Do you know how Reliance JIO is offering 4G data at such cheap rates

User 1 says :

How many of us remember the Rs. 1800 Reliance mobile phone with free unlimited Reliance-to-Reliance calls? For most of the people in India who could not afford phones, it was the first mobile phone they ever bought. India is a price sensitive market and with just lowest price as a USP, reliance actually got successful into making mobile phone a ‘necessity’.

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10 years from then, the times have changed. Reliance just launched the cheapest phone to afford a 4G service. See the connect?

According to a survey, India has more than 550 million mobile users/SIM cards. Mobile penetration in urban India is 70% whereas in rural India it is 36%. Taking into consideration that the rural population in India still accounts for more than 65%, there is still a lot of Indian population in rural areas which doesn’t have access to mobile/internet/3G.

Jio’s 4G network covers 18,000 cities and towns, and over 2 lakh villages. By March 2017, they aim to cover 90% of India’s population – which is a totally untapped market. Once Reliance becomes successful in acquiring (most of) it, they can make money out of:

Raising the prices later (all of the money burnt now is acquisition/branding cost). Because when new customers are eventually used to it, then they wouldn’t mind paying more.
Cross selling various other services to the new users.
Big data – with this market, they will have access to tremendous data, closest to Government’s database of AADHAR cards. And this data is literally priceless. (They could earn shitloads of money with it)
Literally owning the internet in India and that would open doors for collaborations with giants like Facebook or Google, who are eyeing this since a long time.
Currently, they have 16% market share, and this acquisition can tremendously increase their market share making them number one service provider.

User 2 says:

In a telecom company, the first thing they need is the customer base. The marketing strategy of Reliance Jio by providing unlimited data, calls and sms has already made people buy their sim even before the official launch.

So at the date of the launch, they would be a company with a huge customer base probably ahead of its rivals.

If the company A has 10 customers, B has 8 and C has 5 in a total population of 23; the strategy of Jio had made already made 15 out of 23 customers. According to the reports, the data plans of Jio would be the cheapest in the nation. I am someone who completely rely on the mobile data and someone who had to spend around 250 rupees for 1 GB data which could last for almost 10 days. I do have a jio currently as my second sim which helps me save bucks. That’s the case of a common man. The customers would shift or rather slip away. The customer base would be established even before their launch and that is the back bone of a telecom company.

After the launch

If A, with 10 customers charges 100 rupees for 1 GB, B with 8 customers charges 90 rupees for 1 GB, C with 5 customers charges 105 for 1 GB, the final turn over could be

A – 1,000

B- 720

C – 525

And if Jio charges 50 rupees for 1 GB after establishing a customer base of 15 users, their turn over would be still 750. (Actual stats would vary because of the obvious reasons)

So as far as the strategy that they have came up with, the offer that they have been providing is rather an investment.

– A common man’s view.

Everything else, the debt and all are part of a business.

User 3 says :

The business model of jio is plain and simple. They are here to make the profit and add it to the overall balance sheet of RIL. Telecom ops in a country such vast requires capital expenditure on active and passive infra buildup. With jio , the tides are in their favor because at the time of their maiden entry through Reliance Infocomm in 2003, they had the benefit of 850 MHz offering, which had best network propagation. It means that they could provide same coverage with half the number of BTS (Towers) than any other operator who had its services on 1800 MHz band.This time, their prized possession in their ofc network along with the huge spectrum holding they have. I do at times think that what if TRAI today removes the Spectrum Holding caps in accordance with Competition Commission of India.
He will just keel all it !!!

The focus just got shifted to data now,from the voice that ruled the last decade. With the advent of tech, one IP Network can cater everything that other operators can, but with less load of equipment and retro tech . They started from scratch after pseudo bidding through HFCL and build Nation’s second largest optical fiber . What they are doing now is identifying who all are low and high ARPU (AVERAGE REVENUE PER USER) customer, apart from reading usage trends offering unlimited services until 31st. Their net velocity app can provide exact coordinates to RF teams for an optimizing network.When they launched CDMA, in 2003, the issue was of handsets. For that this time, too they have come up with dirt cheap sets , which will support all the 3 bands, that they operate on.
Also, they’d be bidding for additional spectrum in come circles and basic spectrum in few bands in a few circle. For example, in Bihar circle, they have no spectrum in 1800 MHz band , so they are definitely going to bid for at least 5 MHz in the bihar circle, this Dhanteras.

