market. This time it could be truly felt that mobile data speed in India is comparable to what we get in western countries.
Rattling the Market
Buyouts, mergers and quick exits—as India’s richest man Mukesh Ambani shakes up the country’s ultra-competitive mobile market, telecommunications companies are scrambling to either consolidate or cut their losses and run. Norwegian multinational Telenor recently became the latest to quit India and analysts expect other brands will disappear as intense price wars sparked by tycoon Mukesh Ambani mean thinning profit margins.
Most of the smaller players will find it difficult to grow by themselves and will be looking for exit options, feels industry experts. India’s multi-billion dollar telecoms sector had a dozen companies battling for customers as recently as 2010. Now, there is around half that number and industry watchers say soon there will be only four.
India’s telecoms sector has long been a risky and costly endeavour for companies. Network operators have to overcome regulatory difficulties to purchase expensive wireless spectrum to provide services that are often plagued by dodgy reception, frequent call drops and fluctuating internet speeds.
But Jio’s arrival has added a new dimension as major players, including Vodafone and Idea, explore tie-ups to match the deep pockets of the Reliance Industries-backed telecoms company, while others are being forced to call it a day. Already many telecom companies are merging with each other to fight this heavy onslaught of Reliance in the market.
Delving into deep
Mukesh Ambani who had lost his fare share in the telecom market 14 years ago with the advent of Airtel and Vodafone, seems determined to wrest back his share. Jio has recently announced a new feature phone named as Jio phone which can be assumed as a market killer in this segment.
Loaded with features, the Jio phone will be available to consumers against a Rs1,500 one-time security deposit which will be fully refundable after three years. A whole host of other schemes, including one called Sachet could see the price of smart phone ownership in the country crashing to unheard of levels. This will further drive the data usage which lies at the heart of Ambani’s game plan for Reliance Jio Infocomm Ltd.
Even as the delivery of these feature phones has just started, it has already created ripples among other feuding companies. According to a report on asia.nikkei.com, “Vodafone India, the nation’s second-largest mobile phone operator, has warned that its revenue is likely to “further deteriorate” in the current quarter amid fears that new entrant Reliance Jio’s move to lure customers with a virtually free handset will exacerbate competition.
In a letter to India’s Department of Telecommunications, dated July 25, the company said the new operator continues to aggressively under price its services, including announcing the launch of “Effective Zero Price Feature Phone,” offering free voice services.”
Whoever wins the consumers with their unbeatable service needs to be seen but the pioneer and real winner already is Reliance for ushering in the data revolution to India which will greatly help in exponential growth of digital business. In this fierce price war the ultimate beneficiary is consumer and they should, for once, say a heartfelt thanks to Team Jio.
By Rakesh Ranjan