In Business Model, Internet Access, Mobile

“Free” is a difficult price point in most markets. But free voice forever is among the pricing and packaging foundations for Reliance Jio’s fierce attack on India’s mobile market structure. Price leadership is another foundation.

RJio says it will reduce tariffs by another 20 percent whenever a rival matches its offer. You might guess at what will happen. Competitors will drop tariffs, but not to match Jio’s offers exactly, as that will simply trigger another deep discount in retail pricing that depresses revenue for virtually all service providers.

“Same service, lower prices” is a time-tested market entry strategy. But what Jio is doing is more akin to the “destroy the market” strategies used by attackers in other app markets.

Think about Skype. Its objective was not so much to offer “lower prices” as to destroy the pricing regime for voice overall, leaving it as a leader in a much-smaller market. In other words, Skype did not so much aim to take market share as to destroy and then reformulate a market it hoped to lead.

Jio is doing something similar in the mobility market, essentially destroying voice as the revenue driver and substituting mobile data as the driver, in hopes it can lead that new market.

At the end of 2016, Reliance Jio did not appear as a market share leader. Some seven months later, Reliance Jio had taken about nine percent share, and kept growing. By the second quarter of 2018, Reliance Jio might have 14 percent revenue market share.  

Where Jio really dominates is in mobile data, where Jio represents about 94 percent of mobile data usage and 34 percent of mobile data accounts.  

source: Zee Business

source: TRAI


Reliance Jio is now offering unlimited voice plans to JioPhone users, as well as a 1-GB data allowance, for just 49 Indian rupees ($0.76) every 28 days.

The company also offers smartphones that are “effectively free,” as it is “sold” with a three-year refundable deposit.

Reliance Jio  had previously offered a similar smartphone plan giving users a 2-GB data allowance for a 28-day fee of INR98 ($1.52). That plan had offered 2GB of 4G high speed data for a period of 28 days with no daily cap limit.

The internet speed gets reduced to 64Kbps once the data limit is exhausted. Free and unlimited local, STD and roaming voice calls are also available with this plan. This prepaid recharge plan also gives 300 free SMSes. Subscribers also get complimentary subscription to suite of Jio apps.

Airtel also recently updated its Rs. 93 prepaid plan. Airtel’s all new Rs. 93 prepaid recharge plan now offers 1GB or gigabytes of 3G/4G data for 28 days with no daily data cap. The plan also comes bundled with unlimited voice calls and SMSes benefits.

We can argue about whether Jio already is profitable. Jio might be cash flow positive, at least, at the moment.  

But what is clear is Jio’s intention to build its business on mobile data, not voice. By some estimates, about 65 percent of Indian mobile users do not yet use any mobile data.

Start typing and press Enter to search