Reliance Jio to Not Slash Prices Further Courtesy of Predatory Pricing Regulations

Within a few month’s time, Reliance Jio gained significant market share in many circles owing to its dirt-cheap offerings and extremely affordable JioPhone. With these strategies, the Mukesh Ambani led telco raked in a lot of subscribers in five circles including Himachal Pradesh, Madhya Pradesh, Orissa, Assam and Bihar where it now boasts of owning more than 30% market share. However, things might not be all rosy for Reliance Jio since these circles have been deemed as C-grade meaning that the customers in these circles are considered low paying. Another reason why Reliance Jio remains ahead of other telcos in these circles is that of the massive 4G infrastructure which the telco has deployed, as opposed to other incumbents which have struggled to bring reliable 4G services in these states.

jio-tariffs-predatory-pricing

Bumpy Road Ahead for Reliance Jio with Predatory Pricing Rule

Even with such an active user base, Reliance Jio might be in for some trouble since the telco is going to have a hard time further slashing prices even with a low paying customer base. The constraint has been put by the telecom regulatory authority of India (Trai) which issued regulation back in February regarding predatory pricing by telcos. As part of this regulation, the telcos will be slapped with a penalty up to Rs 50 lakh per circle if they resort to predatory pricing techniques, the analysts say.

As per Trai’s definition, predatory pricing will be considered eligible for penalisation in case a telecom operator with more than 30% market share offers services below the average variable cost to gain significant upper hand as compared to the other telcos. Previously, Reliance Jio was merely a new entrant in the telecom scene whereas other incumbents like Idea Cellular, Vodafone and Airtel had a larger share of the pie. However, after Reliance Jio’s extremely affordable plans, the other telcos could only catch up while Jio had already dented their subscriber base.

Reliance Jio Likely to Adopt Different Strategies

Following the strategy of providing free services by Reliance Jio, Trai was forced to define predatory pricing as a reason for penalisation since the other telcos requested the telecom watchdog to intervene in the affairs. As per Trai’s regulation, variable cost is calculated after deducting fixed cost and share of fixed overheads borne by the company from total cost incurred by it for operating a business during the period under question. Now the question remains that as Reliance Jio continues to grow its subscriber base in other circles, the telco is going to have a hard time competing with other telcos since affordably priced offerings have been Reliance Jio’s master move to lure in the consumers. Undoubtedly, if the regulation is to be followed, then Reliance Jio will likely adopt different marketing strategies to bring in more subscribers.

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Arpit spends his day closely following the telecom and tech industry. A music connoisseur and a night owl, he also takes a deep interest in the Indian technology start-up scene and spends rest of his time spilling poetry and stories on paper.

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Kaushik IMABiswadeep, IndiaEsmailChetan | BengaluruNikhil Mumbai-Pune Recent comment authors
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Matthew
Matthew

Peak hour speed of BSNL 4G.

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Kiran Fernandes | Goa
Kiran Fernandes | Goa

That’s okay. The speeds will decrease as BSNL gets more customers on their 4g network. In the meantime, enjoy those speeds with a truly unlimited plan xD

AU(Airtel User)
AU(Airtel User)

Will this work with MTNL network on 4G ?

Kaushik IMA
Kaushik IMA

Suddenly covering tracks switching BSNL to MTNL since I caught you lying about living in Delhi?

You ain’t that smart my friend AU. be happy with BSNL.

Matthew
Matthew

@Nikhil
It is true that me too amused by this speed in BSNL. When Vodafone launched their 4G(and still now )i never ever got a speed above 20mbps in Vodafone. And i payed a hefty amount for Vodafone sub-standard 4G services at that time and now. I am going to stop using Vodafone to planning to give more priority for BSNL as BSNL speeds now lies between 15mbps to 26mbps.

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Jio lover
Jio lover

Which location??

Matthew
Matthew

Vodafone first started 4G in India from Kochi, Kerala.
BSNL also conducted first commercial launch of 4G in whole Idukki district of Kerala. Above speed i got from Thodupuzha, Idukki district, Kerala. My rural village (Kodikulam) also got BSNL 4G with same like speeds.

Biswadeep, India
Biswadeep, India

See and we don’t get proper BSNL signal in Kolkata… Btw wasn’t BSNL 4g started from Shivamoga, Karnataka?

Nikhil Mumbai-Pune
Nikhil Mumbai-Pune

Nobody is using it. That’s the reason? What you think?

Matthew
Matthew

I don’t think so because there was huge rush of youngsters to procure BSNL 4G Sims earlier(now also). If you visit an exchange in Idukki district you can see people there for sim swap. I think BSNL network vendor “NOKIA” did a tremendous job in developing a true state of art 4G network for BSNL. Kudos for Nokia.

Nikhil Mumbai-Pune
Nikhil Mumbai-Pune

Thanks for update. When it will be launched in trivandrum?

Biswadeep, India
Biswadeep, India

I don’t understand why BSNL has quite high demand in Karnataka circle which is rarely to be seen in other states

Nikhil Mumbai-Pune
Nikhil Mumbai-Pune

Airtel and Vodafone/Idea might be not doing so well over there?

Ashish
Ashish

AirTel iz very famous there but they have pathetic network.

Chetan | Bengaluru
Chetan | Bengaluru

Kerela only has BSNL and Idea as best coverage. Airtel is not best their…

Biswadeep, India
Biswadeep, India

Might be

Diana
Diana

It’s Kerala. Idduki is in Kerala

Biswadeep, India
Biswadeep, India

Okay

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