Issues With Reliance Jio
ISSUES WITH RELIANCE JIO 1. Challenges in Technology It is true that 4G ecosystem is developing quite well, but it cannot be denied that it is far from being mature. Also, Voice Over LTE (VoLTE) is still relatively new and might face initial teething challenges. Jio would be using a combination of VoLTE and Circuit Switched Fallback (CSFB) to offer voice to subscribers, which might lead to a some bit of technical issue initially and this is the reason why the company has delayed the commercial launch of its 4G services. Reliance Communications and Reliance Jio are close to signing a spectrum sharing and trading agreement, which might further lead to technical and interoperability issues.
2. No first mover advantage Initially, when Reliance Jio had procured pan-India spectrum of 2300Mhz , it had an advantage to a very large extent. Aggregated licensing and auctions have made sure that incumbents are in a fairly strong position where spectrum is concerned. Also, Bharti Airtel, Vodafone, and Idea Cellular have already launched 4G services. Bharti Airtel would have gained a fair bit of valuable understanding the knowledge of 4G network since it was the first one to launch it in India.Hence, Reliance Jio has got deprived of it’s first mover advantage although being first one to initiate the technology in India. 3. The Device’s Problem Reliance Jio plans to differentiate it’s product on the basis of VoLTE, which requires a different device. Availability, accessibility and pricing of these devices is going to play a major role in the success of Jio. The company is trying to resolve this issue by launching dual-SIM devices, that would enable a customer to not just use the telco’s network, but also other established networks. However, this require cooperation from other service providers to share the network from same towers in particular range of locality. 4. Core addressable market Although China and India have almost identical 4G networks, there has been a steady flux of 4G devices in India. The circulation of 4G devices has been gradually improving but the 4G enabled devices right now in India is still small in number. This indicates that the core addressable market share for Reliance Jio is very small and telecom is a game of abundance . Airtel, Idea and Vodafone all have 60% + market share together, whereas in case of Reliance Jio, the core addressable market is just a mere 1.5% as of now. This is mainly because of the complexity of devices and technological issues mentioned above.
5. Spectrum ecosystem Apart from core addressable market problem, there exists issue of ecosystem. Currently, Reliance Jio has spectrum in three bands namely 1800 MHz band, 2300 MHz band and 800 MHz band. The first two bands have less penetration in terms of coverage. However, this 800 Mhz band is absolutely crucial for Reliance Jio to have a robust coverage. But still recent 4G smartphones in India support 2300 MHz and 1800 MHz and very few support the 800 MHz band. It is the biggest challenge for Reliance Jio to align the network to align it’s emerging 4G technology with spectrum which has large penetration compared to others. 6. Stiff Competition Reliance Jio has indicated that it would take three more years from 2015 to achieve its goal of 100 per cent network coverage in the country. That still gives a lot of time for its competitors Bharti Airtel, Idea Cellular and Vodafone, apart from regionally strong players such as Reliance Communications, Tata Teleservices and Aircel to strengthen their footprint in spreading its network coverage. The revenue market share among telecom operators has become extremely skewed towards the top three players . Bharti Airtel, Idea Cellular and Vodafone control nearly 75 per cent of the revenue market share among telecom players. Besides, it also lost its chance of being first mover in emerging 4G technology, which in any way does not pave its way to achieve its target. 7. Failed promotional strategy Reliance Jio tied up with facebook to support the initiative of Free basics in India. With this Facebook partners with Reliance Jio, emerging 4G telecom network service to access the social networking site for free if subscriber is using Reliance Jio network. This costs reliance some $14 billion to set up. However this influenced the controversy of violation of net neutrality. TRAI was concerned about fostering equal level in telecommunication sector which is legitimate when telecom ecosystem includes number of service providers. This was supposed to create significant entry barriers which can harm competition and innovation. It would deprive the opportunity to new and emerging service providers with better insight and technology. 8. Low Average Revenue per user (ARPU) Reliance Jio face daunting task of convincing, bundling and subsiding 4G users to adopt new handsets and hence it could face problem in adopting subscribers due to low ARPU. This is mainly due to losing the opportunity of being first mover in spite of such a large investment. Reference:
1. http://www.ibtimes.co.in/low-arpu-adoption-4g-volte-handsets-obstaclesreliance-jio-gain-customers-clsa-656345#vmj2CXSiIbe1pBUW.97 2. http://telecomtalk.info/here-are-the-bumps-in-the-road-that-reliance-jio-mightface/148460/