Reliance Jio ends free data plan, but offers cheapest rates; free calls to continue

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New Delhi | Published: February 22, 2017 6:43:37 AM

Though incumbent mobile operators heaved a sigh of relief as Reliance Industries chairman Mukesh Ambani said on Tuesday that its telecom arm Reliance Jio Infocomm will start charging its subscribers from April 1, the way the tariff plans have been...

Reliance Jio (Reuters)

Though incumbent mobile operators heaved a sigh of relief as Reliance Industries chairman Mukesh Ambani said on Tuesday that its telecom arm Reliance Jio Infocomm will start charging its subscribers from April 1, the way the tariff plans have been worked out, there will be no let-up in the tariff wars in the days to come. Further, Jio’s tariffs will be only for data while domestic voice calls will continue to be free; incumbents do not offer blanket free voice calls.

Ambani, who said that Jio has crossed the 100-million subscriber mark in 170 days, announced that existing subscribers as well as those who come on board by March 31 will be eligible to join the company’s Prime membership programme on payment of R99 for a one-year period. Under this programme, subscribers will have to pay R303 every month for the next one year and will get 1 GB of data every day, or 30 GB in a month, which is a much higher quantum and far cheaper than any of the offers of incumbent operators.

Assuming that all the 100 million subscribers opt for Prime membership, then Jio would have matched the quarterly revenues of Idea Cellular (R8608 crore in Q3FY17).

For later entrants (non-Prime users), though the tariffs earlier announced by Jio were comparable with the various packages of incumbents, Ambani said that they would do a comparative analysis of all the data packages by competitors and offer 20% more for the same charge.

To put it simply, on average a bundled data plan by incumbent operators offers data at R50 per GB or R25 per GB in some cases, but Jio’s rates are R10 per GB. Before Jio’s commercial launch in September 2016, data prices were R250 per GB.

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For instance, Bharti Airtel had launched a prepaid offer in December 2016 wherein for R345 one gets 1 GB data for 28 days with free voice calls. Others like Vodafone and Idea Cellular also have similar plans.

For postpaid users, Bharti’s bundled data plan begins at R1,199 per month and for Vodafone some variants come at below R1,000 but with limited free calls. This means that to effectively compete with Jio even when it starts charging, incumbents will need to cut their tariffs further.

However, Jio’s tariffs seem to be protecting its average revenue per user or Arpu. For instance, average voice Arpu is around R150 but a Prime membership customer will have to shell out a minimum of R310 a month. Therefore, for low users, even if they are Prime customers, Jio will provide an option not to pay R303 every month but opt for a low-tariff scheme. It had, for instance, during its launch come with a R149 package wherein it was offering 300 MB data. Now, it is going to offer more benefits on the data front in this pack to capture the lower end of the market.

The incumbent operators and Jio have fought a pitched battle since September 2016 not only on the tariff front but also on the regulatory front. While Jio alleged that the incumbents were not giving it sufficient points of interconnect leading to congestion on its network, the latter alleged that the Telecom Regulatory Authority of India has been a mute spectator to violations of regulatory norms by Jio.

In fact, Bharti and Idea have dragged Trai to the Telecom Disputes Settlement and Appellate Tribunal for allowing Jio to continue with its violations, where the case is currently being heard.

On Tuesday, Rajan Mathews, director general of Cellular Operators Association of India, of which Jio is also a member but is dominated by the incumbents, reacted positively to Ambani’s announcement to begin charging from April 1.

“We congratulate Reliance Jio for reaching 100 million subscribers and for the largest mobile data network in the world. It is good that pricing has started, which will help settle the market. The pricing by Jio is attractive for the consumers and will pose a challenge for the other operators, but the Rs 300 price point is not too detrimental and other operators too will come out with exciting offers. Now, the next stage is about the quality of the networks as the customers are entitled to get the best experience,” Mathews said.

Earlier in his address, Ambani said, “For 170 days, Jio has added on average nearly seven customers on its network every single second of every single day. This is an unprecedented level of acceptance for any technology company anywhere in the world.”

With 200 crore minutes of voice and video calls, more than 100 crore GB or 3.3 crore GB a day of data has been consumed on the Jio network, making India now the number one country in the world for mobile data usage, he added.

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