Six years after re-entering the telecom space RIL (Reliance Industries Limited) chairman – Mukesh Ambani has taken the telecom industry by storm by the big bang launch of Reliance Jio (which would have the cheapest 4G rates and unlimited voice calls) at the company’s 42nd AGM.
He dedicated the much-anticipated Reliance Jio 4G service to the nation as an attempt to fulfil the Digital India dream of Prime Minister Narendra Modi.
Jio will be introducing 10 different tariff plans starting from ₹149 a month and will go upto ₹4999 per month, with speeds up to 135 Mbps to its premium customers. Jio will be offering a base rate which is 1/10th of market rates: 5 paise per MB or ₹50 per GB
These Jio tariffs are built on three principles: customer should play for only one service — voice or data. Data must be affordable. More you use, the cheaper it gets!
At the Annual General Meeting, Mr Ambani revealed Jio’s tariff plans and other details. Some of the key take points include: -
- Free voice calls
- Zero roaming charges
- Students to get 25% more data
- To be formally launched on 5th September, 2016
- Free services till 31st December 2016
- e-KYC based activation of SIM (will give you a working connection with Aadhar card in just 15 minutes.)
- 4G enabled LYF smartphones starting at ₹2,999
- Future-ready and can be upgraded to support 5G or 6G
- Jio claims to have the lowest data rates in the world
- Jio-fi personal Wi-Fi router solution for 2G/3G
They have also created several lucrative enterprise packages that will primarily cater to businesses and start-ups, providing them with fast-speed internet connectivity.
Fourth generation [4G] technology allow consumers to leverage more bandwidth and better output. And consumers with 4G devices can access high-speed data, high-definition voice and do real-time video conferencing.
Mr. Ambani taking a dig at other networks during the launch, said that – “the Reliance Jio network is running entirely on 4G – not “mostly 2G, sometimes 3G, and once-in-a-while 4G.”
Reliance Jio is also a 100% VoLTE network – the largest in the world, and to access the Jio network, you need a 4G compatible phone with VoLTE support! VoLTE stands for Voice over Long Term Evolution, using which one can make voice calls over the data network, which means an end user will dial a number just like they always, but at the backend, even voice calls use data. They will also be offering Lyf devices with prices starting at Rs 2999, to support these requirements as well.
Reliance Jio Infocomm has already informed the Department of Telecommunications (DoT), the Telecom Regulatory Authority of India (TRAI) and security agencies that it would start commercial services on Monday (05.09.2016)
Although, Reliance Jio plans have been revealed, everything (including: data, voice, and video along with the full bouquet of applications and content) will be completely free for users until 31st December 2016. Mr. Ambani called this Jio’s ‘Welcome Offer’, to enable everyone to try out Jio without spending any money.
This ambitious project of Mr. Ambani holds the potential to make Reliance the most comprehensive provider of telecom and Internet services across India and give it exclusive access country’s untapped ‘big data’ i.e. how millions eat, shop and have fun. Unimaginable position!
Within just 45 minutes Mukesh Ambani’s RIL costed telecom companies like Bharti Airtel and Idea Cellular a loss of ₹13,165 crores of market capitalisation. Bharti’s shares dropped down 6.37% that wiped off a market cap of ₹8454.50 crores, while Idea’s shares dropped 10.48% wiping off a market cap of ₹3,528 crores.
What is Reliance Jio?
Reliance Jio, the telecom leg of Reliance Industries Limited is an upcoming provider of mobile telephony, broadband services, and digital services in India. It aims to provide 4G services on a pan-India level using LTE (long-term evolution) technology.
Some of the key people in the company include: Sanjay Mashruwalla (Managing Director), Jyotindra Thacker (Head of IT) and Akash Ambani (Chief of Strategy).
It will offer data and voice services along with add-on services like instant messaging, live TV, movies on demand, news, streaming music, and a digital payments platform, along with LYF Smartphones (cheap [starting at ₹2999] 4G handsets enabled with voice over LTE [VoLTE] that supply with the help of domestic handset maker Intex). These include: 300 TV channels, 6,000 movies, 2.8 million songs in 10 languages via its app.
They will also be offering Jio-Apps bouquet, which is worth ₹15,000 for an annual subscription – will be complimentary for all active Jio customers. These include: MyJio, JioChat, JioPlay, JioBeats, JioMoney, JioDrive, JioOnDemand, JioSecurity, JioJoin, JioMags, JioXpressNews, Jionet WiFi, etc…
Talking about their much-hyped about Tariff Plans, Jio offers 7 packs: – Rs 149 Pack (300MB 4G data), Rs 499 Pack (4GB 4G data and 8GB JioNet WiFi Hotspot access), Rs 999 Pack (10GB 4G data and 20 GB JioNet WiFi Hotspot access), Rs 1499 pack (20GB 4G data and 40 GB JioNet WiFi Hotspot access), Rs 2499 Pack (35GB 4G data and 70GB JioNet WiFi Hotspot access), Rs 3999 pack (60GB 4G data and 20GB JioNet WiFi Hotspot access) and Rs 4999 (75GB 4G data and 150GB JioNet WiFi Hotspot access), along with Unlimited 4G data during night, Free unlimited local/STD voice calls and local/STD SMS and Free Jio app subscription worth Rs 1,250 for all packs(expect Rs 149 pack).
