Approx 100 crore people are connected through mobile phones in India direct or indirect way. Means 80% of total population is well connected through Voice Calling. Out of these, 34% population is using the Internet and only 10% users are using 3G and above it. These data is proving only one point that for any telecom, there is a lot of scope in Internet service than Voice service. Reliance Jio is the outcome of this. They want to put focus only on this Internet base.
Now the question arises that why telecom should not put the focus on Voice and the answer is if you have a good Internet, you will never think about voice call and other messaging services. Because the Internet is capable as an alternative for all of these services.
Further, Reliance Jio has invested so much in its Infrastructure in previous 3-4 years. Now, they have largest fiber optical cable network ( Approx 2.5 lakh kilometer). So they are capable of transferring a large amount of data at very high speed.
For this project, Reliance group has invested approx $22 bn (150000 crore rupees) which is more than combined investment of Airtel, Idea and Vodafone in India for the 3G/4G segment.
Now coming to the main point, how Jio is making the profit ? For this, I want to say that once you have already laid down the fiber optic network, the cost of operating it is not very huge.Again, Jio has an all-IP network, so all voice calls will go through the internet just like skype. So,there is not really any point in charging for voice anymore.Further, the only costs Jio incurs on voice is some 14 paise which they have to pay as interconnect fee to the operator’s network you called. This should be considered a temporary operational cos because TRAI is likely to either further reduce this interconnect fee or make it free in the near future.
Currently, In India, the monthly average revenue per user (ARPU) the current network providers get is around Rs 150 per month. That is the money they get on average from each user. If you spend over Rs250 per month, you are considered a high-value customer. And Jio tariff starts from 149 and end at approx 4999 rupees. So, even if someone chooses the cheapest plan, he will pay little more to Jio network than the current average. Also,they do have some smaller plans at Rs 19, 199 and 299, but these plans do not really offer any more value than their main plans as they have even less validity. Also, it offers less data per rupee. For example, the 299 plan only offers 21-day validity and 2GB data. This may be adequate for many people, but if you ever exceed the 2GB limit, then you will have to purchase ‘addon packs’ and these addon pack will have the validity of the main pack. So, if you recharge on day 20 of this plan, then you will get only one-day validity for the addon. For practical purposes, you will be spending more for lesser value through these packs. The Rs19 pack maybe useful for those who want to use some internet & voice calling once in a while.
Current Profit Making:-
1- Lyf phones- Reliance is earning through these outdated Chinese phones by packaging it in new labels.
2- Jeo Apps like- Jeo Play, Jeo OnDemand, JeoBeats, JeoMags, JeoNews, Jeo XpressNews, JeoDrive, Jeo Security etc.
3- Jeo also has the plan to launch something like google Chromecast by which we can directly connect our phone to TV.
4- Jeo Money- Payments industry is huge, in India and across the world. It is growing really fast that it is set to touch $500 billion in the year 2020. So this is also a high profit making app like Freecharge, Paytm etc.
5- JioFi- it is not free.
This is a win-win situation for both Reliance group and customers. But it will create a monopoly in the market if other companies like Vodafone, Airtel etc would not be able to compete with them in near future. And monopoly is not good for any economy. I hope other rivals will come with different models which will make telecom sector more customer friendly in near future.
In concluding line I want to say that by just making their tariff plan in such a way that the most people interested in 4G have to pay over Rs 500 per month, Jio is making way more money than the current players. Most of the high-value customers of other players will instantly port to Jio, and they may be able to achieve a huge market share in next couple of years.
Now the question arises that why telecom should not put the focus on Voice and the answer is if you have a good Internet, you will never think about voice call and other messaging services. Because the Internet is capable as an alternative for all of these services.
Further, Reliance Jio has invested so much in its Infrastructure in previous 3-4 years. Now, they have largest fiber optical cable network ( Approx 2.5 lakh kilometer). So they are capable of transferring a large amount of data at very high speed.
For this project, Reliance group has invested approx $22 bn (150000 crore rupees) which is more than combined investment of Airtel, Idea and Vodafone in India for the 3G/4G segment.
Now coming to the main point, how Jio is making the profit ? For this, I want to say that once you have already laid down the fiber optic network, the cost of operating it is not very huge.Again, Jio has an all-IP network, so all voice calls will go through the internet just like skype. So,there is not really any point in charging for voice anymore.Further, the only costs Jio incurs on voice is some 14 paise which they have to pay as interconnect fee to the operator’s network you called. This should be considered a temporary operational cos because TRAI is likely to either further reduce this interconnect fee or make it free in the near future.
Currently, In India, the monthly average revenue per user (ARPU) the current network providers get is around Rs 150 per month. That is the money they get on average from each user. If you spend over Rs250 per month, you are considered a high-value customer. And Jio tariff starts from 149 and end at approx 4999 rupees. So, even if someone chooses the cheapest plan, he will pay little more to Jio network than the current average. Also,they do have some smaller plans at Rs 19, 199 and 299, but these plans do not really offer any more value than their main plans as they have even less validity. Also, it offers less data per rupee. For example, the 299 plan only offers 21-day validity and 2GB data. This may be adequate for many people, but if you ever exceed the 2GB limit, then you will have to purchase ‘addon packs’ and these addon pack will have the validity of the main pack. So, if you recharge on day 20 of this plan, then you will get only one-day validity for the addon. For practical purposes, you will be spending more for lesser value through these packs. The Rs19 pack maybe useful for those who want to use some internet & voice calling once in a while.
Current Profit Making:-
1- Lyf phones- Reliance is earning through these outdated Chinese phones by packaging it in new labels.
2- Jeo Apps like- Jeo Play, Jeo OnDemand, JeoBeats, JeoMags, JeoNews, Jeo XpressNews, JeoDrive, Jeo Security etc.
3- Jeo also has the plan to launch something like google Chromecast by which we can directly connect our phone to TV.
4- Jeo Money- Payments industry is huge, in India and across the world. It is growing really fast that it is set to touch $500 billion in the year 2020. So this is also a high profit making app like Freecharge, Paytm etc.
5- JioFi- it is not free.
This is a win-win situation for both Reliance group and customers. But it will create a monopoly in the market if other companies like Vodafone, Airtel etc would not be able to compete with them in near future. And monopoly is not good for any economy. I hope other rivals will come with different models which will make telecom sector more customer friendly in near future.
In concluding line I want to say that by just making their tariff plan in such a way that the most people interested in 4G have to pay over Rs 500 per month, Jio is making way more money than the current players. Most of the high-value customers of other players will instantly port to Jio, and they may be able to achieve a huge market share in next couple of years.
No comments:
Post a Comment