RJio Struggles As Airtel 4G Service Speeds Up
In September, when Reliance Jio 4G services were launched, it was being touted as the biggest industry game changer for the future, primarily because of the ‘free offerings’ it had for consumers. But as the months pass by, it seems Reliance Jio has a bigger race to compete in, when it comes to quality of services, especially related to internet speeds, where it lags behind industry rivals.
According to a Hong-Kong based brokerage firm CLSA, Reliance Jio 4G speed in October was 7.2 Mbps, whereas rival Airtel had an average speed of 11.5 Mbps, Vodafone 9.1 Mbps, Idea Cellular 7.6 Mbps. Even as the war for interconnectivity between Airtel and Reliance Jio heats up, this development ought to give Airtel a headstart towards leadership in the area of 4G internet services.
In terms of the volume game, Reliance won a war from the very outset. With the promises of free voice and data services, bought on a huge rush of new consumers ready to avail the ‘free benefits’, adding on 16 million subscribers in the month of September, which is significantly more than the rival and industry 4G speed leader, Airtel, who added 2.43 million subscribers in the month, Idea adding 1.91 million users, and Vodafone adding 525,279 users in the month, as per data furbished by the Cellular Operators Associations of India (COAI).
While it all seemed hunky-dory for Reliance to capture and rule the market, issues with regards to the applicable terms and conditions, and also the infrastructure problems as pointed out with the interconnectivity issue, put Reliance on the backfoot in the months to come.
Mahesh Uppal, director of consultancy firm ComFirst, raised a few other valuable points which has stopped Reliance from being a leader yet. He said: “In the telecom business, incumbency is a major advantage. It’s very difficult to dislodge the incumbents. Secondly, the reports from the market about Jio are not uniformly great. While some people have access to good cheap data, experience of others is not so good. Also, consumers have a degree of inertia when it comes to changing operators. In the absence of unambiguous market data, people seem to be reluctant to abandon incumbents.”
Even though there are some numbers to indicate the favorable position of Reliance Jio 4G, there is enough data to prove that the other measured variables show otherwise. As reported with IE, Telecom Regulatory Authority of India (TRAI) chairman RS Sharma had received a letter on September 14, which detailed out the number portability details, post the launch of Reliance’s services.
As per data, only 201 requests were made for porting previously used numbers to Reliance, in which, 83 of them were made to Bharti Airtel, 56 to Vodafone India, and 62 to Idea Cellular. Needless to say, despite the severe rush to get Reliance connections, the actual response to Reliance 4G has been lukewarm.
However, in the months to come, the rivalry ought to get more severe. Immediatey after Reliance had introduced its offers, rival companies, also banking on years of customer loyalty, bought out competitive offers which actually retarded the growth of Reliance Jio 4G connections. However, despite the measure the rivals have not followed the ‘pricing’ method to maintain it’s position.
Uppal explained, “The incumbents also have done as they were expected to, and have tried to not be beaten hollow on price by responding as any incumbent would to a price-cutting competitor. And hence while they have not lost significant market share, they have lost revenue as recent results show.”
While the numbers like September ending quarter showed a decline in net profits for Bharti Airtel, from Rs 1,462 crore to Rs 1,460.70 crores, as compared to the previous quarter, it will be interesting to watch in the coming months, as Reliance’s free vice call offers end in December 2016, while some are speculating it could extend to May of 2017.
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