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Indian wireless telecom Reliance Jio Infocomm announced that it had acquired 53 million new subscribers for its mobile network—the first in the country to run completely on the faster 4G LTE standard—in the 83 days since its September launch.
Jio’s secret? Free voice calling and rock-bottom prices for data. The company charges less than a dollar for 1 gigabyte of data, and starts its monthly data plans at INR149 ($2.32), about what you would pay for an eight-ounce latte at a New Delhi Starbucks.
However, it’s not India’s urban-dwelling coffee sippers that Jio has its sights on, but the millions of lower-income residents yet to go online that will access the internet for the first time via a smartphone. eMarketer estimates that smartphone penetration in India will reach 17.7% in 2016. There is substantial room for growth over the coming years.
Jio’s pricing strategy is a clear move against India’s big three wireless carriers—Bharti Airtel, Vodafone India and Idea Cellular, which count between them some 622 million customers in total. All three competitors have already lowered their data plans in response to the new challenge from upstart Jio. However, that might not be enough to retain existing customers given the willingness of parent company Reliance Industries to keep its subsidiary flush with operating capital to build market share.
The promise of cheap, ubiquitous data for smartphone users has the potential to usher India into a new phase of digital development. The country currently suffers from patchy network coverage, bad connections, inconsistent in data speeds and dropped calls, with consumers mired in slower 2G and 3G networks. And until Jio’s entrance, the cost of broadband mobile was a prohibitive one for most consumers, keeping the number of those on 4G networks low.
Given access to 4G networks, consumers in most markets have responded with a marked increase in their data consumption habits. In India, the home of Bollywood, that change is likely to manifest in demand for over-the-top (OTT) entertainment content like films and music. Jio has smartly noted this, packaging its service with a suite of apps that include two OTT video apps: JioTV and JioCinema. It’s unlikely that Jio has a short-term strategy for generating revenue from such services, instead content to seed demand for OTT video as a way of developing the video advertising market over the long haul.
Jio’s launch has also not been without its own problems. An audit conducted by the Telecom Regulatory Authority of India (TRAI) in October revealed that Jio had the lowest 4G speeds out of the country’s four largest service providers, averaging 6 megabits per second, compared with Bharti Airtel’s leading average speed of 11.47 megabits per second.
Despite such hiccups, Jio’s entrance and the strong response by consumers may be the tipping point needed to usher India’s population into the 4G revolution.
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