Mukesh Ambani’s Reliance Jio makes Customers the kings

In today's announcements, Reliance Industries chairman, Mukesh Ambani has announced more freebies with regard to its 4G LTE network with an explicit motive of increasing its subscriber base and cutting further into other telecom operators' pie.

Written by FE News Desk

February 21, 2017 16:41 IST

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Reliance Jio essentially used brute force of massive money in order to change the historical course of an industry which was in a way well established within its limitations. (Reuters)

In today’s announcements, Reliance Industries chairman, Mukesh Ambani has announced more freebies with regard to its 4G LTE network with an explicit motive of increasing its subscriber base and cutting further into other telecom operators’ pie. Ambani also announced Jio’s ‘successes till now that are designed to make other telecom operators like Bharti Airtel, Vodafone India, Idea Cellular and others nervous. It has come out with new tariff plans that seem more like free vouchers. Offering 20 per cent more data at the same price, Ambani’s Jio is clearly targeting the rivals.

The richest man in the country once again created euphoria for his new business by giving the customers more freebies. He said that existing customers can keep availing existing benefits under a new tariff plan for another 12 months on the condition that they make a payment of Rs 303 per month plus a one-time joining fee of Rs 99. It is likely to prove a game changer as he is offering 20 per cent more data for the same price over and above what rivals offer. The existing operators’ network has been built for voice and is now being upgraded to offer data. On the contrary, Reliance Jio’s network is built for data which will also offer high quality voice calling services.

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One of the advantages with Reliance is that their technology is more modern and upgraded than existing companies in the sector. These companies do not have a consistent 4G network. Bharti Airtel, Vodafone and Idea which might see their profitability and margins going down in the near term.

Incumbent companies will have to make investments in network, infrastructure, spectrum to compete with Reliance Jio’s promised service quality. They will also have to bring down data prices (including that of voice) to restrain customers from moving to Jio.

Jio has opened the floodgates and will be challenged by its own promises. Delivery and execution will have to be spot on or else early winnings could turn pyrrhic. Now the expectations are very high, as people have had a sneak preview of the future with the treasure chest of services embedded in their devices at the start itself, which is dazzling them. We have all seen how consumer threshold levels of demand rise quickly . One will have to continue to whet the appetite of the content guzzling Indian consumer, which is like holding the tiger by the tail. We have to be wary that there are teeth at the other end. As of now let’s celebrate as consumers, as a `Battle Royale’ unfurls.

So with all this, the incumbent telecom operators would have to recalibrate their strategies to make sure that nobody shifts to competition purely because of price and that would be a major challenge. They will have to have better strategies in place and consolidate and regroup their business.

The customers, of course are going to benefit from Mukesh Ambani’s understanding of price sensitivity of the Indian consumer and the fact that they want more, better services at lesser prices. Competition amongst operators will make them offer better services at cheaper prices.

However, Jio has opened the floodgates and will be challenged by its own promises. The promises are big and delivery and execution will have to be quick. The expectations of the customers are very high . Consumer threshold levels of demand have risen and they will have to be met. However, as of now consumer is the king and let’s celebrate that!

This article was first uploaded on February twenty-one, twenty seventeen, at forty-one minutes past four in the afternoon.