IMPACT OF RELIANCE JIO ON TELECOMMUNICATION SERVICES IN INDIA
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Compliance Engineering Journal ISSN NO: 0898-3577
1
IMPACT OF RELIANCE JIO ON
TELECOMMUNICATION SERVICES IN INDIA
By
Neha Shrivastava
S. R. K. University, Bhopal, (M.P.)
&
Dr. Milind Limaye
S. R. K. University, Bhopal, (M.P.)
ABSTRACT
India is currently the world’s second-largest telecommunications market with a
subscriber base of 1.18 billion and has registered robust growth within the past
decade and a half. It also holds the unspoken title of the second largest country in
terms of internet subscribers. It's conjointly the second largest country in terms
of web subscribers. The country is currently the world’s second largest
smartphone market and can have nearly one billion distinctive mobile subscribers
by 2020.
This research paper makes us aware of the consequences of Reliance JIO
on telecommunication services in India. And also to study about the pros and cons
of Reliance JIO for customers, whereas different major player in Indian market
like BSNL, Airtel, Vodafone, Idea etc. are providing services in several areas
comes below direct policy redirection and reformation thanks to JIO services.
Key Words: JIO, BSNL, Airtel, Vodafone, Idea, Telecom.
1. INTRODUCTION:
With 110.01 million connections, Indian Telecom Industry is the quickest
growing and 5th largest in the world. The subscriber base has substantially
expanded by 40% in 2005 and has reached considerable expectations of 250
million in 2007. One can safely say that over the years, two out of every three
new telephone connections are wireless. Consequently, wireless now accounts for
54.6% of the total telephone subscriber base, as compared to only 40% in 2003.
The wireless subscriber has now matured to 2.5 million with the addition of new
subscribers every month from 2007.
In 2004, the wireless subscriber base was 33.69 million which shoot up to
62.57 million in 2005. The wireless engineering presently in use in the Indian
Telecom Industry is Global System for Mobile Communications (GSM) and Code
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Division Multiple Access (CDMA). With presence of 9 GSM and 5 CDMA
operators providing mobile services in 19 telecommunication circles and 4 metro
cities, covering more than 2000 towns across the country and the connectivity
numbers are still thriving for Indian Telecom Industry.
The regulatory body that orderly manages the Telecom Industry in India is
Telecom Regulatory Authority of India (TRAI). It has been efficient enough to
acquire a neat reputation for its transparency and competency. Mainly, the
telecom industry community has three types of players.
1. State-owned companies like - BSNL and MTNL.
2. Privately owned Indian companies like - Reliance Infocomm and Tata
Teleservices.
And if we talk about companies like Hutchison-Essar, BPL Mobile, Bharti
Tele-Ventures, Idea Cellular, Escotel Spice Communications, etc were done with
international investments.
Indian Telecom Industry ' services does not only limit its boundaries to
basic telephone but also extends to the internet, broadband (both wireless and
fixed), cable TV, SMS, IPTV, soft switches, etc. The Government Broadband
Policy, aimed at 9 million broadband connections and 18 million internet
connections in 2007. Clearly, telecom industry today in India is awaited to add
nearly 1% to India's GDP which is encouraging and approximation to grow
further and lighten up the scenario of Indian Telecom Business.
Reliance JIO Infocom limited is a child company of Reliance Industries
Limited. This company majorly deals in wireless telecommunications services in
India.
Earlier to this, Reliance JIO was known as 'INFOTEL Broadband Services
Limited' and they change their name in January 2013. The company was
established in 2007 with its headquarters in Mumbai, India. Reliance JIO first
started its 4G service by providing these services to JIO's partners, it's staff and
their families on 27 December 2015. Currently, it has deals signed up with Zee
Entertainment Enterprise Ltd. to show Zee's contents on JIO's platform.
JIO was officially launched in public on 1st September 2016 with a special
'JIO welcome offer' which provides free of cost access to unlimited 4G data and
national voice, video, messaging services and JIO contents and it's applications.
Special permission was taken from TRAI (Telecom Regulatory Authority of
India) for this and that offer will stand till 31st December 2016.
In commercial space, the company put their foot on 5th September 2016.
And within a short span of one month, 16 million users subscribed to JIO scheme.
