Jio got data to millions of Indians, and, now, improving the quality of connections is the next best thing to do.
Last week, Fortune magazine ranked Mukesh Ambani No 24 amongst the world's greatest leaders of 2018 for his contribution to bringing mobile data to the masses in less than two years. As the brief citation reads, "Since Ambani…launched Jio -- the first mobile network in the world to be entirely IP-based -- in September 2016, the company has signed up a staggering 168 million subscribers. The secret? Offering dirt-cheap data and free calls (and plowing billions of dollars into the infrastructure that transmits them). The effect, dubbed 'Jio-fication', has driven India's higher-price carriers to drop costs (if not run them out of business), and it fueled a 1,100 per cent rise in India's monthly data consumption."
Data-fication of lives
Indeed, as consumers, we’ve got a taste of this Jio-fication: we’ve changed plans, service providers, zeroed-in on best deals, thanked Jio - the obvious game-changer - for such low data prices that allow us to view and download to our heart’s content and more.
When Reliance Jio came into the market, most subscribers jumped at the prospect of the free voice service it provided and signed up. Jio made its services accessible by “rolling out eKYC across 2 lakh outlets in India, thereby allowing activation of SIM to get completed in under 5 minutes. More than 95 per cent of the activations are being done in a paperless manner through eKYC” according to a media release on the RIL website.
Jio also made data terribly affordable, with average prices per GB of data dropping from Rs 152 to Rs 10, as per a report titled Impact of Jio Entry, released in the first week of April by Institute for Competitiveness, India. (See Table)
This drastic cut in prices, not just brought the internet within the reach of a larger proportion of the Indian population, but also Jio’s entry led to an unprecedented surge in data consumption. Within six months of Jio’s launch, India became the highest mobile data user in the world, consuming over 1 billion GB of data every month, compared to 200 million GB earlier; it also surpassed the US in terms of app downloads, making it second only to China.
Till now, the industry had derived 75 per cent of its revenue from voice services, whereas now Jio offered free lifetime calls. Data was now “the new focal point” of competition, in the words of the report. For the economy as a whole, the yearly savings due to a rise in affordability of data prices are calculated as Rs 60,000 crore per annum.
Further, Jio’s entry played a key role in increasing 4G penetration, helping the rural population. This happened, as explained in a report released early this month by market research firm CyberMedia Research (CMR). Out of the total 238 million 4G subscribers by December 2017, 83 million were from the rural areas – i.e. roughly one-third subscribers. As explained in the report, this rural movement happened “because early adaptors were leveraged by Jio primarily in the urban space, and as incumbent operators got ready with their 4G in full scale, they focused on rural markets to look for growth”.
The following graphs from Institute for Competitiveness show the increase in subscribers across India. After Jio’s entry in September 2016, the growth of wireless subscribers shot up by twice the rate it was averaging in the last three cycles. The second graph shows, similarly, the impact Jio has had on improving India’s mobile internet subscriber base.
As RIL’s website says, “Jio has created an eco-system comprising network including over 2 lakh towers and the optical-fibre, devices, applications and content, service experience and affordable tariffs for everyone to live the Jio Digital Life.
The larger picture
But then, for Ambani, providing millions of ordinary Indians with data and internet access internet and its attendant opportunities is just the tip of the iceberg. There are widespread effects for the country and its economy.
The Push To Digitisation: Jio, Rather Than Demo
According to a report in June 2017 on Internet Trends by Silicon Valley-based investor Kleiner, Perkins, Caufield and Byers (KPCB), digital payments have surged in India, and they found that a key trend was the emergence of mobile as the preferred means of payments and consumption over the internet. E-wallet companies, various apps, online shopping, banking and travel sites complete the ecosystem. And, this trend is attributed to Jio’s onslaught on data prices, apart from the Aadhar and demonetisation exercises.
The report said India’s Internet user base, then at 355 million, had increased by 28 per cent compared to the previous year — with about 80 per cent of data consumption happening through the mobile. The report named Reliance Jio as a major force behind the increased internet penetration, as it forced incumbents to slash data rates by half.
In fact, in October 2017at the India Economic Summit, Paytm founder Vijay Shekhar Sharma had also attributed the surge in digitisation to Reliance Jio’s onslaught on data prices, rather than on demonetisation.
The Power Of Digitisation
And what does digitisation do to the economy?
In October 2017, Morgan Stanley concluded that “The country was already on a strong trajectory, but digitisation puts India's nominal gross domestic product (GDP) growth on track to compound annually by more than 10 per cent…on track to be the world's fastest growing economy over the next 10 years”.
