It will force other telecom players to lower data tariffs; analysts expect average monthly mobile bill for a mid-to-high-end subscriber to come down by 50-60%
Amidst thundering applause, billionaire Mukesh Ambani on Thursday declared at Reliance Industries Limited's (RIL) 42nd annual general meeting (AGM), "all voice calls for Jio (Reliance's broadband service) customers will be absolutely free. No Jio customer will ever pay for voice calls again across India to any network".
With this, India's richest man has changed the way telecom services will be provided in the country. Not just that. The aggressive tariffs for his fourth-generation (4G), Long Term Evolution (LTE) data and voice over LTE (VoLTE) services, starting from 5 paise per megabyte (MB) or Rs 50 per gigabyte (GB), going down to Rs 25 a GB on higher data usage will see an explosion of data usage.
"Jio's aim is to take India from data shortage to data abundance," said Ambani. "(Jio wants to) transform India from high-priced data market to the one with the lowest data rate in the world," he said.
At present, most telecom operators offer 1GB data for around Rs 250. On Monday, the largest telecom service provider, Bharti Airtel, slashed tariff by over 30% to Rs 51 a GB for 12 months with an upfront payment of Rs 1,450 in anticipation of the Reliance Jio Infocomm Ltd's (RJIL) price-undercutting.
Over the last few months, almost all telecom companies (telcos) have come out with a host of tariff packs that offer more data for the same rate, effectively snipping per-unit data price. Companies are doing this to drive up volume to keep average revenue per unit (Arpu) at the same level despite a price drop.
A Bharti Airtel statement on Thursday said: "We welcome Reliance Jio's entry to the digital world and wish them the very best".
In response to Jio's launch, Vodafone India said in a statement that it has always offered great value to customers, backed by excellent customer service, a nationwide presence, and Vodafone SuperNet, its best network ever. "We will continue to do so for our hundreds of million customers across the country."
At the last count, Reliance Jio's subscriber base had reportedly crossed 3 million. The telecom operator, whose services are still in beta phase, has offered free preview of its services across all users till December 31. It began testing its nationwide internet protocol (IP)-based network in December last year.
Crisil Research, in its release, said Jio's aggressive pricing may "force industry hand" to cut tariff.
"Thirteen years after its first disruptive effort in telecom in another avatar, Reliance Jio Infocomm (RJio) is on course to change the rules once again" said the credit rating agency's release.
"Quite clearly, Reliance is betting on humongous volume play through a material increase in data usage to offset lower tariffs," stated Crisil.
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