Since the launch of much awaited Reliance Jio, telecom sector in India is up for a stir. Jio has already acquired 100 million users in a short span of 170 days, and is targeting ambitious 400 million users by the end of next fiscal year. Some would say, this could be because of Jio’s generous “everything free” offer. I argue, it’s because of the sheer change in the way Indian consumers use mobile data. I still remember paying Rs 250 for 1GB of 3G data for the entire month not so long ago, and suddenly people have started talking about 1GB of data per day! That’s quite a leap, 30 times more, in terms of average data usage. As rightly said by Mr. Ambani -in his 100 million subscribers address- during last month Jio users have consumed more than 1 exabyte (1×10^18 bytes) of data, which brings Indian users at par with the United States in terms of data usage. There are several key factors for this unprecedented growth in data consumption; I will try to summarize a few in the next couple of paragraphs.
First, Jio is India’s first All IP network. In layman terms, All-IP is a network, which transports all information and services (voice, data, and all sorts of media such as video) by encapsulating these into IP packets, akin to those used in the Internet. In recently concluded Mobile World Congress -the world’s largest gathering of the mobile industry- in Barcelona, Jio announced its plans to become world’s largest All-IP network in partnership with Cisco. While early telecom providers such as Bharti Airtel in India and AT&T in the US have a clear disadvantage of upgrading their old 2G/3G infrastructure, Jio clearly is taking advantage of latest technological advancements, shrinking the footprint of required network equipment by as much as 90%. Undoubtedly, this is one of the reasons why all voice calls are free on Jio’s network –for VoLTE enabled devices.
Second, growth of internet user base in India. According to Deloitte’s annual TMT (Technology, Media, and Telecommunications) prediction, country’s internet user base will cross 500 million by 2018, with rural internet users alone accounting for 210 million. With availability of content in regional languages, the amount of data consumed per day would be ever increasing. According to a survey conducted by Vuclip, 78% of the users prefer watching content in their native languages. English is the most commonly used language in the world as well as in India. However, Google data shows 94% growth rate in Hindi content consumption. According to a latest study conducted by IAMAI(Internet and Mobile Association in India) and IMRB International, regional content availability can boost the growth of Internet in India by 24%.
Third, with increasing purchasing power parity and ever decreasing cost of smartphones, people in rural areas are more comfortable spending 3-4K on a smartphone. Introduction of low cost LYF devices, was again a well thought out plan. According to Counterpoint Research, in May 2016, LYF became the fifth largest smartphone player and second largest LTE phone supplier in India. This goes to show the appetite Indian market has for entry level smartphones.
Other clear advantage Jio has is: its deep pockets. As India’s most profitable company with over two dozen different businesses, Reliance can afford to give a few freebies to attract consumers, however, it is not the case with other providers. In 2010, telecom sector had a dozen companies battling for consumers. In 2017, with Videocon exiting, RCom-Aircel-MTS 3-way merger, and Vodafone India-Idea all-shares merger, and Tata Group’s feud with NTT DoCoMo, the number has come down to half-a-dozen. This clearly shows the impact Jio has made in the Indian telecom space.
Data is the new Oil
In a country as big as India, with limited natural oil and gas reserves, dependency on imported oil is a reality one can’t deny. Moreover, addressing problem of pollution is a major concern for country’s leaders. With national capital suffering from heavy fog and pollution much above normal level, people are forced to think about other ways of fuelling their vehicles. Also, according to Prime Minister Narendra Modi’s ratification of Paris Agreement on Climate Change, India is supposed to decrease its emission from 4.5 to ~3%, and with eminent subsidies on electric cars its not too far in the future that India would be seeing electric cars like Teslas and Prius in the US. Though with current scenario, oil is not going anywhere for at least a decade, with advancement in technology you never know when its time.
Lastly, what differentiates Jio from other providers is: everything is done keeping in mind the bigger picture. Jio was the first telecom provider to provide a host of useful apps such as JioMusic, JioTV, JioCloud, JioCinema, JioMagazine, JioNews, JioChat, JioMoney at no extra cost to the consumers. Hence, all users need to do is pay for the data, rest everything is taken care of by these apps, creating an ecosystem in itself. As a matter of fact, Reliance is already preparing itself for the disruption that is Internet of Things (IOT). In Navi Mumbai, Jio Headquarters, Reliance has put on show everything from its e-payment mechanism and music-streaming app to its messaging app, sleek LYF smartphones — sold at a fraction of the cost of an iPhone — connected cars, and even a replica home, which of-course I had the privilege to visit as an employee!
In conclusion, though at first 30 billion dollars seems like a huge investment, by 2020 gross revenue of Indian telcos would be reaching close to 50 billion dollars, and it’s a matter of time to recover the amount spent even if Jio maintains its current market share of 23%. As the rumours go, Jio logo is actually a mirror image of the word ‘oil’, reflecting in a way Reliance’s journey from oil drilling to data mining. If it executes well, Jio is poised to become a Digital India enabler, empowering millions of Indians.
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