Reliance Jio is disrupting the Indian telecom market with cheaper tariff plans every single time. When everyone thought that Jio had run out of cut throat tariffs, Jio launched the most affordable 4G phone targeting the feature phone makers and the incumbent operators at the same time.
The launch of Jio Phone aims to take away around 50 crore feature phone users who are deprived of data services that are being enjoyed by their smartphone counterparts on 4G network. With the launch of Jio Phone which is a 4G feature phone, Jio will get a significant chunk of 2G subscribers from the incumbent telcos.Hence, this new move by Reliance Jio will not be easy to digest by any of the incumbent telcos.
Jio Infocomm is backed by Reliance Industries (RIL) which has a market cap of over 5 lakh crores. They have already invested more than Rs 2 lakh crores in Jio. Jio has enough funds to explore more opportunities and give users the cheapest possible tariffs.
The strength of incumbent telcos like Airtel and Vodafone lies in the fact that they have huge customer base backed by excellent customer support and network. Airtel, Vodafone, and Idea are in the business for more than 5 years and know the market metrics to dive into profitability. Airtel has got one of the best networks as certified by OpenSignal and Ookla recently.
All the incumbent operators have 2G, 3G, and 4G networks. This hampers operational efficiency and also leads to underutilization of each of these networks and related spectrum. Instead of being Jack of all trades and Master of none, the incumbents should focus on 4G. The future is 4G as 4G networks have only one IP network for both voice and data, unlike 2G and 3G that have two distinct networks for voice and data.
To migrate a large user base of 2G and 3G users to 4G network, 4G handsets should be affordable for the masses. Here the incumbents can follow in the footsteps of Jio. Take refundable deposit from users and offer them a first recharge plan for as low as Rs.150.
Jio has eliminated the bill shock factor.Jio plans have all in one feature except for ISD. Simple tariffs make selecting a plan easy for the subscriber as well as the retailer to explain it to the customer.
Developing Existing Services
Incumbent telcos should think about reviving the broadband service too. The need of the hour is reducing the price of broadband as Jio has already promised to do what it has done in mobile telephony.