1. Reliance Jio Phone impact good or bad? Here’s what ratings agencies say

Reliance Jio Phone impact good or bad? Here’s what ratings agencies say

Reliance Jio Phone was launched on July 21 and regardless of the popularity it achieves, the date will be remembered in the telecom history of India as well as the world. But what will be the impact when it finally arrives?

By: | Updated: July 28, 2017 10:33 AM
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Reliance Jio Phone was launched on July 21 and regardless of the popularity it achieves, the date will be remembered in the telecom history of India as well as the world. This device, when it arrives, has the ability to empower a huge number of Indian citizens. In fact, Jio Phone could change the lives of over 50 crore Indians who are dependent on feature phones. While Mukesh Ambani claims that the device is ‘India ka smartphone’, it is in fact a 4G enabled feature phone. But that is not demeaning in any way. This feature phone has capabilities like none other. This alone may be reason enough that a huge section of the population will be curious about the phone. With unlimited data, free voice calls, apps, even voice commands and cable TV linkage, this phone is definitely ‘smarter’ than any other feature phone. Whether more people will go for the device is another matter altogether. In order to understand the impact of the Jio Phone, here’s a look at what the rating agencies say.

THE GOOD: A rating agency called ICRA has claimed that from an ARPU (Average Revenue Per User) perspective, this may be a good move. ICRA said in a statement, “JioPhone is likely to keep the competitive intensity of the industry high with RJio targeting strong addition of lower-ARPU (average revenue per user) subscribers and/or rural subscribers.” The ICRA report has said that Jio will help in the rise of ARPU levels of the industry altogether. This will help in the long run since the JioPhone targets the low ARPU subscribers. The report said that the phone can also increase funding requirements for Reliance. The report said, “Marketability and acceptability of JioPhone would hinge on the kind of data experience it offers to the users without the port to connect to the TV, which comes at a higher monthly charge.” But ICRA aslo showed a few concerns for the success of the Jio Phone, one of the reasons a bundled mobile. It said that bundled devices have not succeeded in the domestic market several times. It said that the ‘tricky issue’ of bundled apps is the creation of a ‘walled garden’, and the concern is whether it can let a buyer use other apps.

Also read | Reliance Jio phone set to launch, but Bharti Airtel shies off launching its 4G feature phone

THE BAD: Meanwhile, another agency CRISIL has estimated that there will be a massive slowdown in data usage growth. In fact, CRISIL said that the slowdown will come down to four times in the next 5 years, while currently, it is 24 times. It also said that data consumers will estimatedly double to 900 million and the penetration will also rise two times to 80 per cent in the period. CRISIL said the faster penetration would be supported by a continued drop in tariffs given the intense fight for market leadership and telcos will have to “increasingly sweat per-subscriber usage to bolster incremental revenues.” However, it said over the next five years, a larger number of new users will be from rural areas and their relatively lower data usage would impact the industry’s average data usage adversely. The agency said that a similar trend was observed in China as well. The report also talked about the upcoming WiFi services. It said, “We expect a sharp increase in WiFi hotspots over the next three to five years, which can be a drag on mobile data growth once penetration growth plateaus.”

Also read | Reliance Jio Phone is a single SIM mobile, but will you be restricted to a Jio number? Find out

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The biggest impact of Jio up until now has been the ability to get its rivals to improvise. Also, it is true that the customers are using more data than ever. Reliance has laid a massive bait with its JioPhone, and it could trigger a virtual exit of customers from their network. Every incumbent need feature phone users with them, in a developing country like India. If such a huge number of users leave, it will be interesting to see how the network providers will sustain themselves.

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