What’s their story?
So their story dates back to the year 2002!
In 2002, when Dhirubhai Ambani died, there were several major ownership issues between his two sons – Mukesh and Anil Ambani, along with public dispute for the control of Reliance empire.
The business was finally split in two parts in 2005, after the intervention of their mother, who gave telecom, power, entertainment and financial services businesses to Anil, while Mukesh Ambani received Reliance Industries and IPCL.
Now the problem was that, Reliance Communications was started and Indian mobile industry was revolutionized (literally) by Mukesh Ambani. He made mobile phones affordable to Indians. It was his baby! Anil didn’t even have a seat on the Board of Directors.
And that wasn’t it. To prevent Mukesh Ambani from starting another telecom company and to compete with Reliance Communications, a non-compete clause was also inserted in the agreement as well.
In 2010 – the non-compete agreement was scrapped/expired, and in no time Mukesh Ambani bought 96% stakes in Infotel Broadband (IBSL) which had won 4G spectrum in all sectors in India, for ₹4800 crores.
IBSL was the only firm to win broadband spectrum in all 22 zones in India in the 4G auction. Later, they renamed it to Jio, and started building Fiber optic network around the country!
The company has gone on to build a network of more than 250,000 kms of Fiber optic cables in the country, over which it will be partnering with local cable operators to get broader connectivity for its broadband services. They have spent about ₹1.5 lakh crores on the venture, so far, and claim to offer high-speed 4G data connections that are 10 times faster than those of current service providers at one-tenth the cost.
In 2013, Reliance Jio became part of a global consortium that includes firms like Telekom Malaysia (Malaysia), Vodafone Group (U.K.), Omantel (Oman), Etisalat (UAE) and Dialog Axiata (Sri Lanka) for establishment of the Bay of Bengal Gateway submarine cable system connecting India to the rest of the world.
How will the entry of Jio affect the overall market?
To begin with – many believe that the entry of Reliance Jio may hurt the growth prospects of present telecom operators. But contrary to popular belief, the entry of Jio in the telecom market is going to be a win-win for all (Reliance, competitors and consumers).
Let me explain!
There are three sets of Indians consumers in this space: – 10% – those who use the Internet extensively and are well-versed with its uses; 30% – those who use internet in a limited way because of high prices and limited connectivity; and Rest – those who are yet to explore the Internet!
The company has announced free voice calls, proposed tariffs and other offers that are quite aggressive and cheap, using which, an average monthly mobile bill could come down by a good 50-60%.
So the new entity will only help to expand the size of the market drastically, and this, in turn, will benefit the other competitors in the space. They will gain from increased demand for data, which will boost revenues, margins and returns.
Additionally, Internet connectivity issue, which is most significant in tier II and tier III cities (the Targeted Groups) of many, will also get solved, which in turn, will help to create more new users and existing users.
Additionally, lower data prices and improved data speeds will enable higher consumption and better online experience for consumers as well. This will also lead to more people upgrading from feature phones to smartphones.
And for the eCommerce firms that have been desperately struggling to attract new shoppers, may get the much-desired market expansion push that companies and investors have been seeking since the start of the year, with the launch of Reliance Jio.
So if you look at the overall scenario – at this point, roughly 20% of mobile phone users in India consume data, that too an average of 600 MB. In about a decade, this number would easily go on to become 80%, with an average data usage of 3 GB or 4 GB. That’s because Reliance Jio’s launch has made data and data phones very affordable, which will massively expand the market, eventually!
How are the other players preparing for it?
The entry of Reliance Jio with their attractive offers, has just unleashed a pricing war in the sector.
And guess who’s going to be the one to benefit the most?
The consumer! To counter Reliance’s offers, telecom providers are now doing everything to ensure their customers don’t switch
Airtel recently revised their data pack plans for their prepaid and corporate customers, and also slashed its internet prepaid tariffs to 80% (₹51/GB, roughly) and over 150% (₹99.5/GB, roughly).
To put that into perspective, one would spend ₹1498 for 1GB 3G/4G data and post exhaustion, they would enjoy 1GB 3G/4G for just ₹51.
On the other hand, Vodafone is giving 1GB data (3G/4G) for Rs 297 with validity of 28 days, and Idea Network, will be shelling out 1GB (3G) at ₹249 for a validity of 28 days.
Catching up with competition, the Stateowned BSNL will be offering 1GB (3G data) at ₹198.
While, with the entry of Reliance Jio is going to make competition even more fierce and ruthless, but like we said, at the end – it’s going to be a win-win!