In telecom, just like the horseless carriage syndrome of business, it stopped operators from being tech savvy. It was in 2012 that AIRTEL rolled country’s 1st 4g network in Kolkata. But look at the pace that they rolled out.

The perfect “catch 22” of AVOID (airtel vodka idea) is that they cant shut down their 2g/3g ops and benefit with jio is that as they have IP NETWORK, their back end can in real time shape all of it to run, milking the every last drop of a spectrum.

TELENOR recently introduced 4g in the remaining circles that they are providing services, and launched 4G on lean tech, using the only 5mhz of LIBERALIZED spectrum they won through bidding. Vodafone is now interested in buying Telenor , but why?
For the spectrum, so that they can fully use their spectrum holding in excess of 7.5 MHz to offer 4g in populous circles like UP EAST and Bihar.
Telenor is also exiting India because of its poor spectrum holding, and as they also have to offer 2g, their half the spectrum is blocked for that.
If you remember the net neutrality debate, it was all about “deep packet inspection”, and if u have used SKYPE, you know you can talk and chat over IP. According to regulator policies, skype has many restrictions, like you cant call any number in India while in India. Volte is nothing, but just JIO providing skype-like services, and that too for free. What happens when u call on skype, it pings other user within a second. Same is the case with volte. Ur calls get placed in blink of the eye, and deep packet inspection let the JIO servers know, u are on a VOICE CALL, so they will treat or give Your call a preference to go through a pipe that has limited flow at a time. But as soon as you end your call and there is no other person calling, the same pipe of 20 MHZ spectrum can be used to let you surf google or quora at full speeds.
while in 2g calls, a fixed amount of flow is ALWAYS separated from the main culvert of spectrum.

Indian telecom industry off late was running as a cartel, with idea Vodafone and airtel offering almost same plans and same offering in same price band. They had the upper hand of QoS and unmatched network with ties like INDUS TOWERS, with all three operators co-owning shares and BTS, which again brings down the CapEx. Also, they had liquidity with them , which was absent with dual tech and other small players like Aircel, rcom, mts bsnl tata. Since these 3 biggies dominated the sector and when we thought of respite through OTT APPS such as whatsapp for calling, they again came up with differential pricing.
JIO has everything that these 3 biggies dont, a company with huge cash reserves, and most importantly a visionary leader, Mukesh. They disrupt everything and everyone whenever they enter a new sector. This time, they have solid OFC roll out, ofc connected bts and most importantly a govt in the center which favors jio, which ultimately favors us all consumers. Rest operators TOWERS are still working on RF BACKHAUL, just the way ur home microwave works while heating ur food. In JIO, MOST OF THEM ARE FIBER CONNECTED, ONLY WHICH CAN ACTUALLY SERVE 100S OF DATA HUNGRY CUSTOMERS, WITH “TRUE” 4G SPEEDS.

The govt is soon going to make ip calls free,just the way they removed any charges from LandLines, and this the reason for bsnl landline provide ul calls on Sundays, Though they can provide it everyday. They already tweaked UASL LICENCE norms to allow operators such as jio to provide VoLTE , as the licensing norms earlier, in the telegraph act only spoke of circuit switch calls or conventional calls.

Last but not the least, they have an undersea cable that they own with 3 other global carriers jointly , which connects India to south asia and beyond. Till now, only the trio of Rcom of Anil, Tata Comm and Airtel owned them, and everybody leased bulk data from them.

A brouhaha always settles down, but you can be assured that from today onwards, there’d be two camps. One of hoodwinking airtel,vodka, idea and one camp of rest all operators. Though the tele industry has already marched towards consolidation , with mergers and acquisitions on the horizon. If a three-way probable merger happens between aircel-mts-rcom and Rjio, that will have long lasting effects.

Its also the time for the govt to think, whether to go with the idea of Socialism of the 70s and continue having a state-owned carrier , if yes, then what should be the policy?
Bsnl already has a tie with JIO for BTS sharing and 2G 3G FALL BACK,wherever 4G is not present, and to provide the combo of 2 networks in one.
Shouldn’t we think of either Disinvesting or forging ties with other operators too , so that the nation doesn’t have to fund its plunging

*A User Answered * No intentions of Negativity . 

Author: Elyuxen

Elyuxen, a student newspaper where students get to work as well as publish all the news related to colleges in and around Hyderabad. It is the first ever student newspaper in South India which is successfully running. The beauty and the tagline of this newspaper is it is *For the student, by the student, of the student

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