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Reliance Jio and the Price Wars: Survival under threat for telecoms

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10

Nov, 2016

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Reliance played its trump card and launched the services at the lowest price possible to win the masses. This announcement by Mr Mukesh Ambani controlled company has snatched away the sound sleeps of the telecoms in India. With one GB Data being available at as low as Rs 50, the telecoms like Airtel and Vodafone have completely lost the game it seems.

Launching the price war among the telecoms, the Reliance Jio has come as the delight to millions of customers, players such as Airtel, Vodafone and Idea Cellular have started slashing data prices and adding value to existing internet and voice packs. Jio started cornering customers by offering free unlimited voice and data packages.

Once it started initial tests through Reliance employees from December 27 last year Jio has managed to get 1.5 million users. Customers can buy Jio’s Lyf handset at Rs 3,000 to avail 4G service free-of-cost. Moreover if you have any of the compatible Samsung handsets that the company has listed, you can get the Reliance Jio 4G service for free after generating a code. And they win the heart by referring these offers as “invitation”.

The Telecoms Responded by changing their premium plans:

Airtel:

Responding to it Airtel lowered the threshold for plans where it also offers free voice, though not doing much damage to its plans it has restricted this services to the postpaid segment. It has plans now with revised segments like the entry to the ‘Infinity’ plan is now available from Rs 1,199, offering unlimited voice calling for local, STD, and national roaming along with 100 free SMSs per day, 1GB 3G/4G data and free subscription to Wynk Music and Wynk Movies. Earlier, this was available from Rs 2,000. ‘Infinity’ customers, but it’s just comprises 1% of Airtel’s overall customer base.

Airtel was also announced various data plans to withstand in the market. It is offering one GB data for Rs.255 with a validity of 28 days.

Vodafone:

Vodafone added additional sixty seven percent data on its prepaid packs to give more internet value at the same price. It has announced Vodafone Delights – that promises free 10-minute talk-time to all customers whose conversations get interrupted for any reason including the call drops. Applicable only for Vodafone connections. To avail the talk-time benefit, customers need to SMS ‘BETTER’ to 199 and talk time of 10 minutes will be credited immediately to their numbers.

Vodafone has also announced various data plans to withstand in the market.

Here is the offr given by Vodafone lower pack: 1 GB @4G speed. Post 1 GB you will be charged 4p/10kb. Additional 1GB data is available only on 4G handset, 4G SIM & 4G network

Idea Cellular:

Idea Cellular too added benefits to its smaller prepaid data packs which are below 1 GB, as it increased value for customers.

These three major telecoms are gearing up to counter Reliance Jio by increasing their 4G spectrum and the officials are still unsure how they are still going to fare once Reliance Jio gets aggressive.

Idea is also competing with Airtel and Vodafone to retain their customers.

Telecom Market is all set to explode:

Operators are now focusing on two things:

  1. Protecting their consumer base from being poached by RJio and
  2. Expanding the overall market

The operators are also adopting the ‘sachet’ scheme to make mobile Internet affordable, a strategy that worked earlier in driving up voice calls. Reliance, the company says it hopes to reach 90% of India’s population within a year of period. Reliance is working with those stratagies.

When Mr. Ambani unveiled his plans, the share price of India’s biggest telecom company, Bharti Airtel, fell 8.5% – almost losing $1.3bn (£975m). Idea Cellular’s market value also dipped by 7%, wiping more than $500m of its value.

Reliance is entering the market at a time when the telecom industry has a combined debt of over $50bn. The price war means Indian mobile users should be the winners. Cheap internet access is today’s customer’s key requirement. People have already started queuing at Reliance’s stores in the capital, Delhi. They are more than happy to get free internet even if it’s for a limited period of time.

Reliance Jio’s SIM cards are free but they would need handsets that are 4G enabled where we make calls in VoLTE phones. But we can also make call through Jio app.

India is a country where internet speeds are still slow and the problem of call drops is too frequent. So it’s not going to be an easy market even for Reliance. While cheap deals will win it customers early on, only good service will guarantee it the long-term loyalty of users.

BSNL jumps into the competition:

BSNL has announced to launch an unlimited wire line broadband plan which will cost the user less than Re 1 per GB data consumption. BSNL’s announcement came right after Reliance Jio’s launch which promises to offer 4G data at Rs 50 per GB.

‘Experience Unlimited BB 249’ from September 9th 2016. This is the scheme BSNL has launched.

