Jio, a challenge to existing players

Jio, a challenge to existing players

Ever since Reliance Industries chairman Mukesh Ambani announced the launch of Jio mobile voice and data service wrapped in an aggressive price pack, epithets have been attached to the new challenger in the telecom sector. Some say ‘disruption’, others describe it ‘game-changing’. Call it by any name, the Jio announcement has caused quite a stir in the marketplace with analysts predicting an intense price war that will force the incumbent operators like Airtel, Vodafone and Idea to fight for each penny of their subscribers who have this royal choice of shifting, importantly, without changing their telephone number thanks to the portability permitted in the regime.

The 4G speed internet at one-fifth of the price charged by the existing service providers coupled with free calls is too tempting to resist on the face of it. While the existing players, consumers and the stock market have all been expecting Reliance Jio to shake up the comfort zone of high tariff muzzled by call drops, the ‘Data-giri’ unleashed by senior Ambani is too much of a combat for players such as Airtel and Vodafone. The way Ambani spoke at the launch listing some of the hurdles like point of interconnect being experienced for Jio gives an impression as if it is Reliance versus the rest. But then, it was time for regulator Trai to keep its watchful eyes on the unfolding developments. 

In the midst of it all, where do the subscribers figure? Happily for them, they are a huge mass of over one billion of which less than a third have moved over to the Internet. It is the vacant space of over 700 million potential users who would be central to the Jio business model which has been created by a humungous investment of Rs 1.34 lakh crore and still counting. Jio would be offering a suite of information and entertainment products delivered through different devices. While Ambani has set a target of 100 million subscribers in the short term, market leader Airtel with a subscriber base of 250 million is not going to let it slip through competition and along with other players, is expected to slash rates of data packs. It may be party time for consumers, the major worry for the industry could be the viability of it all since most of the operators are sitting on a large debt pile. Even Jio is reported to have added to the large burden. It would remain to be seen how soon the challenger is able to reach a break even amidst high pitch competition. In the mean time, customer would be the king! 


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