Like the mobile broadband initiative here, too, Mukesh Ambani announced ambitious plans with tariffs aimed at disrupting the market.
Unlike the last three years, the focus of RIL’s telecom foray in this year’s AGM speech by chairman Mukesh Ambani was not on the mobile broadband business but on wireline broadband, a project about which an announcement was made last year.
Like the mobile broadband initiative here, too, Ambani announced ambitious plans with tariffs aimed at disrupting the market. However, analysts said since laying fibre to the home, as opposed to providing the last-mile linkage through copper, is a tedious and time-consuming process, a nationwide launch at one go is not possible.
The commercial launch of Jio Fiber will begin from September 5 this year and be completed in a phased manner. Ambani said the company has received over 15 million registrations from nearly 1,600 towns. And based on these registrations, the company has drawn up a plan to reach 20 million residences and 15 million business establishments in these 1,600 towns. He said the Jio Fiber rollout will be completed within the next 12 months.
The targets are ambitious because currently, the total user base of wireline broadband in the country stands at just 18.45 million.
Of this, the largest share is of BSNL at 9.09 million followed by Bharti Airtel which has 2.39 million subscribers. Ambani said the tariff for Jio Fiber will be one-tenth of the global tariffs. Jio Fiber plans will start from Rs 700 per month and go up to Rs 10,000 per month.
For perspective, Bharti Airtel’s current tariffs range from Rs 799 to Rs 1,999 per month. As part of the Jio Fiber welcome offer, customers who opt for Jio’s annual plans will get a high definition or 4K LED television and a 4K set-top-box free. “The average fixed-line download speed in the US, which is the most developed economy, is around 90 Mbps. In India, even the most basic Jio Fiber plan will start with 100 Mbps speed and we have plans all the way up to 1 Gbps or 1000 Mbps. This will disproportionately improve the quality of fixed-line data in India,” Ambani said.
At present, Bharti Airtel provides speed between 40 Mbps to 300 Mbps and says its network is ready for providing speeds up to 1 Gbps but devices are not available at present.
Ambani told the shareholders that so far Jio has been able to leverage just the mobile broadband as one of the engines of revenue generation. However, now with the launch of the fibre network, the company is set to kick-start four more engines of ‘connectivity revenue’, namely the Internet of Things (IoT) all over India, home broadband, enterprise broadband and for small and medium businesses. These will be generating revenues within the current financial year itself.
Talking of IoT, he said within the next two years, it is estimated that there will be more than two billion connected IoT devices in India. “Jio aims to connect at least 1 billion of these on Jio’s IoT platform. This translates into a Rs 20,000 crore per year revenue opportunity for Jio,” Ambani said. Jio’s IoT platform will be commercially available starting January 1, 2020.
As part of fibre offering, Ambani said customers will pay for only one service, either voice or data, and announced that for the customers of Jio Fiber, voice calls from home to any Indian operator — mobile or fixed — will be free forever.
He added that the default tariffs on Jio home phone will be one-fifth to one-tenth of existing industry tariffs and an unlimited international calling pack at Rs 500 per month to US and Canada. Also, as part of the subscription Jio Fiber plans will come bundled with subscriptions to most leading premium OTT applications.
In another disruptive offering, this time for the multiplex industry, Jio Fiber’s premium customers will be able to watch new movies in their living rooms the same day these movies are released in theatres. Called the ‘Jio-First-Day-First-Show’ service is planned to be launched in the middle of 2020.
Industry experts believe Jio’s latest offerings will have a mixed impact on the market. Bharti Airtel’s broadband revenues may see some pressure led by low tariff offering by RIL, but given the nascent stage of the market, both have room to grow, said analysts at Bank of America Merill Lynch (BoAML), while this is unlikely to see any pressure on Bharti’s enterprise business. However, DTH (direct-to-home) companies are most vulnerable to RIL’s broadband plus cable service as they are unlikely to offer these dual services, while indirect impact on broadcaster subscription revenues could be seen if DTH/MSO revenues are affected. According to analysts, multiplexes may also face longer-term impact if more movies are available on OTT apps.
Ambani also told the shareholders on Monday that the investment cycle for Jio is now complete and only marginal investments in access are required to grow capacity to meet the growing demand.
He said the core and aggregation layers of Jio’s converged network have been 5G ready since day one. And because of early adoption of the ongoing enhancements to LTE technology, Jio’s wireless network is already 4G Plus. “We can upgrade this to 5G at minimum incremental cost. Thanks to Jio’s converged network architecture, we can offer even faster fixedline broadband to homes and business establishments today,” he said.
Meanwhile, Reliance Jio and Microsoft have entered into a long-term strategic relationship aimed at accelerating the digital transformation in India. This 10-year commitment combines capabilities of both companies to offer a detailed set of solutions comprising connectivity, computing, storage solutions, and other technology services and applications essential for Indian businesses.