The report further mentions that this will be powered by government’s continuous nudging towards digital transactions, which make it difficult to evade taxes, and also encourage e-commerce and make credit easy for small enterprises. Figures in the report estimate that a third of India’s population has internet access, but they expect it to double by 2026, with 915 million Indians on the Internet. Again, the firm expects Jio to play a critical role in increasing the penetration of 4G services in rural India.
The financial services company is, of course, looking at India as a prospective market for corporations worldwide; these developments make it a multi-trillion-dollar opportunity that comes from increase in consumption, e-commerce, financial products, and so on.
The Institute for Competitiveness report had specifically, through econometric analysis, arrived at a figure of 5.65 per cent boost to GDP because of Jio’s entry and the widespread network effects.
Next Halt: A Banking Licence?
Analysts inform us that Reliance’s interest in promoting digitisation is also with an eye on a banking licence – a usual strategy of telecom operators, as their captive telecom customers become banking customers.
According to an Financial Times report in 2015, Reliance had announced its intention of setting up a payments bank, in line with then RBI governor, Raghuram Rajan’s strategy for financial inclusion and increased competition for traditional banks. Through their large telecom networks, companies could bring millions of customers into the banking fold. Reliance had then said that it aimed to democratise banking and payment services through massive adoption and low transaction costs.
The Much Larger Picture
For Ambani, however, this is just a stepping stone to a much larger dream. As he articulated before thousands of his employees at an event on 25 December last year, he dreams about Jio emerging as a telecom platform that will leverage the power of data mobility to transform the nation through interventions across entertainment, financial services, commerce, manufacturing, agriculture, education and healthcare, with artificial intelligence and blockchain.
This is in consonance with the current government’s ‘India’s Trillion Dollar Digital Opportunity’- action plan led by Ministry of Electronics and Information Technology (MEITY) and management consultant McKinsey & Co, and involving various government departments, as this news report outlines.
There exists a 30-point implementation module for creating up to $1 trillion of digital revenue by 2022, and Jio has been part of the discussions, apart from Google, Quatrro, Airtel, Ola, Facebook, and others.
The vision talks about “how India’s digital economy can unlock productivity and value – through transformative infrastructure, applications and ecosystems”. It also outlines iconic ‘Lighthouse Projects’ that will have an impact on India in the digital arena, and how best to accelerate their implementation.`Make in India’, `Make for the World’, doubling farmer incomes through online agricultural marketplaces and precision agriculture, Education are all part of the document. Immediate action areas among nine sections identified for empowering the country are: technology infrastructure, health care, education and skill training, agriculture and food processing, and transportation and logistics. There exists something called India Stack (explaining it is beyond the scope of this article) and Jio is supposedly “turbocharging” it, as this article says.
This is then the background behind Ambani’s grand plans. Indeed, digitisation has the potential to go much beyond payments and entertainment, and Reliance Jio is in the thick of things.
Already, it’s an exciting state of affairs at Reliance Jio. In entertainment, as per a report in October last year, Jio has plans to bundle its TV service with Fibre (FTTH) broadband to tap over 100 million TV households in 30 cities. Jio, with hundreds of millions of wireless subscribers has already spread out over 300,000 kilometres of optic fibre in the country, and this JioFiber network can carry data speed up to 1 Gbps. The launch is expected soon, in May 2018. It will be remembered that Reliance already controls the media group Network18, with interests in broadcasting, digital, e-commerce, mobile content, and presence across 26 states. Along with cheap data and free voice, Jio even gave free subscription of their premium apps, which included JioTV that supported most channels.
Jio has developed a platform for farmers with real-time market prices, technical information on sowing and harvesting, and access to top agricultural experts.
Numbers, So What
Analysts, though not exactly discounting the rise of Jio, say that any company with deep pockets would the capability to do this. Neither are they worried about finances, because they know that once the business picks up, cross-subsidisation will happen -- with consumers with inelastic demand charged high prices to compensate for the dirt-cheap prices otherwise. However, what they do worry about is, is this trend leading to a monopoly situation, and if yes, is that good for the consumer and the government in the long run?
For now, Ambani can gloat in the warmth of having got data to millions of Indians, and having provided employment to several others through this expansion of business. Just one message to Ambani, though, from a common man interviewed: “It’s great to have this much data and all the benefits, but can’t something be done about the quality of connections, so that signals get better and calls don’t drop?!” Touche.