JioFiber Pricing Aggression Will be Lukewarm at Best, Points Out New Crisil Report

Reliance Jio launched its FTTH JioFiber service on September 5 and unlike the public expected the plans do not come with a massive competitive edge

By September 12th, 2019 AT 1:50 PM
Highlights
  • As per the Crisil report, the per GB price of JioFiber plans is similar to other broadband service providers
  • The lack of bundled TV services is also something that might tick of prospective users

Credit rating agency Crisil has come out with a new report which highlights that Reliance JioFiber’s latest launch is unlikely to create an upheaval in the broadband sector of India unlike how the telecom operator caused back in 2016 during the launch of its prepaid services. On September 5, Mukesh Ambani led telecom operator launched the JioFiber broadband service in India starting at Rs 699 for its Bronze plans with 100 Mbps speed and going up to Rs 8,499 per month for Titanium plan with 1 Gbps plan. These plans also offer Set-Top Box with long term offering and some other benefits as well. As per Crisil, these plans are not going to cause a disruption in the market and will only lead to a little competitive behaviour. These plans will also not drive a lot of churn in the market as per the report.

JioFiber Broadband Plans Are Not So Charming After all

The report underlines that the broadband market is under-penetrated, and in this market, the lack of non-attractive bundled pricing combined with little to no pricing aggression from Reliance Jio would not lead to disruption. There is also the non-refundable deposit of Rs 2,500 to take into consideration which sets the bar higher and dampens the prospect for JioFiber. Not only this, but the customers of JioFiber will also be required to pay for additional content.

JioFiber’s entry-level plan offers 100 Mbps speed with 100GB data which is not at par with other telecom operators and broadband service providers, at least by not a large margin. The per GB price for Reliance JioFiber’s plans comes out to be Rs 4 for the base plan which is in the similar range as what other telecom operators are offering. The government-led telco BSNL is providing these connections at a much lower price of Rs 2 per GB. The premium segment plans are offering the price of Rs 1.2 to Rs 1.6, again a price, which is not very competitive in the broadband market.

Lack of Bundled TV Services Becomes Achilles heel for Reliance Jio

Although there are some unique offerings from JioFiber like a free HD TV with higher-priced long-term plans and, 1 Gbps speed and more, Crisil believes that this market has not yet found its tune with the customers. The use cases for gigabyte connections are still away as they would only be used in case of IoT based homes. There is also the fact that India’s broadband market is very under-penetrated as compared to other markets like the USA, UK and Japan, which have around 30% to 50% broadband penetration. The rate of growth of broadband subscribers in India has also been slow in the past few years. Reliance Jio had also hinted towards the launch of bundled TV services for the customers. However, that could not materialise while the services were launched. Hence, there is little competitive edge that JioFiber is currently enjoying over its rivals.

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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