Reliance Jio in RIL’s 41st Annual General meeting of stakeholders announced that it would be stepping into the broadband sector with the rollout of Jio GigaFiber, a new gigabit broadband service which would commence operating in 1,100 cities initially. A piece of news has surfaced hinting us about the pricing of this new service. The Mukesh Ambani led telco had also revealed that the registration for Jio GigaFiber and related offerings would start on August 15, Independence Day. Also, he said that the initial rollout cities would be chosen depending on the interest which these locations receive in the registration period. Reliance Jio will also be introducing Jio GigaTV, VR headset and other smart home solutions alongside Jio GigaFiber.
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Lower Pricing Compared to Other Providers
A person aware of the matter told ET that the pricing of these new Internet-based services would start with as less as Rs 500. Compared to the other cable providers who ship over 100GB data at 100 Mbps for Rs 700-Rs 1000, Reliance Jio would provide the same at just 50% rates, the person said. Reliance Jio plans to do a massive rollout of Reliance Jio GigaFiber before Diwali in metros and 80 tier 1 and tier 2 cities initially. The person also said that the conventional cable providers charge Rs 250-300 extra for providing broadband services to the users. Jio, unlike the other providers, would be offering its services at such low prices because it would be focusing on racking up a high volume of customers.
According to analysts, the rates for internet provision by Reliance Jio will also be 25-30% less compared to the standard 4G market rates for data right now. Rajiv Sharma, HSBC director and telecom analyst, said that Reliance Jio’s broadband internet would be “much more affordable and well below the current 4G mobile data rates that are in Rs 2.7-5 per GB range.”
Experts’ Opinions on Pricing
Another telecom analyst, Naveen Kulkarni from PhillipCapital said “There can be very limited cannibalisation even if Jio prices fixed broadband (with bundled internet TV services) at 30% below 4G mobile broadband rates as the two data products are very different – one meant for the home user and the other for the person on-the-move. Also, the quality of video streaming in a fibre-based home broadband scenario would be far more reliable and consistent than 4G mobile broadband.”
Hetal Gandhi, director (research) and telecom expert at Crisil Ltd remarked: “bundled services to emerge as the key differentiator and start gaining importance among operators as they seek to improve stickiness and gain market share.” Drawing a parallel between the situation in the UK and India, she said that in Britain and US, companies rely on four areas to hook customers wherein the consumers buy landline, internet, television and mobile services from a single company. She said that it’s highly likely that Reliance Jio might take a similar approach.
As per the experts’ opinions, to make this possible, Reliance Jio would be using the IP multicasting technology. HSBC’s Sharma also supported this idea as he said that said IP multicasting makes sense. He reasoned that “without such technology, Jio would have had to provide each home with a data allowance of over 500-600 GB per month for delivering TV services alone, which would limit the company’s ability to price home broadband with bundled TV services at an attractive Rs 500 per month.”
Jio Aiming 50 Million Users in Quick Time
In the telecom segment, Jio garnered over 200 million users in just 19 months. And in the broadband segment, the Mukesh Ambani-led company is looking to grab 50 million users, but the company did not reveal any timeline though.
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