Reliance Jio’s approach combining fibre and 5G fixed wireless access (FWA) solutions to tap the home broadband market in India is expected to give the company a strong lead over its competitors, according to analysts.
India’s largest telecom operator by market share is not only seen winning on its approach to tap the home broadband space, but also factors such as the speed at which it is connecting homes, cheaper tariffs, bundled offerings, and a strong network of local cable operators, analysts said.
Jio currently has around nine million home broadband users with a market share of 31%, as compared to Bharti Airtel’s expected 7.2 million users at the end of March with a 25% market share, according to analyst estimates based on the data by the Telecom Regulatory Authority of India.
While talking about the company’s performance in the January-March quarter on Friday, Reliance Jio president Kiran Thomas said the company is targeting to connect 100 million homes through Jio Fiber and 5G FWA in the next two-three years.
“5G is also powering our expansions into the homes (through Jio AirFiber)…we are now positioning Jio Fiber even for the people who already have other broadband connections in their homes,” Thomas said, adding the JioFiber broadband backup plan of `198 is already getting high interest, especially in tier 2 and tier 3 cities.
The telecom operator introduced the `198 entry plan starting from 10 Mbps at the end of March. In comparison, Airtel’s cheapest bundled plan, which comes with a broadband connection and entertainment apps, is priced at `699 per month with a speed up to 40 Mbps and bundled services like TV channels and OTT apps.
“We think this is Jio’s strategy for increasing the market’s fibre adoption before upselling at a later stage. We continue to think that the company can repeat the mobile success in fibre, which is a large opportunity. Jio Platforms also has strong ambition in FWA that can be game-changing for the FWA industry globally,” said brokerage house NewStreet Research.
According to Jio, consumers who initially took a backup plan are now upgrading to a primary connection. The trend is similar to when Jio launched in 2016; people opted for its connection as a second SIM card, eventually making it their primary connection.
“Jio is taking the next step in Homes (Fibre+FWA+payTV) through the launch of disruptive “backup” fibre plans, LCO (local cable operators) partnerships, FWA launch. Backup plans are intended to help trojan entries into peer customers. LCO partnerships and FWA launches can expand coverage and reach,” said brokerage house JP Morgan.
While Jio is also using the optical fibre way to connect homes, analysts believe that through wireless 5G solutions, the company will be able to provide home broadband services at lower rates than fibre. Wireless networks are much cheaper to operate and maintain than wired networks, which are prone to breakage due to digging and construction activities.
“Jio’s recent interventions in postpaid and FTTH suggest its aggression and intent to improve market share in these segments. While Jio is on track to achieve pan-India 5G coverage by December 2023, it would also focus on 5G FWA rollouts in FY24,” IIFL Securities said.
On the other hand, even though Airtel is also focused on the home broadband space, it has not actively shown optimism about the fixed wireless solution.
“We are doing several experiments on fixed wireless. One of the constraints or one of the challenges that you have is that the router cost of fixed wireless is quite high today. The router cost is anywhere between $180 to $200, and if you look at our cost per home pass, today it is about $25 to $30,” Airtel CEO Gopal Vittal had said in February.
“The cost per connected home for fixed wireless access given the router that you need, or the CPE (customer premises equipment) that you need, is almost double that of a fibre that is rolled straight to the home today,” he had said. According to Vittal, the cost of routers for providing fixed wireless solutions will come down over time, and the company has been working on fixed wireless access.