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13 monsoons later, RIL set to shake telecom market again
NEW DELHI: Reliance Jio’s much anticipated launch on Thursday offering free voice calls and data services at very low tariffs resembles a similar “disruptive” strategy
NEW DELHI: Reliance Jio’s much anticipated launch on Thursday offering free voice calls and data services at very low tariffs resembles a similar “disruptive” strategy that the company had adopted 13 years ago.
In 2003, Mukesh Ambani-controlled Reliance India Mobile stormed the market with a “Monsoon Hungama” scheme, which offered mobile connection and a handset at Rs 501.
As incumbent operators jostled to keep their customer base intact, tariffs plunged, making mobile phones affordable for millions and breaking down class barriers.
From about Rs 5 then, a call now costs as low as 45 paise per minute despite intervening years of inflation and growth that makes the rupee go less far.
Reliance Jio has placed its bets firmly on low tariffs to push data volumes, which is evident from the strategy of making calls free. The move will force incumbents to lower rates.
In 2003 when Reliance entered the market, it was dominated by a few incumbent players, including Airtel, which commanded a significant share of the voice telephony business.
The conditions are different this time round.
The data sector is still very much in its infancy and remains a fledgling line of business for operators.
This will make it easier for incumbents to adjust their data tariffs to match Reliance Jio’s offer.
“The Indian telecom sector is at an inflection point of massive data adoption, repeating the precedence of the voice market growth trajectory (2007-2011),” said Tanu Sharma, associate director, large corporates, India Ratings. “This will necessitate continued investment in the key resource—spectrum—during the coverage expansion phase.
“Competition has to gear up. Operators have to make increased investment both in terms of coverage and quality,” Rajan Mathews, director-general, Cellular Operators Association of India (COAI), told HT.
