Are RJio Competitors Barking Up The Wrong Tree?

by Raj Narayan    Jul 28, 2017

Ever since the Mukesh Ambani-led Company made ‘free’ the new yardstick for mobile telephony, rivals have been crying foul. The question is do they even realize that price wars are just the tip of the iceberg?

Over the past few weeks, the voice of protests against Reliance Jio from older telecom players has become shrill with each passing day. Led by Bharti Airtel, the players have cried foul over a series of issues, ranging from monopolism to price wars and interconnect user charges (IUC). It started since last December’s launch of Jio by India’s biggest corporate Reliance Industries was around the IUC Vodafone and Idea Cellular joined Airtel to seek higher interconnect charges in the backdrop of Jio claiming 99 per cent coverage across India by year-end and a complete scrapping of these charges.

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The current charge of 0.14 rupees per minute is the bone of contention. Reliance is seeking its removal while competitors want to double it to 0.30 to 0.35 rupees a minute. The Jio family appears to have the support of lawmakers who want to know why TRAI is reneging on its pledge to Supreme Court in 2011 that termination charges on mobile calls will end by 2014.

Both the telecom company and the lawmakers argue that such a move would ultimately benefit consumers. However, Airtel and other service providers counter this logic by suggesting that TRAI’s submission was subject to symmetric traffic which is not the case as Jio’s free calls were creating lopsided flow to other networks and that the current IUC doesn’t cover the costs of this deluge. 

They suggest that Reliance is piggybacking on the infrastructure built by other networks and seeking the removal of IUC to throttle competition and build a monopoly in the mobile telephony business. (Read the full story here)

The latest claim has been brought by Idea which asserts that since the JioPhone doesn’t allow apps of other services, it may be in breach of net neutrality laws. Multiple reports about an Idea-made phone are doing the rounds currently, and some also suggest that Idea may be looking to bundle its 4G services with a Rs 2500 phone that does not offer a restrictive internet, app experience.

Read more: Reliance Disruption: Jio Launches A Zero Priced Feature Phone

While all of this might be true, the question is are the mobile operators even aware of how bad things are for them today? On an average day, this writer gets two to three telemarketing calls from AirTel offering MNP and cheaper plans than what’s being currently used via Vodafone.

There’s no doubt that Reliance would continue to reduce the price barrier further till such time that the competition finds it tough to survive. And, once the point is reached, we can expect the masterstroke from the master tactician sitting at Antilla at Cumballa Hill in Mumbai.

Choke the pipes with so much of content that users would consume more and more data packs. One look at the Jio App is enough to suggest that Ambani is once again all set to break the paradigm that’s existed in the mobile telephony business since it’s inception over two decades ago. 

The recent launch of the Jio feature phone is yet another step towards this direction. Remember the ‘Kar Lo Duniya Mutthi Mein’ offer from Mukesh Bhai in 2003-04? One got a phone and free voice calls by forking out a measly Rs.500 – at a time when clunky mobile phones cost upwards of Rs.15,000.

Today, the company is replicating the same through their Jio phone which costs Rs.1,500 that would be returned after three years. True to form, the rivals are worried and are having plans to counter this movie through offering bundled plans with external feature phone manufacturers. (Read the story here)

Read more: Telcos Must Explore New Revenue Streams With IoT: Study

However, there is something even more drastic that Reliance is doing with a minimum of fuss. It is investing heavily in content across multiple formats. This way the company can have users hooked on to its data network for longer periods and thereby afford to provide cheap voice calls.

Over the past couple of years, the Mukesh Ambani group has pumped in the hard dollars in acquiring content companies. They began by taking controlling stake in Network 18, the new media company founded by Raghav Bahl. Apart from current affairs content, Reliance also acquired interest in two joint ventures, viz. Viacom 18 and History TV 18.

Thereafter, the company acquired the ETV Network comprising television channels in several regional languages. They have since renamed these channels under their Colours TV brand, thus getting more than a foothold into the lucrative television and TV content production business. 

“The combination of India’s leading TV content provider, with a bouquet of nearly 25 channels, and the Infotel, will be a significant step in bringing a high quality ‘live TV’ experience to broadband customers across the company, a statement from Reliance had said when the deal happened in January 2012.

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Having swept the floor with the television business, the group shifted attention to video content and cinema business. The company acquired stake in the Ekta Kapoor-led Sri Balaji Telefilms by pumping in Rs.413 crore. (Read the full story). “This investment in content production (including digital content) is in line with RIL’s commitment to invest and grow in telecom, digital and media businesses, the company had said in a statement. 

On top of all these acquisitions, the Jio brand has tie ups with several content creators that allows for seamless presentation of high quality video content via the broadband network to its subscribers. It currently offers over 430 live channels across 15 regional languages, including premium names such as HotStar and SonyLiv. 

The company also has deals with several broadcasters such as Star India, Zee Entertainment Enterprises and Sony Pictures, besides studios such as Balaji Telefilms, Eros, International, Shemaroo, Venus and Rajshri Productions.

With so much of content readily available for users, could there be a day not too far into the future when Jio would offer even data at subterranean rates and charge for content usage?

Let’s not forget that the world-over, paid content served across a digital platform is gaining acceptance. Even some of the world’s best-known names have dumped their print publications in favor of the digital ones.

While we wait and watch how the future unfolds, we can be sure of one thing – price wars on voice and data calls aren’t really going to define the winners and losers in this highly exciting mobile telephony game.

Meanwhile, keep an eye open for the threat from non-telecom players such as Google, Apple and Facebook. Who is to say that these tech giants or others in their shadow might come out with technology that disrupts the current business models and renders them utterly redundant? (A good read)

(Raj Narayan is the Chief Content Officer at Trivone Media Network and works as a corporate and life coach who uses Neuro-Linguistic Programming (NLP) skills to build awareness and help individuals and teams to ‘Unleash Their Latent Potential’. More details from www.novaindia.net