Author(s): Raghu Gopal
Indian wireless operator Reliance Jio, a subsidiary of Reliance Industries, has yet to officially launch its LTE network in the country, but it's already shaking up the market. Its attractive new deal could be considered a bargain by many consumers: the operator is offering its line of smartphones bundled together with a free three-month trial of its 4G network.
Earlier in 2016, after long delays, Jio launched a family of low-cost 4G Android smartphones under its Lyf brand (see The $60 LTE Phone for India). It took less than three months after launching for Lyf to become a top-five smartphone brand in India.
The Lyf phones come bundled with a Jio LTE SIM card, which offers three months' worth of 4G access. This week, the SIM offer was opened to owners of compatible non-Lyf 4G phones. Jio is offering this deal even though its LTE network is still in its testing phase. This is essentially a large beta test. The offer was initially launched for employees of Reliance, but was later extended to family and friends, then partners and suppliers.
This means that users will have free, albeit temporary, access to unlimited HD voice, video calling, SMS, as well as unlimited on-device LTE data with tethering and mobile hot spots for up to five devices. This is an intriguing promotion to get 4G off the ground and interest has been so strong that there are long lines at stores for the free SIM card. Although it's an innovative move, it also carries an element of risk. If the sheer number of participants overwhelm the fledgling network, then customers’ first experience of LTE could be a negative one. And this could have longer term ramifications for the operator.
As Jio's LTE services approach commercial launch, incumbent Indian telecom operators Airtel, Vodafone and Idea have been forced to cut their tariffs and have bundled free calls with data. Jio, on the success of this "experiment", has altered the direction of the Indian telecom market, which was beginning to show signs of price stabilisation.
While mobile voice services in India are among the cheapest in the world, 3G and 4G data services are expensive by local standards and subscribers are very cautious when connecting. For example, Airtel and Vodafone had been charging about 250 rupees ($3.75) per each GB of data, but this week, under competitive pressure, Airtel announced it was slashing its rates by up to 80 percent. This would bring the cost per GB down to 51 rupees ($0.76), but this would require subscribers to agree to a 12-month prepaid package offer of 1,498 rupees ($22).
Every market needs a challenger operator and Jio has gladly taken on that role. This is despite the fact that LTE services are still being established in India and coverage is limited to several major urban centres.
According to our research, India is on target to surpass the US in 2018 to take the number-two spot in the world for smartphone shipments after China. The recent launch of the low-cost LTE Lyf phones with prices starting at less than $50 could accelerate this. Jio's project is ambitious and could make Reliance a defiant competitor versus its much larger rivals: Airtel, Vodafone India and Idea Cellular. Most of all, Reliance Jio has raised hopes of cheaper, more reliable data for the Indian population.