Year In Review: Exploring Reliance Jio

We are in the last leg of 2016. Over the next final few days remaining in the year, we take a look at the major tech events that took place this year. We talk about them in great detail and do an in-depth analysis of the same. To kick start this series, we take a look at the coming up of Reliance Jio and how it has managed to turn the Indian communication industry upside down.

How did Reliance Jio come up?

Reliance Communications (RCom) was originally started in 2002 by Mukesh Amabani and Manoj Modi. The duo spearheaded the undivided-Reliance subsidiary to new heights with the unique offering of a mobile phone and a SIM connection for just ₹500, a price which was unheard of during those days. Even though the ₹500 scheme had backfired with customers selling off the phone's battery at a much higher price than the combined one of the phone and the SIM, this move certainly helped RCom take a step into the communications industry and it also marked the onset of Mukesh Ambani as a shrewd businessman.

Following Dhirubhai Ambani's death in 2002, the Reliance empire was split between the brothers Mukesh Ambani & Anil Ambani, with the latter getting RCom. To prevent his brother from entering the telecom industry and to avoid competition, Anil Ambani had signed a non-competance clause with brother Mukesh. Because of the non-competance clause in the division agreement of Reliance, Mukesh Ambani couldn't enter the telecom foray and start his own company in the same venture. However the clause was subject to get expired in 2010. Following it's termination in 2010, Mukesh Ambani bought 96% stake in Infotel Broadband for a mammoth sum of ₹4,800 crores. Infotel Broadband Services has the license to operate broadband spectrum in all the 22 zones across India. As a matter of fact, Mukesh Ambani had bought the 96% stake within hours after Infotel Broadband had won the spectrum rights and just a month after the no-compete clause had come to an end. Infotel Broadband Services was later renamed to Reliance Jio. 

Following this, fiber optic cables were laid down over pan India. This thus made Jio an only 4G LTE network. Jio does not provide 2G/3G based services. The current hardware and fiber optic cable network has also made Jio readily capable of hosting 5G connections too. When the fifth generation of mobile telecommunications arrives, Jio will be one of India's first networks to update it's services.

The cunning business plan

Before we get into the details of the various plans offered by Jio, it is important to understand that data is what calls are. VoLTE calls divide the audio that is transferred into small data packets and then send these packets over a packet switched network. Thus whether you consume data or make calls, it is only data that we are consuming here. This is the only thing Reliance is charging us for.

If you are making a call to a different network other than Jio or to any 2G/3G based user, then the only fee Reliance has to pay here is that of 14 paise, which is the interconnecting fee Reliance has to pay to the network you are calling to.

Reliance claims that it charges the lowest rates of data exchanges in the world. The ₹50 per GB claim includes the public WiFi services and unlimited internet during the night (2AM-5AM). 

Let us now calculate the 1GB rates offered by Jio under various data packs. For the ₹149 pack, per GB cost will come out to be ₹496.66. Similarly, we can obtain the below table:

As you can see, no plan actually gives you the proclaimed ₹50 per GB cost. Hardly a small number of users use the public WiFi services. The ₹50/GB claim was a marketing strategy too. Moreover as the above table shows, the per GB cost decreases as the cost value of the pack increases. Users will this be keen to buy the pack which has lesser per GB packs. And just to remind you, Jio is only charging you for data services. Also, the price gap between different plans is of a great margin. These are just mind tricks to make you buy the packs of higher value because higher the cost value, lower is the per GB cost.

It's not just the communications and data services on which Jio's business model is based. It in fact also incorporates the LYF branded phones and the set of Jio applications which some of us often look at as bloatware.

LYF's smartphones are available under four sub-brands, namely Earth, Water, Wind & Flame. Reliance was somehow inspired by Aristotle I guess. The prices ascend up in the following order: Flame, Wind, Water, Earth. A few months back, a person could only get a Jio SIM if they brought a LYF phone. These phones have their prices ranging from ₹3499 to ₹19399. At the same time these phones have low end specifications. Reliance has made these phones in partnership with Indian manufacturers such as Intex and Chinese manufacturers such as ZTE. Because of the very fact that these are one of the cheapest 4G-VoLTE enabled smartphones available at the moment and because they have competitive specifications as compared to similar priced handsets, Reliance has been able to grab a slice of the phone industry as well. Moreover, LYF branded phones consist of all the Jio apps too.

Thus, one venture leads to another. Reliance created a demand of 4G services and VoLTE calls. At the same time, the Indian industry lacked VoLTE enabled devices and services which made use of the high speed internet. Thus, Reliance created a demand and became it's supplier as well. Too cunning!

Why was the WELCOME offer introduced?

The WELCOME offer had three reasons behind it. First up it gave Reliance enough time to validate the resources it has setup. Even though there might have been outages or lack of resources to meet the desired demand, people wouldn't complaint, since they are getting all these services for free. At the same time, Reliance is not only able to assess the demands it's network must meet, but it is also able to gather statistics which will help it in making out how the network has been performing. Secondly, the WELCOME offer also created enough buzz in the market. Reliance Jio was one of the most trending topics in 2016, it gathered a lot of headlines and attention too. All this contributed in gathering a large user base. Lastly, Reliance was able to promote it's lineup of phones and services offered through the Jio apps.

The "virtual" merger of Jio & RCom

Over the last couple of months, Jio has clearly emerged superior to RCom in terms of consumer base and marketing strategies. In fact, recently there were rumours that the two companies might be subject to a merger. However there haven't been any official statements regarding the same. When asked about the merger, Anil Ambani said, "As far as our 100 million customers are concerned, as far as our one million retailers are concerned and as far as our vendors and partners are concerned, there has already been a virtual merger of the two organisations." He further added on, "Our spectrum is shared, our network is shared, our fibre is shared, our voice is shared..."

A win-win situation for consumers

With the Jio fanaticism robbing other carriers of consumers, they have been forced to slash their data rates and upgrade their infrastructure. This has lead to faster speeds at cheaper rates.

Even though it is yet to be known which carrier gets an upperhold of the market, it is clearly a win-win situation for us as consumers. Jio has undoubtedly brought with it an upgradation in the technology standards, which for us means better voice qualities. Also, courtesy to the fierce competition, we will be able to these services at cheaper prices. There is no gain, no loss, because the consumers are the boss!

Help us

We are trying to figure out how Jio's Welcome Offer may have brought changes to the ways we have resorted to over the last couple of months to meet our data requirements. If you can spare a few minutes, then please do help us out by filling up this short questionnaire over at Google Docs.

Krittin Kalra

Krittin Kalra is a 20 year old Android freak. Striving for passions, chasing down his dreams and living a life without regrets is his sole mantra. A bit moody, he also does custom ROM reviews for AndroGuider. Currently pursuing his B.Tech, he aspires to follow his heart.