The Jio juggernaut

Reliance Industries is known for its ability to conceive and execute projects on a grand scale, its capacity to disrupt the existing scheme of things in whichever industry it enters, and its knack of deploying the latest technology to score over the incumbents. The company exhibited these traits in petrochemicals, oil refining, cellular telephony and retail. They were on display yet again on Thursday when Chairman Mukesh Ambani unveiled the company’s telecom business, Jio. Interestingly, unlike in petrochemicals where the loopholes in the system were exploited with political backing, the Mukesh Ambani-led Reliance has played largely within the system and existing framework of rules in the Jio foray.

The scale will come from a national footprint covering 18,000 towns and 2 lakh villages to start with, which will go up to cover 90 per cent of the population by March next. Jio will deploy the latest voice-over-LTE (Long-Term Evolution) technology and its backbone and network will be compatible up to 6G and beyond, built as they are, for data and not just voice. With its plans to sell data at a fifth of existing prices and offer voice calls free, Jio will disrupt the status quo in the industry. A new player entering an industry with well-set, powerful incumbents needs to innovate and disrupt if it hopes to make a mark and Reliance has done just that. That it is an 800-pound gorilla itself, and one with deep pockets, certainly helps. Considering that the company has invested at least $20 billion in this business in the last few years, and given its tariff plans, it is clear that Reliance will not be making money on Jio at least for the next few years. It appears set for the long haul. The incumbents clearly have a battle on their hands and will have to go back to their drawing boards to revise their strategies and game plans.

While consumers are bound to get excited by the battle for their mindspace and wallets, the responsibility of the regulators has increased manifold. As we saw over the last few weeks, the regulators will be in focus more and more as the new entrant and existing players slug it out in the market. Mukesh Ambani was smoking the peace pipe at the launch, urging the incumbents to play fair on both interconnection and porting of existing subscribers, which might gather pace as subscribers of existing players migrate for better tariffs and experience. The regulator will have to walk the tightrope between protecting consumer interest and ensuring that there is fair play in the market. The tariff-based competition is likely to cause blood-letting and it is the regulator’s responsibility to ensure that it is not carried to the extreme. Consumer protection also means that there are enough healthy players left in the market to compete.

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