Five reasons you should take the Reliance Jio juggernaut seriously

Pranav Dixit August 10, 2016 7 min

You can’t have missed the headlines. At some point in the next few months, after years of being delayed, Reliance Industries, the country’s largest corporate, will launch Jio, a brand new 4G LTE-based telecom network that promises to transform India’s mobile internet landscape in the years to come.  

Jio is expected to kick off a massive price war in both voice and data tariff on a scale that we haven’t seen since Tata Indicom introduced per second billing back in 2009. Even though the company hasn’t announced a date for commercial rollout or even tariffs yet, early adopters and technology enthusiasts who have managed to get their hands on Jio SIMs as a part of Reliance’s promotional three-month preview program are already having a field day doing speed comparison tests and streaming high-definition video on the go without buffering.

Should you buy in to the hype? Here are five reasons why you should take the Jio juggernaut seriously.

#1 Deep Pockets

Reliance chairman Mukesh Ambani has publicly stated that his aim with Jio is to bring India into the world’s top ten mobile internet access markets from its current rank of 150. That might sound like hyperbole, but Reliance is walking the talk. The company has invested Rs. 150,000 crore in Jio so far — much higher than the Rs. 85,000 crore it said it was investing last year — and experts say it will continue pumping in money into the business for the next few years no matter what.

“You need scale in the mobile market to succeed, and getting to that scale is extremely expensive for a new player,” says Tarun Pathak, senior telecom analyst at market research firm Counterpoint. “However, this is India’s second richest company we are talking about. They have deep pockets and they can afford to take a hit for a few quarters with deep discounts and aggressive pricing to make sure they reach that scale at any cost.”

At the end of last year, Reliance began rolling out Jio to its employees around the country, and later expanded the program to include people who bought its LYF handsets and those using select Samsung phones. The target? To have 100 million users on its network within 12 months of launch — nearly a third of Airtel’s customer base.

#2 It’s more than a dumb pipe

Here’s what happens when you have a fast and affordable data network: you need to encourage people to actually use it to its highest potential. This is something that you might scoff at — after all, there are more movies on Netflix and HotStar, more cat videos on YouTube, and more music on Gaana and Apple Music than you can watch and listen to in a lifetime — but think of the million of Indians coming online for the first time who may be (blissfully) unaware of any of this. Having its own content ecosystem riding on top of its own data network is how Reliance plans to hook these millions of people.

“They definitely have ambitions of being more than a dumb pipe that carries data,” says Pathak.

Reliance currently has more than a dozen Jio apps. Some of them, like Jio Drive and Jio Wallet, are pale copies of cloud storage services like Google Drive and electronic payment wallets like Paytm. But last month, Jio released four apps on both Android and iOS that take direct shots at digital entertainment incumbents: Jio Beats competes directly with streaming music services like Airtel’s Wynk Music, Times Internet’s Gaana, and Apple Music; Jio Play with nearly a thousand movies is Reliance’s version of Netflix; Jio Mags, which provides over 500 magazines in dozens of Indians languages on your phone and tablet, competes with Magzter; and Jio On Demand, which offers over 300 television channels streaming live to your devices is poised to make life difficult for smaller players like Yupp TV.

“Instead of waiting for new users to discover how to use the internet in their own time, Reliance is already giving them a stepping stone,” says Viranch Damani, a freelance technology writer who frequently writes about the India’s telecom sector.

In theory, that sounds great — after all, having a major player like Reliance throwing its own offerings into the existing mix will increase competition and be a win-win situation for consumers — but it might give Jio an unfair advantage if it zero-rates its own services for customers on its network by exploiting a loophole in India’s current telecom regulation, which exempts content that service providers offer over a closed intranet — only on their own network, in effect — from being subjected to the ban against differential pricing.

“People are saying that this is a loophole,” said TRAI Chairman R S Sharma in a June interview to FactorDaily. “I am saying that even if this was not there, could you apply this regulation on the non-internet? No.”

#3 4G LTE devices are finally penetrating the Indian market even at budget price points

You can’t get onto Jio’s high-speed 4G LTE network unless you have a phone that supports 4G — something that experts say is a chink in Jio’s armour. That’s true, but 4G-enabled smartphones are flooding the Indian market faster than you think.

According to a CMR India report, 65% of the 23.6 million smartphones sold in India in the first quarter of 2016 were LTE enabled. And compared to last year, LTE-enbaled devices grew a crazy 618% in the first quarter of 2016 compared to the first quarter of 2015.

The icing on the cake? 4G LTE is rapidly becoming a standard on even budget smartphones — you can pick one up for as low as Rs. 3,000.

#4 The hype is real

Even if you haven’t followed the sporadic reports about Jio’s impending launch in the pink papers for over a year now, you can’t have missed the hype bubble that has grown larger and larger as the service has rolled out in its preview form .

A quick search for Jio on social media throws up dozens of search results of users boasting about download speeds on their smartphones that are often many times faster than an average home broadband connection; and technology blogs and websites are cashing in on the hype with helpful posts like about getting a Reliance Jio SIM card to work in any smartphone, and in-depth reviews about Jio apps.

“I think the hype is justified,” says Damani, who has written some of these pieces himself. “People are tired of paying so much money for mobile data right now. Telecom companies in India milk heavy data users way more than they do heavy voice users, since we’ve never had a data tariff war in India. I expect Jio to change that immediately.”

Pathak says that Reliance is expected to open up its preview program that offers free unlimited data, voice, and SMS to Samsung users to more handsets in the near future according to internal data available with his firm, so expect the hype to be turned all the way up to 11 shortly.

#5 Advantage spectrum

Here’s something that Reliance did way back in June 2010: it bought out a company called Infotel Broadband Services for $1 billion, shortly after ending a non-compete pact with brother Anil Ambani.

The move was significant — Infotel was the only firm in India to win low-frequency broadband spectrum in all 22 telecom circles in the country, and Reliance snapped it up within hours of the auction ending.

Thanks to this deal, and some strategic planning and investments over the years, Reliance now has pan-India 4G coverage that exceeds every other operators 4G coverage. Others, however, have already made expensive investments in 2G and 3G first. Airtel, for instance, is investing Rs. 60,000 crore over the next three years to upgrade existing infrastructure to 4G — baggage that Reliance doesn’t have to deal with.

With the caveat that this is oversimplifying things slightly, independent tests in crowded stadiums — an ideal scenario to stress test a network with hundreds of people using it at the same time — have shown that Jio provides download and upload speeds that are significantly faster than any other operator in the country.

Our own testing backs this up too. In New Delhi’s East Delhi neighbourhood, the average download speed on Airtel’s 4G network never managed to go beyond 5 Mbps. On Jio? A consistent 25 Mbps.