Will RJio’s ‘Datagiri’ Disrupt Telecom Market In India?
Mukesh Ambani’s ambitious Reliance Jio 4G service that aims to digitally connect over 10 crore people in the country is finally out. What Ambani terms as “Datagiri”, RJio’s attractive tariff offers that promises to free its users from voice calls, RJio has rightly hit the minds of customers. Rolled out on the auspicious occasion of Ganesh Chaturthi, RJio has already disrupted the telecom market in India, compelling its rivals to slash tariff rates. RJio is expected to further intensify the data battle among telecom vendors, ultimately benefiting the digital revolution in the country.
What RJio Offers For Digital India
Reliance Industries Limited chairman Mukesh Ambani has dedicated the RJio 4 G Service to the Digital India initiative that aims to digitally empower people in the country. In a big announcement, Ambani promised to free RJio customers from voice calls. Reliance Jio customers will not have to pay for voice calls ever and the company has also done away with the roaming charges within India.
All Reliance Jio 4G data services are free for users till December 31, 2017. The company has already rolled out e-KYC solution from September 5, where customers can grab RJio SIM free using their Aadhar card.
Reliance Jio 4G data tariffs start at Rs 50 for 1GB that makes it the cheapest data plan in the world. The smallest plan starts at Rs 19, making the internet accessible for the lowest segment of the data users.
The company has not only rolled out lucrative offers on its data services, but also on the devices to add maximum customers in its kitty. The preview offer, which was earlier restricted to Lyf handsets, is now available on most smartphone brands such as Samsung, LG, HTC, Intex, Videocon, Lava etc. Jio service is already available on Sony, Sansui, Videocon, LG, Samsung, Micromax, Panasonic, Asus, TCL, Alcatel 4G smartphones.
Reliance Lyf 4G-enabled smartphones starts at Rs 2,999. Reliance Ji-Fi hotspot device also comes with the Reliance Jio preview offer, which gives users an access to free unlimited data and Jio premium apps for 90 days.
The Reliance Jio 4G service is currently in beta phase, and the company claims to have more than 1.5 million users on the network already. Industry experts estimate that after tie up with all the major handset makers, its reach may extend to about potentially 75-80 per cent 4G phone users. Ambani’s Jio aspires to cover 90 percent of India’s population by March, 2017.
RJio Intensifies Data Battle
While attractive low cost data and voice plans are wooing customers, it has irked the incumbent telecom players such as Vodafone, Idea and Bharti Airtel, who had to slash data tariffs ahead of RJio launch. In a move to counter Reliance Jio, Bharti Airtel slashed 4G and 3G mobile internet charges by up to 80 per cent to as low as INR 51 per gigabyte (GB) under a special scheme. State-run BSNL also announced a national unlimited 3G mobile data plan for INR 1,099 and doubled the data usage limit in some existing plans.
Idea Cellular announced up to 67 per cent reduction in 4G and 3G mobile internet rates, providing more value to heavy internet users who consume data packs of 2GB to 10 GB. The idea has also launched Freedom Packs, low cost data packs starting at Rs INR 35 with four-day validity. Similarly, Vodafone has also revised its 3GB 3G/4G monthly recharge pack.
Thus, the data battle is expected to further intensify with the industry witnessing a drop in data charges, ultimately benefiting end users.”As RJio commercial launch nears, we are seeing tariff cuts from the incumbents with free calling being bundled together with data for some select high value plans, while there are also data tariff cuts” said JP Morgan.
From Disruption To Break Even
The grand entry of RJio with unimaginable data charges is definitely good news for consumers, but the industry experts have cautioned that a margin-denting price battle will adversely affect the recovery of the industry which is facing about Rs 35,000 crore debt. In order to woo customers, RJio has offered voice, data, and access to its apps free till December 31, 2016. However, it will be a challenge for the company to build a strong subscriber base, including shifting existing users of incumbent telecom vendors on RJio network. Also, as soon as the standard tariff plans apply after December 31, it would be a task for Reliance to charge these customers on actual tariff.
Industry experts say that Reliance Jio would need to garner 75-80 million subscribers, who spend an average of Rs 180 a month on mobile bills, over the next 2-3 years to hit break- even. Similarly, Goldman Sachs expects RJio to hit EBIDTA break-even by FY 2019-20 with 75 million subscribers. Another brokerage, Motilal Oswal said a subscriber base of 75 million with an ARPU of Rs 244 would help RJio generate revenues of about Rs 18,400 crore, but remain loss-making at the EBITDA level.
Win-Win For All
In a move to counter RJio, Bharti Airtel, Vodafone and Idea are mulling various data pricing strategies. UBS Securities Pvt. Ltd report pointed out that the entry of Reliance Jio has the potential to further disrupt the market in terms of cuts in data tariffs, but at the same time, acknowledges that there is also a possibility that it would lead to an expansion of the data subscriber base, ultimately benefitting other telecom vendors.
According to the report, data realizations will decline 15 percent in 2017, 14 percent in 2018 and 13 percent in 2019 for both Bharti and Idea. However, the increase in data traffic would compensate for declining realization, it added. “We believe India’s mobile data market is likely to grow to Rs.2.13 trillion by FY26, driving strong operating leverage. We believe both Airtel and Idea are well positioned to benefit from this potential data boom,” it said.
Quality Service Will Be De-facto
With RJio making a giant entry in the market, telecom players have got a clear message that quality service will be critical for the business success. In an era of free flow of information, consumers are raising voice against un-justified charges for poor services from telecom vendors. Hence, all the telecom players are now focusing on building infrastructure for better coverage. More importantly, they are emphasizing on the interiors of the country which are going to bring real growth for telecom players in the near future.
Bharti Airtel has deployed technology known as “carrier aggregation” in Mumbai and Kerala to combine different bands of spectrum and create larger blocks of airwaves to offer faster 4G data services for users. The enhanced service enables peak download speeds of as much as 135 Mbps. Airtel also plans to deploy the technology in other areas in the coming months. With the help of spectrum acquired from Aircel, Airtel is expected to offer enhanced speeds in 13 circles. Following the steps of Airtel, Vodafone and Idea Cellular are considering deployment of this technology where Vodafone has reportedly conducted a trial with equipment vendor partners.
Similarly, Jio will be rolling out a state-of-the-art, pan-India digital services business. This includes fixed and wireless broadband connectivity services offering voice and data quality on an IP network. According to RIL’s annual report, Jio will have the most video networks in the world.
The RJio has definitely brought disruption in the telecom industry in the country on the price front. While consumers are the one who are the biggest beneficiaries of the falling data prices, it would be interesting to see how the industry prepares itself to experience further disruptions in the telecommunication industry.
(Image Courtesy: www.livemint.com)
- Top Fintech Trends That Will Dominate This Year
- Data Felon’s Next Target: Insurance Firms
- 2018: The Year Of Demystifying Unstructured Data
- The Key Security Factors In Aadhaar Authentication
- Is It Time To Say 'Goodbye' To Passwords?
- AI, AR, ML, VoLTE To Boom In 2018: Deloitte
- SMB Guide To Effectively Deploy Salesforce CRM
- The Promise Of Cognitive Computing In India
- Top 10 Customer Experience Trends in 2018
- India's Telecom Sector To Slash 80K-90K Jobs