This was the fastest build-up for any mobile network company in the world. JIO
got 50 million subscribers in just 83 days and crossing 100 million till 22 Feb
2017. The increase in subscriber base didn't stop and till October 2017 JIO has
about 130 million subscribers. To add a feather to its hat, JIO became third largest
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and ninth largest mobile network company in India and the world respectively
with over 253 million subscribers.
JIO also launched it's fixed-line broadband service in India on 5th July
2018 with the name "Giga Fiber". According to a report from Berstein, JIO's will
become India's No. 1 telecommunication company by 2021.
2. OBJECTIVE & RESEARCH METHODOLOGY:
The objective of this paper is -
1. To examine the impact of Reliance JIO on telecommunication services in India.
2. To analyze the advantages and disadvantages for customers.
The study is based on secondary data, to achieve the objective, secondary
data is examined which is sourced from the website, online sources and scholarly
articles, magazines, books, internet and annual report Ministry of
Telecommunication, Govt. of India. To analyze the data simple mathematical
tools has been used to examine the impact of JIO on the Indian Telecom Industry.
Impacts of Reliance JIO on Indian Telecom Industry have discussed by
Haq [2], Sharma [6], Singh [7], Kalyani [3], Maheswari [4], Patlolla [5], Ameen
[1] and others time to time. Following them, we will study the Impacts of
Reliance JIO on Telecommunication services in India.
3. IMPACT OF RELIANCE JIO ON INDIAN TELECOM:
Reliance JIO subscribers count has increased to 10 crores and analyst are
analyzing the business model of JIO and trying to find the conversion rate of
consumers. By conversion rate, it means how many customers will retain JIO
connection after it's free scheme is finished. According to analyst conversion rate
can be 50%.
The company is expecting revenue of Rs.227 per user when more than
50% subscribers opt for the Rs.303 plan while other half opt for the Rs.149 plan.
Since 2008-09, this is for the first time that Indian telecom companies are
down to Rs.1.88 trillion annual revenue in 2016-17 and it will get down more to
Rs.1.84 trillion in 2017-18. It is estimated that this can be recovered in 2018-19 to
Rs.1.87 trillion.
Impact on market share: The incumbent players – Bharti Airtel, Vodafone, Idea
Cellular, BSNL, and MTNL – have seen their revenue share fall. While Airtel’s
share has gone below the 30%-mark for the first time in 15 quarters, Vodafone
and Idea Cellular saw their market presence erode sharply. On the other hand, JIO
has added about 160 million subscribers since it entered the telecom space in
September 2016. The newbie has also captured 14% of the market share in the
second quarter of FY2018, as per a report prepared by Bloomberg-Quint and
Telecom Regulatory Authority of India (TRAI).
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Pressure on the postpaid segment: JIO revenues are primarily driven by the
prepaid segment, which has impacted the postpaid business. Postpaid revenues
have declined 10% quarter-over-quarter and 23% year-over-year (YoY) to Rs
5,900 crore in the third quarter. Moreover, the incumbent players offered heavy
discounts to retain their existing customers, which has also contributed to revenue
losses, according to a Kotak Securities report.
Increase in 4G subscribers: JIO’s entry has coincided with the surge in 4G
subscriptions. The telecom’s introduction of cheaper data packs and 4G LTE
infrastructure seem to have played a role in it. The Kotak Securities report states
that 4G subscribers in the telecom market have increased from 160 million in
June 2017 to 197 million in September 2017. In contrast, the 2G and 3G user
bases are depleting. However, the data usage per subscriber for these two
segments has increased in the last few quarters. This could suggest the 4G
infrastructure in the country remains inconsistent as more and more people’s 4G
networks are lapsing into 3G and 2G services.
SIM subscribers: The telecom industry's user base has declined by two million
in the September quarter. The Kotak Securities report states two reasons for the
reduction in SIM subscribers. One, people are increasingly seeing sense in
owning a single SIM that offers multiple services. Two, telecom operators exiting
the business added to the consolidation of SIM subscriptions.
Consumer spending: Extreme competition made data cheaper and affordable.
While this has benefitted the consumer, the telecom sector has taken a hit. The
sector’s Gross Domestic Product (GDP) share slid from 1.25% in June 2016 to
0.88% in September 2017.
