Reliance Jio 4G : The Brilliant Business Plan of Mukesh Ambani

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September 1st 2016 will be remembered as the Day when Reliance Launched its much anticipated Jio 4G  and how it disrupted the Indian telecom market,for the 2nd time.With a hope for building a Powerhouse of Internet connectivity and the Vision of Digital India,Mukesh Ambani has launched,which many call,a ₹15,000 Cr Startup,though it has left many in excitement,awe and uncertainty at the model of Reliance Jio and how will it print profit in the balance sheets.

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And i have tried to explain the whole Reliance Jio system from its roots and answer the questions which many of you may have regarding its service.But first,

The Cell Shock of 2002

What started as a dinner table conversation between Dhirubhai and Mukesh Ambani,converted into a major disruption in the telecom sector.Though not primarily by Reliance telecom,but maybe because of the effect of Reliance,incoming calls were made free which were previously charged very heftily.With a slogan of “Karlo duniya mutthi mein”,Mukesh Ambani spearheaded the whole plan after the demise of Dhirubhai and with a dream of a mobile phone in everyone’s pocket

But then why is Reliance Comm. not a Major player today ?

Because after Dhirubhai Ambani passed away in 2002,there was a major split between Anil and Mukesh Ambani as to who will get what of the gigantic pie named Reliance.The dispute ended in 2005,with Mukesh getting oil and gas, petrochemicals, refining and manufacturing while Anil took reign over electricity, telecoms and financial services.So,Reliance telecom,which was a brainchild of Mukesh Ambani was handed over to Anil along with non-compete between them.

How Jio was created

In June 2010,just after the non-compete was waived off,Mukesh bought around 95% stake in Infotel Broadband Services for Rs 4,800 crore.They renamed it to Jio and charted a plan to roll out an only 4G network.During the 4G spectrum sale it won rights to all the 22 circles,the only company to have a pan india presence.

Then,following what he did prior to 2002,Mukesh Ambani started laying optical fiber connections throughout India.They laid more than 2,50,000 KM’s of Fiber optic cable of 96 – 288 fibers along with 1 lakh 4G Towers[See this].Their cables are ready for 5G and 6G while other companies are still struggling to upgrade from 2G/3G to 4G.

So how will it impact Indian Telecom and especially you

Now,there are many benefits,but the main,and rather unknown of are :

1.) As they have presence in all states and because they have laid their own cables,they don’t need to pay some other company to allocate them space.This results in more freedom to the network which is passed on to the customer.Moreover,they have only 4G cables,hence you will not get reduced speed as you might have faced while using 3G of other networks(but that might mean that where there is no 4G,there is no connection,yikes).

2.) Currently,tough Jio 4G network is available in 40% of India,they plan to lay it out to nearly 70% till their main commercial launch,which is on 1st January 2017,and then to almost entire India by 2018.They surely seem ambitious,but with the manpower and money power they have invested in this project,i don’t think they will lose out in this race because they didn’t have enough towers.So,they will,in my opinion be India’s largest network and billboard featuring them as “India’s largest 4G Network”

3.) Now,not a huge technological impact,but certainly a different approach towards mushrooming the towers..Reliance Jio is erecting Towers which look like trees and hence blend with the surroundings and also don’t harm the aesthetic beauty of the place.

reliance-jio-eco-friendly-green-towers

 

Okay,that’s fine.But will i get 4G really at ₹50/GB ?

Well,that one thing was a marketing tactic by Reliance Jio,is what i think.If you look at the image below,where all of their plans are shown,

  • The cheapest plan of Rs 149/month gives 300/Month and the next plan gives 4 GB/month for Rs 499,which works out to be roughly Rs 125.
  • Also,the plans which are on the higher end of the spectrum(no pun intended),is at Rs 3999 for 60 GB and Rs 4999 for 75GB,which work out to be nearly Rs 66/GB.So no plan here is offering a GB of 4G at Rs 50.

reliance jio 4G price plan
So,then why did they advertise at Rs 50,if they are not going to provide it.Well,it actually turns out that with the plan of say Rs 499 ,you get 8 GB of free WiFi(they say as JioNet),so it turns out to be 4GB + 8GB,so 12 GB for Rs 499 which is around Rs 42/GB.

The Fineprints

Okay so there are somethings you should keep in mind regarding Jio.

