Jio Will Fight Hard, But Airtel & Vodafone Need Not Lose Sleep Yet
Reliance Jio’s entry could be a big threat to moneymakers at Airtel and Vodafone, but not right now.
Reliance Jio has become a household name and they have much to thank their free voice call and internet offer. Reliance’s Digital and Xpress Mini stores have seen longer queues than even what Apple iPhone garners.
Jio has puzzled the telecom industry. They want to offer free voice calls to consumers and high-speed internet, at the same time costing 35 percent less than Airtel, Vodafone or Idea right now.
Safe to say that Jio is a nationwide craze but do the existing players need to lose their sleep? This is something which is up for a debate, and a long one at that.
Jio — Breaking the Cult
Jio’s entry reminds me of the time when Chelsea and then Manchester City, flushed with oil-baron money, changed the paradigm of English football, which was for a long time ruled by Manchester United.
With Jio, a similar situation is panning out for Airtel and Vodafone. But, in fairness, Jio has a lot of work to do before it comes to that.
At present, India is predominantly a voice-calling market, where people still like talking on the phone, for long hours.
India’s data usage as of now stands at less than Rs 200 per month on an average as highlighted by the companies themselves.
The Average Revenue Per User (ARPU) on data has been declining after every quarter in 2016.
If you take a closer look at the data plans that Jio has announced, the company clearly feels that their major revenue share will come from users with higher data usage, with plans starting from Rs 999.
The small packets will give Jio the volume, but for revenue they need the upper echelon to splurge big bucks. This will only happen when their service comes at par with the existing players.
Calling — The Big Conundrum
So, when Airtel and Vodafone refuse to offer Reliance Jio the required number of points of inter-connectivity (PoI), its not because they fear Jio’s emergence, but because they don’t want to disrupt their service.
Jio has recently claimed that over 52 crore voice calls to other networks did not complete their course. Now that is a staggering number of calls that Airtel and Vodafone have denied access to on their network.
Was it done intentionally, or were they truly handicapped to meet Jio’s free calling demands? We’ll never know the reality behind it.
Telcos are duly regulated to pay each other for letting calls go through their networks. Airtel, Vodafone and Idea have been paying 14 paise for inter-network calling charges. But with Jio, operating on a higher bandwidth VoLTE network, these telcos want more to offer access to their network.
Interestingly, TRAI, the telecom body has refused those demands till now, and Airtel has revised its stance and will offer PoIs to Jio in the coming weeks.
Calibrating the incoming of calls from a VoLTE range to normal range puts heavier load on Airtel, Vodafone and Idea, but it seems they have caved under TRAI’s pressure and insistence.
Why the Fear?
Reliance Jio has invested up to Rs 1,50,000 crore on spectrum and their chances of making any profits in the near future is grim, and experts seem to agree.
It’s never easy to break the momentum of existing players, in this case Airtel and Vodafone. Jio is living the honeymoon bubble for now, but sooner than later (1st Jan 2017 onwards to be precise), things will have to be streamlined.
People will ensure that they get their money’s worth, no matter how reasonably priced the service is.
So, Airtel and Vodafone, all we have to say is, people on smaller budget will prefer Jio, but you still get to rule where the real big moolah is made and that’s all that matters.
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