Blog Article

Telecom companies have been getting a kick out of how fast the Indian mobile and internet market has been growing. From near extinction of landlines to every street vendor now owning a cell phone, companies that provide networks have been rolling out tons of new schemes and packages, constantly upping their game to advertise and serve as many phone connections as they possibly can. We’ve seen family schemes, referral programs, friend to friend discounts and so on. All to lure their users into using the network more through lower costs. What do we look for in a good phone network? More than just cheap calls and text messages, when it comes to smartphones, we also require the best possible data connection. Initially, this made way for 2G and 3G connections, but hold it together, as even these are not good enough anymore. It’s the year of 4G and 5G boom! Step in, Reliance Jio.

Reliance Jio has set a few goals as part of its new launch which includes the following:

1. Breaking the barrier between charges on voice calls (what we call currency or what we pay for in postpaid) and other data charges, it’s all-in-all VoLTe network, claimed to be the largest in the country, allows end users to make a call just as they would, but the costs are charged through data usage, not separate call charges.
2. The ultimate free offer – Till the end of the year 2016, Reliance Jio is free! No charges nor tricks.
3. 15 min activation – Jio also claims that sim card activation will happen in not more than 15 minutes!
4. Handsets also – Reliance also plans to give handsets as part of the offer, which will be available for prices as low as 2,999 INR.
5. Speeds and scalability – Reliance Jio claims that internet speed can go up to a desirable 1GPS. Moreover, the company plans to dominate to over 90% of India’s population.

Reliance Jio

An ambitious project by the Reliance group has led to the launch of Reliance Jio around mid-2016. Formerly known as Infotel Broadband Services Limited (IBSL), Jio (which means ‘live/life’) is an internet service provider engaged in smartphones, broadband services and digital services catering to India. It is the only service provider to provide 4G internet on a pan-India level. Jio also launched a bundle of apps available on Google Play which includes JioTV, JioCinema, JioMessenger, JioMusic, JioNews, JioSecurity, JioDrive and JioMoney Wallet to name a few. With the entry of Jio in the telecom industry, digital India will be easier and cheaper to access, especially for rural India.

The Competition Act, 2002, established the Competition Commission of India (CCI), a statutory authority as per the provisions of the act to implement and enforce trade policy and restrict Government interference in the economy. It is also to prevent and reprimand anti-competitive or monopolistic business practices by firms. These duties exercised by the commission protect the interest of the consumers and ensure freedom of trade along with healthy competition. The Act extends to the whole of India, bar Jammu and Kashmir. This Act was further amended in 2007 and in 2009.

The Act:

“An Act to give, keeping in view of the economic development of the country, for the establishment of a Commission to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets, in India, and for matters connected therewith or incidental thereto.”

Note: Since the information about Reliance Jio’s new tariffs is easily available online, the tariff prices and plans for customers are not described in this article.So let’s take a look at what’s new about Reliance Jio:

Roaming Charges

Reliance Jio has done away with roaming charges, something that the TRAI has been recommending for some time. Other competitors such as Vodafone, Airtel and Idea still charge for roaming. This serves as an additional utility for a customer as it promotes fair and healthy competition in the economy. Competitors will have to undertake measures to keep up with the competition, and such measures will, in turn, benefit the customer in the form of lower costs, better services, standardise products, increase in quality and so on. You get the gist of it.

Unlimited Voice Calls

Reliance Jio has announced that outgoing voice calls will be free. Once again, we all know that every other operator charges us for our outgoing calls. But in order to keep up with the competition, it is likely that other service providers will provide a similar bundle of unlimited voice calls along with the purchase of data plans. Though Jio has set up free calling, other service providers are yet to keep up their word.

This has drawn criticism on the grounds that Reliance will need to acquire a customer base of 100 million subscribed users in order to be profitable, because voice calls account for 3/4th of the company’s revenues and by not charging for voice calls, it is yet to be seen if it will prove as a sustainable model. If Reliance does become profitable, other operators would soon follow suit and would have to restructure current plans being offered to incorporate voice calls as a part of the bundle. Additionally, Reliance Jio offers video calls with uninterrupted service while travelling or roaming.

Data Rates

It has been argued that Reliance Jio adopted predatory pricing strategies in its tariffs. Though Reliance did offer a slight edge over other operators, the latter have responded by lowering most of their own tariffs, thus leading to a healthy competition. A monopolistic advantage does not arise for Reliance nor are the tariffs too low to kill off competition completely.

Free Night Usage

Previously, BSNL employed a similar strategy of free night usage of calls and internet until 2014. Not only that, Reliance Jio offers better speeds at more competitive rates. The consumer thus has several options for operators to choose from keeping in mind that it is encouraging fair competition that will ultimately benefit the customer.

Net Neutrality

Net Neutrality requires that all individual users be treated equally with regard to varied or discriminatory charges per user, application, site, mode of communication, content or type of attached equipment.

India has no laws governing net neutrality at present, though the Supreme Court has ruled several cases in favour of the user against discriminatory pricing for different users as seen in the case of Facebook. Reliance making their users use their own applications provided does point out that loopholes exist in the non-existent net-neutrality laws that give Reliance Jio an unfair advantage over third-party services.

Impressive!

Reliance has entered into a competitive market and in order to build its customer base, it is restructuring the market to become data-centric for revenues instead of voice calls (currently, the main source of revenue for the companies in the telecom industry). In terms of growth, Reliance has the highest scope for growth in a saturated market where customers are always looking for cheaper and better alternatives. If Reliance can sustain themselves for some time, they would force the competition to adopt similar strategies employed by Reliance by forcing competitors like Airtel, Vodafone and Idea to lose out on its call/voice revenue.

Reliance Jio just might set way to ground-breaking mobile technology with lowest costs. In the overall mobile market front, it may force other networks to normalize costs to keep up with competition. India is surely excited and has taken well with Reliance Jio’s disruptive marketing schemes. We can all hope that they successfully follow through with all their claims. What do you guys think? Let us know your thoughts in the comments below.