TECH

Jio Dominated The Telecom War In 2016

Reliance Jio has kicked off the 4G war by providing free data, but is it sustainable?

28/12/2016 12:35 PM IST | Updated 28/12/2016 3:06 PM IST
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At the beginning of the year, data packs in India for mobiles were still costly. Only select cities had 4G coverage and India's average Internet speed was 3.5 Mbps. The country ranked 114th in the world in that category.

But one name to shake up the status quo was Reliance Jio. The company had started testing out the network by giving the employees LYF devices and WiFi hotspot dongles. In May, it started its consumer testing by asking employees to invite more customers from their circle to buy a LYF phone and get a Jio SIM with it.

Soon, the invite system was removed and the SIM was bundled with the LYF phones. While, the smartphones offered by the company very average at best, the incentive was the SIM and the free data offer. The company was offering its customers three months of unlimited 4G data. It also offered 4500 minutes of voice calling and access to premium Jio services and 1500 minutes of VoLTE (Voice over LTE) calls.

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Later, the company partnered with Samsung to let the owners of selected Samsung phones get the Jio SIM free through an invite code. The company made JioFi device open for purchase. In August it opened up the offer to all the LG and Samsung phones. However, a bug in the app which occurred for a short while allowed anyone to buy the SIM.

The company started selling the SIM cards openly before the grand announcement on 1 September at Reliance's Annual General Meeting. The company's chairman, Mukesh Ambani, announced Jio open for all customer for three months. The company announced tariff plans as well. The telecom wars started from that day, as incumbent operators started to question the free data plans and network strategy of Jio. On the other hand, Ambani asked them to co-operate in the movement and asked for the support in interconnection for a healthy environment.

Amit Dave / Reuters
Mukesh Ambani, chairman of Indian energy company Reliance Industries,

After a lot of back and forth between operators, Cellular Operators Association of India (COAI) and Telecom Regulatory Authority of India (TRAI), the incumbent operators gave way to Jio and provided the interconnection points. However, Jio's argument continued that these were not sufficient for the volume of calls being made by the customers to other networks. TRAI took a harsh step and slammed a ₹3050 crore of penalty on Airtel, Idea, and Vodafone which is still under challenge.

The telecom authority kept Jio in check as well, by declaring that it has to end its welcome offer by 3 December as the inaugural offers are only valid for 90 days. On 3 December Jio launched a new plan called Happy New Year Plan, which included free data for new customers as well. Airtel has already opposed the TRAI's decision to give this plan a nod. Now the Jio customers would get 1 GB of free data every day until March 2017.

Apart from that, Jio is facing the prospect of a growing customer at a breakneck pace. The growth is a hindrance in 4G speeds overall. The company has slammed the method of testing by a TRAI app which deemed it as the slowest network.

While Jio is known as a network provider at the moment, it has started testing for a Gigabit broadband in Mumbai. It aims to be in the home, car and the entertainment space as well. Following the demonetisation, the company has been pushing its wallet app JioMoney aggressively as well. Ambani had recently said that Jio is planning to install Aadhar based MicroATMs soon as well.

The growth for Jio has been phenomenal. However, a lot of customers are using Jio as a secondary SIM. Service qualms are tolerated because of the 'it's free' mentality. It'd be really interesting to see that if the customers would like to switch to the network once it is proven that it gives reliable services.

Cash burning wouldn't be a problem for a company of this scale, however, every user retention and revenue generation would be talked about a lot next year when it goes under a tougher test.

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