A RESEARCH PAPER ON JIO

Reliance JIO

The game changer strategy that brings revolution in telecommunication sector

Sonu Singh (+91 8700879050) and Shubham Bhardwaj

Institute of Innovation in Technology and Management, New Delhi

ABSTRACT

India is currently the second-largest telecommunication market and has the third highest number of internet users in the world. Reliance JIO entered in telecommunication business like a boss which is very important for business. Whenever you are entering into a new business, it is important to create a buzz or we can say a huge buzz. People should talk about you. Providing free SMS & calls, 4G internet and roaming for 6 months are the best decisions by JIO. Reliance’s vision for India is the broadband and digital service will no longer be a luxury item. Rather converted it into a basic necessity that can be consumed in abundance by consumers and small businesses. In 2 months JIO has 50+ million users and in next four month it would be around 100–120 million users. After decade companies like BSNL and Idea having more than 100 million users, JIO getting in 6 months. They are creating the customer base. JIO is the fastest growing tech company even beating the tech giant Facebook, Skype and Whatsapp. Mukesh Dhirubhai Ambani, chairman, managing director and largest shareholder of Reliance Industries Limited, recently announced the New Year Offer that is free service for 3 more months. Now the question is, how JIO will earn money if they give free service like this and how the JIO will prove to be better for common peoples. This paper includes all the possible research about JIO and how it will be benefiting the common peoples and what is the business strategy behind this.

Keywords: Reliance JIO, Telecom business, 4G internet, VoLTE service, fastest growing tech company.

INTRODUCTION

"JIO" is the business name of the Reliance JIO Infocomm Limited (RJIL). It is an LTE(Long-term Evolution) mobile operator in India. JIO aims to provide 4G LTE service network without 3G/2G based service. It is a 4G only service and does not use lower bands for data transmission (unlike other networks). It is the only Voice Over Long-term Evolution(VoLTE) service in India. It has no separate charges for voice calls and all the calls are made over the internet. JIO is currently operating across all the 22 telecom circles in India. Its distinguishing offer is the free internet, calls and other services till the 31st December 2016. Later, this offer was extended till 31st March 2017 as a "New Year Offer". Mukesh Ambani confirmed that this offer is made to help JIO meet its target of 100 million users.

Reliance JIO is a dream project having its grass roots way back in 2010. In June 2010, Reliance Industries(RIL) bought a 96% stake in Infotel Broadband Services Limited(ISBL) for 48 billion. IBSL was the only firm to win broadband spectrum in all 22 zones in India in the 4G Broadband Wireless Auction(BWA) that took place earlier that year. The IBSL was later renamed to Reliance JIO Infocomm Limited(RJIL) in January 2013. The trial version was launched on 27th Dec 2015 for the employees on the occasion of the 83rd birthday of Late Shri Dhirubhai Ambani. This release was made to determine the flaws in its working before releasing it for the public. It was made commercial on 5th Sept 2016 with a delay of about 6 months from the scheduled date.

Reliance JIO is the world's largest startup at ₹1.5 lakh crore investment. It aims at providing premium data service at low cost. It plans to have a partnership with thousands of small and emerging Indian entrepreneurs. The average age of the employee at JIO is 30. Mukesh Ambani describes this as the services created by the new generation for the new generation. As a long-term evolution, JIO has reportedly joined hands with various mobile companies developing LTE enabled smartphones like Intel and LYF. Despite the huge benefits provided by JIO to the customers, its fate remains uncertain till the free period is over. Some experts investigated and reported JIO's Business Model to be more expensive and uneconomical but after all now the Reliance JIO is thriving like a king, leaving other Telecom companies in a doubt about their own survival in the future.

OBJECTIVES OF STUDY

1. To identify the effect of JIO on common peoples.

2. To analyze how other operators affected by JIO.

3. To identify the business strategy behind JIO.

SCOPE OF STUDY

· The study will provide the sound knowledge about the strategies adopted by JIO in order to expand its business.

· The study will make mass aware of both the positive and the negative effect of JIO on common people and Indian economy.

· The study can be used to identify the kinds of benefit that JIO will receive in return of the offer given by it.

· The study helps to know the evolution in digital world after the launch of JIO.

RESEARCH METHODOLOGY

Type: Exploratory research

Sampling procedure:

We visited to Central Park, Connaught place, then based on our questionnaire we have collected the data from different group of peoples.

Sample size: 200

Area: Connaught place

Data: Primary data from common peoples to know their views on the topic with a structured questionnaire and Secondary data for effect on other operators and Indian economy from newspapers, magazines, internet etc.