The plan will enhance the customer experience towards wire line broadband services and attract new users to experience BSNL broadband services. Under this plan, customers can download unlimited Broadband data without bothering about any data limit. And BSNL is offering 2 Mbps speed under this plan.

Customers can download up to 300 GB data by paying Rs 249. BSNL also has signed a Memorandum of Understanding with Telecom Department regarding performance based targets assigned to the telecom PSU.

Meanwhile Vodafone and state-owned BSNL have joined hands countrywide 2G intra-circle roaming agreement to provide better telecom services to their respective customers. Vodafone India has over 1, 37,000 towers across the country and BSNL has more than 1, 14,000 towers.

After this partnership, the reach of network of both the companies, especially in the rural areas will improve and lead to better services.

Playing it safe Reliance Jio and state-owned operator BSNL has reportedly signed a pact for intra-circle roaming: roaming within the same telecom circle. This means BSNL customers with a 4G-capable phone will be able to use Reliance Jio’s 4G services in roaming mode, while Reliance Jio’s customers will be able to use BSNL’s 2G network for making voice calls.

For Reliance Jio, this partnership could be hugely beneficial. The current Reliance Jio deployment is quite focused and network optimized for urban and suburban tier 1 and 2 towns, whereas for BSNL it has decent footprints in terms of rural coverage.

The tie up between Jio and BSNL is mutually beneficial. Jio has been having interconnection issues with other networks, with calls not getting through, and with this tie up the fall back on BSNL’s 2G network for voice calls will help solve the problem.

Below are details of the BSNL Offer to its customers:

Below are details of the BSNL Offer to its customers

COAI advises TRAI to increase interconnect charges:

Meanwhile reacting on the launch of Jio, COAI has asked TRAI to put the review of interconnection usage charges (IUC) on hold for the moment and that the same should be deferred by a few months.

With the launch of Reliance Jio, there are clearly two fractions that have formed in India’s telecom space – one is Reliance Jio and the other is a joint force formed by incumbent telecom operators and COAI (Cellular Operators Association of India).

Wi-Fi Hotspot:

Reliance Jio has “The JioFi “ which is a personal hotspot -a small device that will fit into your pocket, and acts as a bridge between the 4G network and a local Wi-Fi network that it creates, which your phone, laptop, and other devices can connect to. It’s a very simple way of getting your home online, and it comes with a rechargeable battery.

The JioFi is priced at Rs. 1,999, down from its earlier price of Rs. 2,899 and data is free to use until December 31st. As of now, the company has made no statement about what the plans will be post that December. As they announced extension of free services upto March 31st 2017.

The BSS/OSS:

Reliance Jio has partnered with more than 20 technology firms to streamline its OSS and BSS operations. For a telecom operator, OSS/BSS is responsible for the overall operational and billing of the services offered.

Finally, Swedish telecom gear maker Ericsson has bagged a nearly $10 million almost Rs 60 crore, three-year operations support systems (OSS) deal.

Under the deal, Ericsson, the world’s largest network gear maker, will provide the telecom unit of Reliance Industries its service fulfillment software solutions, comprising nine suites including Catalog Manager, Granite Inventory and GIS-based Network Engineer solution.

OSS comprise software applications which support a telecom operator’s back-office activities and maintain customer services while business support system (BSS) are software applications that support activities involving customer interface such as billing, customer relationship management and call centre automation.

Reliance Jio has partnered with multiple vendors to streamline its OSS and BSS operations, including Cisco, HP, IBM, SAP, Cognizant and Subex, among others.

Speaking on the occasion of launch Chairman Mr. Mukesh Ambani has said by introducing Adhar Card Based Sim Card distribution and billing process he is trying to make paper work easy for customers but still if anything is causing problem in their convergent billing, he said they would be ready to consider it and make changes accordingly.

Thus, the overall conclusion is that Reliance Jio has slipped in into the market slowly and is building upon the masses’ requirements. By looking out for bulk clients at one go which will generate revenues for them instantly, and allow them to move ahead and be a giant in the telecom industry soon, provided they stick to their words of quality service and reach.

By : Ramakrishna Mashetty

Ramakrishna Mashetty is The Chief Marketing officer of SURE! (a Magnaquest product).SURE! is an internationally acclaimed player in comprehensive end-to-end Subscription Business Solutions for PayTV, Broadband and Cloud Computing businesses – through deployment of Metered Billing, CRM, Service Fulfillment, Value-Added Services, and Managed Services.

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