Very few companies can claim the honour of becoming a household name in such a short time as Jio. Its journey began seven years ago but it’s these last 10 months wherein Jio’s popularity shot up in a manner that has given every other business house a massive inferiority complex. And why not, after all, Jio brought such a disruptive change that has had every other telecom company in the country crying bloody murder. So much that they’ve all come together to file numerous complaints against Jio’s pricing strategies to the country’s regulatory authorities. Analysts observing all the action from the sidelines have pointed out the realisation that most telecom companies have arrived at – that mobile data is the new oil.
While some may say that it’s an overestimation of the true value, there’s a simple thing that I’d like to point out. Jio is targeting not just the telecom market but also the DTH market. Mukesh Ambani’s Reliance AGM address hinted at Jio’s intention of targeting this market which is projected to have a revenue greater than $5 Billion by 2020. It’s right there in Mukesh Ambani’s speech under the JioPhone announcement. Before we get to that let’s see what JioPhone brings to the table. It’s a low cost smartphone that comes with Jio apps. This phone offers half a GB of data every day. That’s half a GB for a targeted 500 million subscriber count. This is what you get for the base price package of Rs.153. For Rs.309, you can double the daily data cap which Reliance says is enough to enjoy 3 to 4 hours of video. Additionally, there’s an “affordable” JioPhone TV Cable that you can buy which allows you to link the JioPhone to your TV. This JioPhone TV Cable sounds like an MHL cable which will let you mirror your JioPhone with your TV. The very same JioPhone that has 1 GB of data per day and a couple of Jio Apps. JioTV is one of these apps and it opens up your phone to over 400+ TV channels including 60+ HD channels. Then there’s JioCinema which does the same for movies, TV shows and music videos. The former costs Rs.349 a month and the latter costs Rs.199.
Let’s recap, you’re getting unlimited phone calls across India, 1 GB of data, access to a plethora of TV shows, movies and music; all for Rs.309. Or you can make that Rs.153 for the base pack. Now let’s take a look at the existing telecom base packs and DTH base packs. The bare minimum appears to cost around Rs.85-99 across all DTH providers. And this is without sports and international channels. When you club those “premium” packages along with your base plan, the net DTH subscription fee goes up to Rs.500-600. Now, you can get the phone and the Jio apps for a bare minimum of Rs.153+199 (Rs.352) or you can pay upwards of Rs.600 to get the same set of features with any other telecom and DTH operator. So for the millions and millions of people in our country who are faced with a choice of picking their existing telecom providers along with an additional DTH provider, they can simply get a JioPhone and save money while getting a phone-cum-TV. All this, provided their all-IP infrastructure can handle the load. There simply isn’t any reason left to pick a DTH provider. I don’t see any reason why these millions would have to keep subscribing to a DTH service. The very same DTH services which have bifurcated TV channels into carefully crafted “bouquets or packs” which practically forces customers to opt for more than one pack just to satiate their entertainment desires. And it’s not just me that feels this way. This sentiment was shared by thousands of shareholders who let loose of their DTH stocks, so much that they dropped in value by 6% the day Mukesh Ambani made his announcement. Moreover, there have been leaks in the past few months regarding a Hybrid Jio DTH box which aims to offer broadband internet as well as DTH services. If rumours are to be true, Reliance will be unleashing another “Prime” offer to reel in customers from the competition.
This marks the moment in Indian history wherein the first telecom-cum-DTH provider came to be. Now let me draw your attention to the US, where such entities are commonplace. There’s AT&T, Comcast, Verizon and a couple of others. Some of these only provide telecom services while others serve multiple markets. And when you have a closer look at most American cities, they only have one or two providers to pick from, often giving rise to a situation where consumers have to pick the least worst of the two. That’s because of the US free market system made it very easy for a monopolies to form. And as competition lowered in each territory or zone, these monopolistic companies hiked fares at each and every opportunity they could get. This has resulted in the USA having one of the highest per capita internet expenditure greater than most countries.
It seems there’s absolutely nothing that’s going to stop Reliance from going the same way. It has caused more disruptions in the market than any other entity leading to mass adoption of Reliance’s services. And with the introduction of these new plans, it seems Reliance will not only gain a stronghold over telecom but also the DTH market giving rise to, in all sense of the word, a monopoly. Only time will tell if Reliance will slowly consume all the competition and go on to be India’s AT&T. There would be nothing worse for the Indian telecom consumer than that.