Tool used for interpretation of data: Excel

1. EFFECT OF JIO ON COMMON PEOPLES

JIO came in India with a good game strategy and it bring the revolution in telecommunication sector. It not only effects its operators but also effect the common people, small business and Indian economy let study them one by one. Right now, JIO become popular among people of India most of the people want to buy JIO sim as they want to enjoy its free data service. JIO gains its popularity in such a short period and most of the credit goes to common people. So how JIO affect or change the life of the common people of India we go to central park of CP to conduct a survey that how JIO effect the life of common people. In this survey we got good true responds from people.

We conduct a survey that of what age group are more JIO users and by collecting the data we come to know that in this bar around 75% of the people which is of age group 15-35 are having more JIO sims as compare to other age group this age group contain students. There is only 33% of the people which is of age group 36-50 having JIO Sims this age group contains salaried employees and self-businessman and at last only 20% of the people which is of age group 50+ having less JIO Sims as compare to other age groups.

Reliance JIO redefines the mobile experience for its users with several built in applications.
With more than 300 live channels, users will never miss their favorite shows.
They can watch up to 6,000 HD movies on-the-go thanks to JIO Cinema.
JIO Music is a library that offers its users 2.8 million songs.
JIO Mags and News Xpress gives them the access to thousands of latest magazines and newspapers in 10 languages.
JIO Cash will enable users to go cashless while shopping through apps.
And guess what, the total subscription of applications worth ₹15,000 is free for the first year.

Ratings given by peoples to JIO

JIO is on the mouth of everyone and everyone enjoying free data service provided by JIO, is it true? To check out this fact we do the survey on common people that what ratings they want to give to JIO.

In this pie-chart, it clears that 37% of people found JIO sim OK because they are facing some problems (internet and calling) with this sim, where as 34% considered it GOOD as yes, they are facing the problems but JIO also providing free service. 18% of people found it EXCELLENT as they are not facing any kind of problem with it, where as 9% of people found it BAD because they facing lots of problem and at last only 2% of people thinks JIO is WORST this is because bad network problem of JIO.

JIO not only effect common people of India but it also promoting digitalization, the dream of our honorable Prime Minister Mr. Narender Modi. As Mukesh Ambani said, ‘anything and everything that can go digital is going digital.’ The Government of India has been talking about Digital India for some time. Mukesh Ambani said, ‘India is ranked 155th in the world for mobile broadband Internet access, out of 230 countries.’ He added that JIO is conceived to change this. He said, ‘with the launch of JIO, India’s rank will go up to among the top ten. 1.2 Billion Indians cannot be left behind as the world enters a new era.’

Indian will have digital ATMs in their hands. And to support digital Indian reliance JIO came with its digital apps like JIO Money, JIO chat etc. According to Mukesh Ambani by doing demonetization our honorable prime minister Mr. Narender Modi has giving the strongest possible push to digital enable optimal cash economy in India.

Peoples using JIO for Digital Payments

Though our survey we came to know that 62% of people use JIO sim for digital payment and only 38% not use JIO for digital payment.

Through JIO digital enabling transactions will help to create a fair, transparent and strong Indian economy. Indian will have the digital ATM in their hands, from this they can operate whenever and wherever they want. Indians can use JIO money app for digital payments. The decision of demonetization also implement the vision of our PM that is digital India with this one strong step he has brought the all unproductive money to productive use and reliance will help to fulfill the vision of our PM by providing digitalization to India.

FINDINGS:

From our survey, we came to know about many more things, most of the people get JIO because of its free calls, messages and data services. Effect of JIO is more on students as compare to other age groups. After arrival of JIO, now peoples are using digital wallets (JIO cash) for online payments. Not only this, because of JIO, peoples are now more involve in online entertainment services like TVs, Music etc. So JIO plays a vital role in shifting India towards digitalization.

2. HOW OTHER OPERATOR AFFECTED BY OF JIO

#These information are taken from Daily News channels, Google and articles of Economic Times and Times of India.

The arrival of JIO brings the revolution in the whole telecommunication sector and now JIO will become the threat for its competitors. The plan of JIO is to provide High Speed Network to the entire nation. And these plans are much cheaper as compare to other telecom operators. The tariff plans announced by reliance JIO will be a game changer for the telecom industry and are expected to drive greater adoption across data and voice segments but it might also impact the profitability and sustainability of existing operators. JIO offers data transmission at almost four times the speed of 3G and 16 times the speed of 2G. This is expected to cause problems for other players such as Bharti Airtel, Vodafone and Idea, who have paid a huge price to buy the spectrum.

A) Airtel

The impact of Reliance JIO on Airtel is so disruptive that Bharti Airtel chairman Sunil Mittal termed Reliance JIO Infocomm’s voice and data offer ‘unfair’, and said the entire telecom industry was impacted due to the rival’s freebies.

