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With Reliance Jio, Mukesh Ambani aims to change the way India uses data

With Reliance Jio, Mukesh Ambani aims to create an eco-systems where a user does not have to step out of the family of apps to access services online. Ambani announced a slew of offers inlcuding the Reliance Jio Prime membership.

business Updated: Feb 22, 2017 10:56 IST
Sunny Sen
Mukesh Ambani chairman of Reliance Industries Ltd, poses with his son Akash before addressing the company's annual general meeting in Mumbai.
Mukesh Ambani chairman of Reliance Industries Ltd, poses with his son Akash before addressing the company's annual general meeting in Mumbai.(Reuters file photo)

Hundred million users in 170 days is just the beginning for Reliance Jio, promoted by India’s richest man Mukesh Ambani, as it promises to offer more, cutting into rivals’ space and changing the way India uses data.

On Tuesday, Ambani proudly announced that India is the number one country in data usage. Jio users alone consume 33 million GB of data every day, he said. That’s more than the entire data consumption of the US, and 50% more than that of China.

But the battle that Reliance Jio is waging is far bigger than just taking on rival telcos.

A day before his speech, Jio announced a partnership with Uber to accept payments through JioMoney. It also said that it will add more incentives and offers, and create multiple avenues.

While globally, companies such as Facebook are talking of eco-systems where a user does not have to step out of the family of apps to access services online, Jio is already there.

The Jio eco-system consists of apps for payments (through JioMoney), movies and other video content, instant messaging, news, games, shopping, and even booking an Uber ride. Through its mobile wallet—Jio also has a payments bank licence—it will soon add lakhs of merchants on its network and will offer financial services.

WeChat, of China, offers services from transferring money to ordering a pizza to booking cabs. But, Ambani has more. Jio owns the telecom airwaves and telecom infrastructure, which allows it to offer internet at higher speed.

“Data is the new oil,” Ambani, whose Reliance Industries’ mainstay is the petrochemical business, once said. And data is what he will bet on.

The initial success is huge. But Ambani has not made any significant money from his telecom business. But still the share prices of Bharti Airtel and Idea Cellular dropped on Tuesday, after Ambani’s speech.

Even as Reliance Jio will start charging for internet usage beginning April, Ambani doled out enough to keep the customers hooked. Going further, he said Reliance Jio will never charge for voice calls.

“On all of Jio’s tariff plans, all domestic voice calls to any network will always remain free, across India, to any network, always… and no roaming charges… no blackout days… and no hidden charges,” he said.

And then came a promise that only Mukesh Ambani can make.

Rivals had come up with hundreds of offers in the last few months to take on Jio, creating a lot of confusion.

To remove that confusion, Jio will put in place a “comprehensive process” to monitor all publicly announced plans from all operators. “We will not only match the highest selling tariffs of each of the other leading Indian telecom operators, but we will provide 20% more in each of these plans,” he said.

That would make Reliance Jio cheaper than any other telecom operator in the country. Ambani calls it a “solemn promise”—to offer better value at the best price.

Ambani also lifted a page from Amazon, and launched the ‘Prime’ membership. However, that is limited to Jio’s first 100 million users.

Before March 31, users can also take the Prime membership for a full year at Rs 99.

The offers are at three levels. First, members can continue with the Happy New Year offer of 1GB of free internet until March 31, 2018. Second, users can opt for the “Welcome Offer” at an introductory price of Rs 303 per month for a year. Third, members can avail the full bouquet of Jio’s media services, worth over Rs 10,000 for the annual subscription, completely free for a year.

Bringing down the cost of data will increase the usage of internet services. Reliance Jio will not only make money from subscription and regular tariff charges, it will also ensure cash flows through partnerships with other companies.

Sanchit Vir Gogia, CEO and chief analyst at consultancy firm Greyhound Research, recalls that Airtel tried the same thing, but lost out on traction. “A lot of Reliance Jio’s success will depend on critical user base,” he says.