Jio makes customers happy, leaves competitors wary

From tomorrow, you can slash your mobile bill by half if you opt to become a customer of Jio, Reliance’s ambitious venture in India’s mobile telephony and broadband market. With the aim to capture the mass market, Jio promises free voice calls and SMSs bundled together with data tariffs that it claims to be the lowest in the world. Quality voice and data services with affordable smart phones starting from Rs 3,000 onwards are also on its offer. This means that India’s Rs.2 lakh crore of mobile and broadband market (of which just 20% is data) is going to become buyer-centric, at least in the short to medium term. “There is no doubt that buyers would find their position strengthened. They would (now) rejoice many more players actively competing for their business,” said Mahesh Uppal, director, ComFirst, a niche consultancy group on telecom policy and regulation. 

While customers would relish the enriching of their digital life at much cheaper rates, the same cannot be said of telecom players. Reliance’s salvo of lowest tariffs is, in fact, a double-edged sword that many admit would bring financial losses for all the players, including Reliance itself. The drastic fall in share prices of all telecom players (including Reliance) by up to 10% last Thursday supports this concern. But Reliance seems committed to pay any price which might help it win a significant share of the incremental market pie. The ensuing competition could hurt the voice tariffs and average revenue per user (ARPU) of existing operators as well as push them to match the pricing, in a bid to protect their market share, says India Ratings & Research.

But Jio’s entry is being termed as a significant step which would boost data consumption in the country. The data usage remains pathetically low, with barely 100 million Indians checking their internet accounts only once in a day. Analysts feel that such inputs (Jio’s entry) would surely boost India’s data market. But in terms of the overall evolution of India’s data market, more needs to be done. They cite many reasons for the low data usage in the country. Affordability, access to the network, language barriers are important handicaps that restrict data consumption at a mass scale. Except for six or seven languages in the country, no other language has a significant amount of internet content. The government being the regulator should be incentivising more connectivity to rural areas. “I agree that without affordability nothing would move, but affordability alone would not ensure that the digital experience would come to all,” said Uppal.