One year on, RJio upbeat about digital services, robust data demand

Rashmi Pratap Mumbai | Updated on January 10, 2018

When Mukesh Ambani launched Reliance Jio’s telecom services exactly a year ago, he had spelt out two clear targets for the company — to make data services affordable to the masses and to disrupt the sector in a way that democratises the internet. A year later, RJio has done all this and more.

“Users on RJio network consumes more data than the combined usage on AT&T, Verizon and T-Mobile in the US. We clearly did not expect such a response from Indian users when we started out. But this is just the beginning of what we have to do,” says a top company official.

RJio now has over 120 million customers and 10 per cent market share within just one year. Research firm CRISIL partly credits Jio with pushing up data usage in India. “Between fiscals 2012 and 2017, India’s mobile data usage per subscriber rocketed at 80 per cent annually to around 1.25 GB per month on increasing adoption of 3G and 4G services, free data offered by Reliance Jio, and a sharp 40 per cent fall in tariffs in the past fiscal alone,” it said in a report.

Critics on strategy

Critics however say that Jio started on the same old narrative of lower tariffs and free calls, deploying the same old method of subscriber acquisition as earlier players had done.

“In the digital era, the company is still talking the age-old mobile language of tariffs and not the millennial’s language of digital services. Launching in 2016-17, the message should have been how the company is best positioned with its all-IP networks to leapfrog common consumer services to digital services bandwagon instead of what others are giving at cheaper rates,” says Jayanth Kolla, founder and partner at technology research firm Convergence Catalyst. But company officials said that while the initial phase was focussed on acquiring customers, the next phase will be on rolling out services. “On services, the initial uptake has been for media and entertainment. But now, we are piloting services across education, healthcare and payments banking. We will roll them out over the next few months,” said the company official.

Moreover, Jio has the strongest fibre backbone, which gives it a strong capacity to carry traffic from consumers. Its fibre backbone at 2.7 lakh km is more than that of Airtel. “We are going to speed up our fibre to the home services,” said the official.

The official said that even at lower tariffs, the operations are viable. “At ₹11 per GB, it is a viable operation. We have large capacities on our network so we are looking to ramp up our user base. By 2020, broadband market is expected to be ₹3 lakh crore - so it is a big market,” the official added.

Retaining customers

With the backing of Reliance Industries, Jio may be in a position to wait for profitability, but its biggest test will be in its ability to retain customers especially after the promotional offers end. At that point, users will have to pay ₹309 per month for accessing data with free voice calls. “There is a lot of pent up demand for data. Even though users may have their existing operator’s SIM cards, their usage has shifted to RJio. This is highly encouraging,” said the company official.

RJio’s entry has disrupted incumbent operators’ business models with most of them reporting losses since last year. Two of the largest operator Idea Cellular and Vodafone have now been forced to attempt a merger to survive. “The impact on incumbents is short-term. Finally, the entire industry will benefit as data consumption rises,” said the RJio official.

Published on September 04, 2017

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