Reliance Jio – The Indian Telco Dials D for Disruption
“As the world goes digital, India and Indians cannot afford to be left behind. Today, India is ranked at 150th in mobile Internet rankings out of 230 countries. We have a responsibility. To digitally empower India. To end this digital poverty”
– Mukesh Ambani, Chairman and Managing Director, Reliance Industries Limited
July 2016: The Management at Reliance Jio Infocomm Limited (RJIL) was upbeat on the launch of their ‘Lyf ’ smartphones that had Jio 4G enabled Subscriber Identity Module (SIM) cards. The Lyf smartphones came with a three month unlimited data preview offer and aimed at selling in the metropolitan areas of Delhi-NCR, Mumbai, Bengaluru and Chennai. Further, reports suggested that RJIL was to expand this 3 month unlimited data preview offer to the Samsung smartphone users in India as well. RJIL was part of Reliance Group – a well-known family business group in India.
In 2005, because of a family feud, the younger brother Anil Ambani received the ownership of Reliance Communications (RCom) and elder brother Mukesh Ambani (Mukesh) received Reliance Industries Limited (RIL). In 2010, RIL acquired Infotel Broadband Services Private Limited (IBSPL), the only firm that had won the bid for pan India fourth Generation (4G) network services in the same year (2010). Later in 2013, RIL rechristened this acquisition as Reliance Jio Infocomm Limited (RJIL). In December 2015, RJIL made its test launch of 4G network services among its own and group company employees. The commercial launch earlier scheduled for March 2016 was postponed for later half of 2016..........
Evolution of Indian Telecom Industry – Landline to 4G
In 1851, The British East India Company started telecommunication services in India. The first telegraph lines connected Kolkata (then Calcutta) with Diamond Harbour8 and was exclusively used by the East India Company for official work. Later, in 1881, the British Government gave license to the British Oriental Telephone Company to set up telephone exchanges in certain Indian cities such as Kolkata, Chennai (then Madras) and Mumbai (then Bombay). In 1947, after the nation attained Independence from the British rule, all the foreign telecom firms were nationalized to form the department of Post, Telephone and Telegraph (PTT) under the ministry of communication..........
2016: Competitive Structure of Indian Telecom Industry
Airtel obtained the ‘first mover advantage’ by launching its 4G services ahead of its competitors in August 2015 in 296 towns across 14 Indian telecom circles. The company offered the 4G services at the same price point as their existing 3G services and as well offered their customers a free SIM up-gradation to 4G services. The focus was on data services as their main source of revenue generation and thus wanted all its 3G customers to be upgraded in 4G.To experience the full band of 4G services, it was imperative that the users had both the 4G enabled SIM cards and the handsets............
Reliance JIO Infocomm: Entry in the Telecom Market
On December 27th 2015, at the 83rd birth anniversary occasion of the group Founder, Dhirubhai Ambani, RJIL, launched its Jio network services.The launch of Jio marked the re-entry of Mukesh in the telecom business. The Jio services were RJIL’s 4G network services that made use of 2300 megahertz of bandwidth. This meant high volumes of data transfer as compared to their competitors that were limited to 800 and 1800-megahertz spectrum bandwidths. The company opted for a phased launch on the basic premise to eliminate faults in the network before its commercial launch................
RJIL Challenges to Success
The success of RJIL Jio was primarily dependent on the technology support for a seamless user experience. The Jio SIM necessarily mandated handsets that supported VoLTE technology. Further, since the VoLTE technology transmitted the voice calls as data-packets over the IMS using packet-switch transmission; the data was routed through different paths over the bandwidth and had higher possibilities of call drops unlike the traditional circuit-switch network where a dedicated link provided for voice transmission resulting.............
The Road Ahead
Reports suggested 50% growth71 in mobile data usage in 2015. Further market research companies forecasted the revenues from data usage to grow at a Compound Average Growth Rate (CAGR) of 35% to reach $16 billion by 2020. This was all favourable for the plans of RJIL’s Jio.............
Exhibits
Exhibit I: Aim and Objectives of National Telecom Policy, 1994
Exhibit II: Growth of E-commerce and E-tailing in India
Exhibit III: Evolution of Mobile Telephony Generations
Exhibit IV: Growth of Mobile Internet Users in India
Exhibit V: 4G Operators in India