“There is an impact on the whole industry”, Mittal said on the sidelines of the launch of Airtel’s payment bank, “anything being offered free would have an impact on revenue and margins. This is unfair competition.” Bharti Airtel has challenged the free voice and data offer by JIO, and sought intervention of the Telecom Dispute Settlement & Appellate Tribunal (TDSAT), which on January 6 asked the sector regulators to decide on Reliance JIO’s free 4G services within a reasonable time.

Telecom Regulatory Authority of India (TRAI) in October last year, suggested a penalty of ₹3,050 crores on Bharti Airtel, Vodafone India and Idea Cellular for denying adequate connectivity to JIO. Of this, Bharti Airtel’s share was ₹1,050 crores. Bharti Airtel Ltd offered free calls and data to anyone switching to its network, in an attempt to counter free services from Reliance JIO, available until 31 March. Customers can opt for the Airtel offer from 4 January to 28 February. After free calling launched by Airtel, the company has now launched additional data benefits. To be sure, Reliance JIO is offering free voice and data to all JIO customers until 31 March 2017.

B) Vodafone

Not only Airtel but also India’s second largest mobile network operator Vodafone is also effected by the entry of Reliance JIO. After JIO’s Happy New Year Offer Vodafone announced that it was cutting the price of its 4G data by huge 50 percent. In other words, it was offering double 4G data.

“We had recently made incoming free on national roaming across India. Our hundreds of million customers can remain confidently connected and enjoy talking to their loved ones worry free. Our 4G customers will further enjoy the additional benefit of up to free 1GB data along with unlimited calls,” Sandeep Kataria, Chief Commercial Officer, Vodafone India said in the statement. According to Vodafone, “All Vodafone 4G prepaid customers can now avail ‘Double Data’ benefits on existing market pack and will enable Vodafone customers to enjoy and enhanced mobile internet experience”.

C) Idea

Facing stiff competition from new entrance of JIO, first Vodafone then Airtel and now Idea has also updated its existing call plans to match up with JIO. Idea which is the third largest telecom network in India, rolled out free data bundle in the plans for their customers. This comes within few weeks of the incumbents offering similar services to compete with Mukesh Ambani owned Reliance JIO, which has been boasting of getting half million subscribers a day since its launch. According to chief marketing officer of Idea Cellular, Shashi Shankar, “These new plans will further drive 4G penetration amongst users and will encourage idea customers to adopt the companies high speed wireless broadband services, furthering data penetration”. Idea thinks, by providing their customers with easy and affordable solution for their communication and infotainment needs, they can open the door to endless possibility for them.

With Reliance JIO now extending its free services by another three months as part of the JIO Happy New Year Offer, other telecom operators have started launching new plans and recharge packs of their own, offering unlimited voice calls, and various data benefits, in order to retain users.

Airtel launched its free voice call plans across the country. Company has rolled out two packs- ₹145 and ₹345 packs for its users. Under the ₹145 offer, user gets a 300 MB data with 4G phones in addition to free Airtel-to-Airtel calls, both local and STD. User with non 4G handsets gets a data benefit of 50 MB data in addition to free Airtel-to-Airtel calls across India. Similarly, the ₹345 pack offers 1GB data benefit with 4G phones plus free voice calls, local and STD, to any network in the country. Non 4G handset user will get a data benefit of 50MB.

Vodafone also updated its voice call plans and rolled out exciting offers to beat Reliance JIO. Vodafone announced double 4G data for all plans over ₹255. This means that company will offer 2GB of 4G data for ₹255 against the earlier offered 1GB data. Similarly, ₹459 plan will offer 6 GB of 4G data, ₹559 plan 8GB, ₹999 plan 20 GB and ₹1999 plan 40 GB. These plans will come with a validity period of 28 days.

Idea announced the two packs are priced at ₹148 and ₹348. Priced at ₹148, the packs offer free local and STD Idea-to-Idea calls all over India. Users with 4G-enabled smartphones get an 300MB data benefit addition to the voice calls. Those with non 4G handsets can avail a data befit of 50MB. The pack is valid for 28 days. The other Idea voice call plan costs ₹348 and offers free local and STD calls across all networks in India along with 50MB of data benefit. Customers with 4G handsets will also get 1 GB of data in addition. Its validity is also for 28 days.

FINDINGS:

As our second objective, we found that impact of JIO on other operators is very disruptive. JIO force them to bring changes in their plans. After arrival of JIO, other operators changed their plan to stand with JIO because they all know that if they will not make any changes then it will become difficult or impossible for them to be in competition and increase their market shares. That’s why they all changes there plan to satisfy their customers so that they can get their market position back.

3. BUSINESS STRATEGY BEHIND JIO

JIO comes with such a cheap plan and distributing its SIM free of cost that everyone is thinking that there must be a big business strategy behind this and they all are right, Mukesh Ambani is a good player of telecommunication sector and definitely there is business strategy behind JIO. Let study them one by one.