After entry of JIO in the market India is now the largest data user in the
world after USA (710 million GB) and China(630 million GB). JIO has 43% of
the total mobile data market more than cumulative shares of already established
telecom operators - Bharti Airtel, Vodafone, and Idea Cellular. 1.2 billion GB of
data a month is alone consumed by Only JIO customers and this is 80% of the
total data consumed in India. The overall data usage has increased in India after
JIO's entry from 200 million GB a month to 1.5 billion GB a month.
Due to prices slashed down by 97% after JIO launch, the average data
consumed by wireless users in India has increased by five times in one year. The
total consumption of wireless data has touched to 4.3 billion GB in three months
(1.44 Billion GB a month) from April to June 2017. Given that the total number
of data subscribers in the quarter was around 400 mln, that gives an average usage
of 3.5 GB per user per month, or about 120 MB per day.
If we compare the scenario before JIO's launch, the average consumption
of data was about 600MB per month (20MB per day). So, there has been a 500%
increase in total data consumption after JIO has arrived. This suggests that the
incumbent operators continue to lag in fulfilling the developing needs of data.
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For example, Idea cellular was providing 2.2 GB per month a user against
all India average of 3.5GB per month, while Bharti Airtel was selling about 2.6
GB per head.
On the other hand, JIO users are estimated to have been consuming about
6-7 GB per month on average during the same three months.
However, per user data consumption increase is only one side of the coin,
there has also been an increase of 24% in the total number of data consumers.
The total number of data connections increased from 330 mln, or 33 cr as
of June 31, 2016, to 409 mln (40.9 cr) as of June 31, 2017.
4. ADVANTAGES OF JIO FOR CUSTOMERS:
1. 4G Network – Reliance JIO offers only 4G network and the network is
available across India. It promises quality service and a customer can be sure that
wherever he goes, 4G LTE network would be available. A lot of customers who
depends upon other telecom providers face this problem. Whenever the travel to
the rural area, their 4G network downgrades to 3G or EDGE.
2. Voice Over LTE – Reliance JIO also offers free unlimited calls over LTE and
the quality of LTE calls are quite amazing. The voice doesn’t break and there are
no call failures.
3. Free SIM – There is some service provider who charges their customer for a
sim card. Reliance JIO doesn’t charge its customer for SIM or calls. Some of the
service providers charge on basis of even replacing the SIM but Reliance JIO is
different in terms of this.
4. Free Roaming – Reliance JIO offers free roaming services and there are no
charges for the calls at all. So at end of the day, the user only has to pay for the
data charges. Rest everything is included in the data package. There is no
differential pricing at all.
5. Wi-Fi Hotspots – Reliance JIO also offers Wi-Fi data as well. The service
provider has a lot of hot spots and the user can use the Hotspot. The data on
Hotspot can be used free of cost as some amount of data is given free of cost in
the internet package associated with the data plan.
6. Free SMS – A lot of users do not use text messages these days but it should be
mentioned that Reliance JIO offers free Short Messaging Services to the User. It
doesn’t really benefit a lot of users in the age of Whats app but it is still an add-on
7. Student Offer– This is of particular advantage to students. Reliance announced
that all the users availing student offer will get 25% more data than what the
package promises. A student offer can be availed by simply submitting the copy
of ID card while availing the sim
8. JIO Application – Reliance JIO also comes with a free subscription of JIO
Apps. There are several apps included in the package. For example, there are
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applications for music, news, TV, Movies, Wallet, and even security apps. All the
applications are compatible with android phones as well as Apple phones.
5. DISADVANTAGE OF JIO FOR CUSTOMERS:
1. Only 4G Network – Reliance JIO provides only 4G network and this is a
particular disadvantage to the users who do not have a 4G compatible phone. The
users who have an only 3G compatible phone cannot use internet services or call
services provided by Reliance JIO. Users would have to upgrade their phone in
order to avail 4G services of JIO. Without a 4G phone, the user cannot even make
a phone call for free.
2. Not as Advertised – Reliance JIO made a lot of news by stating that the data
prices are Rs 50 per GB but the fact is that there is no such data plan and the
company’s cheapest data turns out to be Rs 75 per GB. A 2 GB plan costs Rs 299
which grills down to 150 Rs per GB and the most expensive plan offers 20 GB
data which comes down to Rs 75 per GB. So it can be said that the product is not
as it is advertised.
3. No Free Calls – The problem with Reliance JIO is that the free calls can only
be availed after recharging with a minimum package amount. If the user doesn’t
recharge the SIM with internet package, he would not be able to make free calls at
all. The pricing of the calls is still not clear.