1.) The validity of the packs is 28 days.Which means yo don’t get the 4G for a full month,which is of 30 or 31 days,but only 28 days.And it might not seem as a big deal,but in fact because of those 2-3 days,you end up paying for 13 months in a year instead of 12 months.Think for yourself.

2.) Many people got excited because Jio tariff card mentions night unlimited for all their plans.But turns out the consider the Night from 2AM – 5AM.So,unless you are nocturnal,this free deal will taste bitter to you.

3.) And Jio says that Calls are free.Nope,Voice calls are free.In fact,you cant make a call from Jio 4G.And by that i mean that on 4G when you will call,it wont be a normal call,it will be VoLTE(Voice over LTE).In simpler terms ,now even your normal call will be through Internet,hust like Whatsapp call.So,when you will talk over phone,you will spend data.

But now Jio has clarified that the data used by Voice calls won’t be included in the plan.Hence there is no limit for the data used by Voice call.

Okay,so how will Reliance Jio make money ? What is their Business plan ?

So,finally coming to the question,why is this all so low cost and most things free.It sounds too good to be true right ? Well,it kind of is and isn’t.But to understand that,just think for yourself,how much amount of money do you spend on your phone including call+ data.Now,i don’t know about you,but according to telecom companies data,an average person spends around Rs 150/month on his mobile phone bill.Which means that companies get Rs 15o per customer per month(which technically called as ARPU) So,

Data :  Now again refer the table above and you will notice that the cheapest plan is of Rs 149,so even if you are starting at the smallest plan,you are spending what an average customer is spending today on his phone bill.But that plan obviously wont suffice your needs and you will then look at the second cheapest plan which is of Rs 499(notice the tree fold jump).

So now,instead of you,assuming an average customer, spending around Rs 150,is spending Rs 499 and by this Jio has increased its ARPU,hence more money in their pockets.Of course the benefits which you are getting are also worth the price increase.

Jio Apps : Reliance Jio also has 8 premium applications which you can use along with your free 4G.What’s more,they are free till 1st January 2018.And these apps are supposed to replace apps like Netflix,Hotstar,Spotify,gaana,etc.

But after the completion of the free period i.e. after 1st jan 2018,these apps cost Rs 15000/month.And till then you will be addicted tho them so that you will shell out that money without thinking twice.

Small Plans : They also have rs 19,29 and 129 plans but they are not worth much once you see that they provide much less value,eg. The 129 plan gives just 2GB net and validity is also 21 days.So,this is a psychological trick to make you spend more and hence become a regular paying customer instead of one time recharge customer.

So this is how they will print PROFIT on the balance sheets.And i am not touching their LYF phones and the profits from them as well as the Hotspot service.

And this wraps up the article.I think that this was a very bold move by Reliance but which was needed very much.Indian Telcos were without much competition on the price front and this literally meant that customer had no way to go because all companies had plans offering same data at more or less the same price.

There are still many questions left to be answered as how will they provide customer service,how will they lay out the groundwork for the nation wide network.Sure Reliance did it in 2002 and worked it quite well,but you know what is more difficult than creating history ? Repeating it.

Do write in the comments below what you think of this Ambitious plan of Jio.Will they pull it off in style or will it end it as a Gimmick.I am waiting for your answers.
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References : [1.] http://gadgets.ndtv.com/telecom/news/reliance-jio-plans-revealed-voice-calls-and-roaming-free-rs-50-for-1gb-data-1453073
[2.] https://www.quora.com/What-is-the-business-model-of-Reliance-Jio
[3.] http://telecom.economictimes.indiatimes.com/news/3g-4g/reliance-jios-voice-and-broadband-network-is-upgradable-to-5g-mukesh-ambani/47644803
[4.] http://indiatoday.intoday.in/story/reliance-india-mobile-service-promises-to-shake-telecom-industry-test-ambanis-ability/1/218169.html
[5.] http://telecomtalk.info/jio-fiber-to-the-home-deliver-speeds-up-to-1gbps/147416/
About the author

Abhijit Mahida

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It is the air that you breathe and what makes your heart continue beating. Your soul is filled with words that have no meaning until you sit down and pour them through your heart like a sieve. This is what writing is to the writer. The writing profession is unlike any other because it is not a profession to us. It is a way of life. We are drawn to it, sometimes despite our best efforts to pull away.And that's why we are insane.Now,are you ?

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