1. With its schemes JIO will attract low quality customers who will jump to other networks once the freebies end. But Reliance doesn’t believe so. It is offering free 4G data which means it’ll occupy the primary sim slot in the smart phones 4G phones. Also, customers will switch to JIO from their broadband or the Wi-Fi services and possibly will stick to it even after the promotion period ends. In addition to that it is offering free calling, so it is aware people will be using the number for calling purposes for the next three months. Three months is a sufficient time span for people to experience the super-fast speed and the quality services and permanently transfer to the network. Let’s assume that if JIO can able to cover 90%of population of India. Then JIO would have acquired more than 70% of the market share. Even if many subscribers leave the association with Reliance, still Reliance would be left with significant market share. What an Idea, Reliance!

2. Mr. Ambani has expressed his plans of to reach 90% of India’s population. The company plans to acquire 100 million subscribers in the first year of its launch. By luring the population with free data and calls for the initial few months, many doubt if this could result in financial gains for the company. But by doing this it is stretching its operational and strategic bandwidth. Let assume that when JIO became paid then 50% of the users opting for ₹149 plan and the remaining for higher price plans, Reliance can easily make ₹400 per customer. If JIO able to active its plan of having 100 million customers, it’ll recover the cost within 5 years and start reaping huge profits after that.

3. Reliance JIO has differentiated its product by setting up a huge bandwidth to handle the traffic of enormous data. And the plans they are offering is at amazingly cheap rate. JIO has an IP network hence all the calls will be routed through internet just like Whatsapp calls and skype calls. And once the huge optical fiber network infrastructure is built, there isn’t any marginal cost for the company for providing call service.

How can JIO make money when they are providing free sims & free services:

JIO makes money with LYF phones

Many of you may be knowing about their LYF phones. Few months ago, purchasing these phones were the only way you could get access to a JIO Sim Card to get their free unlimited preview offer. Nearly all of their phones have very low specs compared to the competition at the price point they sell. The only reason why people bought their phones were because of the unlimited internet plus voice calls preview offer. This was a very clever move by JIO. The reason why there are so many versions of these phones is because of this business model:

1. JIO would go to China and then buy previous generation unsold 4G phones for cheap prices in bulk. No one wants to buy these phones, so obviously, the manufactures will happily sell it for a very low price.

2. Then it is re-labeled and sold in India.

3. A totally outdated phone which no one would otherwise buy is coupled with JIO preview offer and now everyone wants to buy it just for the JIO offer.

4. JIO can now sell these phones and make profit. Plus, they get to test their network and solve the bugs. Plus, they can venture out into the mobile device market.

The real money is in JIO Apps

In JIO’s welcome offer you can only assess your JIO sim by downloading MY JIO application in which there are 14 different apps of JIO which you have to install so if you download 1 application the JIO Company will get ₹25 so if you download all the 14 apps then JIO will get ₹350 per customer. And in play store there is 10+ million download for MY JIO app so you can assume that JIO approximately earn about 3500 million on its welcome offer.

They are currently giving these apps for free till 2018. But, that is done so that they can get maximum users to get addicted to these apps. Then they can start subscription charges for these apps. Instead of paying for your TV service or Movie-DVD or Magazines, JIO wants you to pay them. Apart from that, these apps are locked to JIO network. So, a person using any other internet service won’t be able to use it. Thus, this will force other people into joining JIO. Currently, only Airtel is capable of properly competing with JIO in the 4G market, but they too may not be able to release such apps on time.

Publicity

To increase its publicity JIO offers free sim with free services and everyone wants free things so most of the people start buying JIO sim by this JIO get the publicity and also make a record of having larger consumers within short time period. Now JIO achieve the publicity and for any company who wants to work for long term needs publicity. By this the sales of other operators goes down and sales of JIO goes up, this create a big gap between JIO and its competitors and that’s why JIO can able to increase its shares in telecommunication sector.

CONCLUSION

Through this study, we came to conclusion that

· JIO supports digitalization by launching its app JIO money in which you can do cashless transactions.

· By providing free calls to its customers JIO create strong line of connection because now its customer can communicate anyone and from anywhere without any tension of balance cut.

· JIO effect its operators and brings their sales down.

So, by these all points we clear that JIO is good for our Indian Economy as it supports the dream of our honorable PM, Digital India. Apart from this, it became beneficial for our common people as they are going digital. Through our study, we came to know that yes, our common people facing few problems with JIO but still they don’t want to switch their networks. Because JIO is proving free services. On the other hand, where JIO is beneficial for common people and our Indian economy, it also become threat for its competitors. By this study, we also came to know the business strategy of JIO, that how JIO is making money by providing everything for free. On this basis, we can say that JIO brings revolution in India.

BIBLIOGRAPHY

1. https://www.youtube.com/watch?v=3XOxwaDf72g