Reliance Industries’ 4G LTE launch of their Jio offering sent ripples of excitement across India, marketing it as the cheapest data in the world. But is there really any substance beyond the seemingly false facade of dirt cheap prices, or is it just bait for Mukesh bhai to hook you into their closed MyJio ecosystem?
Their infrastructure growth is unparalleled
The sheer size of Reliance Industries means they’re one of the companies capable of creating vast tracts of infrastructure across the country. They’re able to create networks at a rapid pace, and with Jio they’ve done so across the country with 90,000 4G towers and over 250,000 kilometres of fibre optic cable. Their claims for being the “largest 4G provider in the world” do garner some merit, as the infrastructure they have access to, which includes Reliance Communications’ networks, is unprecedented. Combined with the fact that they’re the only company to have unfettered all-India 4G access means that they certainly have the capability to hold true to their word. Let’s not forget that all this comes from a man that invested heavily in everything from petrochemicals to retail, and delivered on those seemingly risky propositions.
What they’re really selling
One of the defining features of the Jio launch was Reliance’s suite of apps that are purportedly going to cost Rs. 15,000 per year for a subscription that’s free for the first year. For this they’ve developed a whole array of apps that are set to fulfill the communication and entertainment needs of every consumer. The MyJio suite of apps offers a payment gateway, a music streaming service, instant access TV, free cloud storage and another WhatsApp clone. A veritable potpourri of services to compete against well established Internet behemoths. But hey, we don’t judge. The more competition, the better, except…
Reliance wants to sustain their closed app ecosystem
The way it’s going to differ is that Reliance has inherently created a closed ecosystem, with complete autonomy over their services, and that means complete control. MyJio apps only work over 4G LTE, which means that even if you have the apps installed on a phone connected to your non-Jio Wifi, they won’t work. Usually content services that do really well, like Netflix, Spotify and Hotstar are all competing against each other on an open platform. It’ll be interesting to see if Reliance is able to pull enough strings to firstly, cope with the increasing demand for consumers’ access to content at their fingertips and secondly, succeed in keeping its millions of users boxed into the Reliance ecosystem. If they succeed in the latter, Reliance could find themselves solidifying their existing foothold in both the entertainment and telecom industries.
Still, there’s something fishy about this…
Reliance is ruthless in its business practices. It employs a loss-leading market strategy without making significant losses. And they’re able to do to that only because they throw their weight around in every cycle of the supply chain, squeezing every little bit out of suppliers and middlemen to maximize margins before passing the cost benefit on to the consumer. The result is, of course, a satisfied consumer, perhaps one of the causes for Indians seemingly placing their trust in big brands like Tata and Reliance over newer, less established players in any industry.
But even this doesn’t stop Jio from slipping in some deplorable clauses into the fine-print. Their 28 day billing cycle means the consumer is essentially billed 13 times in a 12 month year. The “unlimited” 4G data transfer for the first three months is capped at 4GB a day; enough to run out of if you watch a few HD Netflix movies. Unlimited night data only applies for a measly 3 hours, from 2AM to 5AM. Once again, this is a symbol of Reliance’s strategy of playing the game in broad brush-strokes, capturing media and public attention through its huge market presence, but still slipping in their globules of greed.
The Rift is a factor you can’t ignore
What separates Reliance’s drive in this particular business has a lot to do with its past. Imagine your father owning a large mansion, with you and your brother inheriting it after its death. You both get ten of its twenty bedrooms, but he gets the prime sea-facing cardinal bedroom. In a booming telecom industry, Reliance Communications was handed over to Anil after the split, and RIL is sure to take this industry back in its grasp with a vengeance.
Despite all its flaws and merits, one thing that’s certain about Reliance is their impact on the market. Any industry they enter undergoes price erosion, increased competition and probably changes the landscape of that industry forever. If there’s anything Mukesh Ambani can provide through Jio, it’s a wake up call to all other players in India’s telecom industry.