4. No Unlimited Data at Night – As per other service providers, the night time is
from 11 PM to 7 AM in which the free services or the discounted tariffs are
applicable. In the case of Reliance JIO, this is not the case. The free unlimited
data is valid only between 2 AM and 5 AM. This is just free data for 3 hours
which is not as advertised and can be termed unethical. The free data should be
valid from the timings which match the other service providers. This is an
unethical marketing trick.
5. Data Cap – As of now, many users enjoying Happy New Year Plan or
Welcome offer where they are enjoying free service of Reliance JIO. But here is a
catch. There is a data cap of 4 GB on Welcome offer and data cannot be used by
the service provider with unlimited usage.
6. Network Issues – A lot of people are facing network issues and frequent call
failures because of high network congestion. This is a big problem as a person
cannot be totally depended on JIO sim in the case of emergency and that impacts
the user a lot. Read this guide if you JIO sim not working or you want to activate
it.
6. CONCLUSION:
Reliance JIO has played a big role in the market of telecom industries for
the past year till now. Their marketing intelligence is very attractive to customers.
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The main objective of Reliance JIO is increasing their consumer base by
providing high-speed internet at nominal rates. The company would have
generated a significant market share in the next 3-5 years. In end reliance, JIO has
successfully hit the target market and has deep pockets to invest but has a threat to
competition and technology.
State-run telecom player BSNL will be the first to cut down the tariffs, in
order to challenge the tariffs offered by Reliance JIO. This can be the beginning
of telecom war, as BSNL has gone a step ahead of the Reliance JIO by offering
lifetime free voice calls service from 2017 and that is the only part of their
renowned policies. Also, BSNL will be offering new tariffs to 2G and 3G
customers against the JIO which is available only to 4G users.
The state-run company has a strong market presence in terms of network
reach, particularly in the states like Kerala, Himachal Pradesh, Punjab, Odhisa,
and Haryana. The company will be announcing zero voice tariff plans from 2017
which could be lower than that of JIO.
BSNL’s broadband users will be getting benefitted from the new plans, the
company stated. The idea is to reroute the outgoing calls from the users’ mobile
phones through their landlines.
BSNL surely has put a tonne of pressure on the other telecom companies
such as Airtel, Idea, and Vodafone to cut down their tariffs by some margin.
REFERENCES
1. Ameen Nisha: Impact of Reliance JIO on Telecom Industry in India,
International Journal of Legal Research and Studies, Vo. 2, Issue 4, October-
December 2017, pp. 52-54.
2. Haq Noorul: Impact of Reliance JIO on the Indian Telecom Industry,
International Journal of Engineering and Management Research, ISSN
(ONLINE): 2250-0758, ISSN (PRINT): 2394-6962, Volume-7, Issue-3, May-
June 2017, pp. 259-263.
3. Kalyani Pawan: An Empirical Study on Reliance JIO Effect, Competitor’s
Reaction, and Customer Perception on the JIO’S Pre- Launch Offer, Journal of
Management Engineering and Information Technology (JMEIT), Volume -3,
Issue- 5, Oct. 2016, ISSN: 2394 - 8124, pp. 18-36.
4. Maheswari J Meena, Ramya M S: Reliance JIO: A digital boon, International
Journal of Academic Research and Development ISSN: 2455-4197, Volume 2;
Issue 6; November 2017, pp. 473-476.
5. Patlolla Ramya, Doodipala Mallikarjuna Reddy: Distracting the Indian
Telecommunications Sector: An Analytical Study on Reliance JIO Network,
American Journal of Marketing Research, ISSN: 2381-750X (Print); ISSN: 2381-
7518 (Online), Vol. 4, No. 2, 2018, pp. 34-43.
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6. Sharma Pankaj, Gupta Tapen: Reliance JIO (A pack of services): Impact on
Indian telecom market, Biz and Bytes (Vol. 8. Issue: 1, 2017) E-ISSN: 0976 0458,
Print ISSN: 2320 897X, pp. 122-131.
7. Singh Rajbinder: Impact of Reliance JIO on Indian Telecom Industry: An
Empirical Study, International Journal of Scientific Research and Management
(IJSRM) 2017, ISSN (e): 2321-3418, Volume 5, Issue, 07, pp. 6469-6474.
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