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Some thoughts on the Jio Effect, as the free-everything plan nears an end

Reliance Jio has withdrawn its 3-month complimentary offer, days after it had announced it, following an advisory to the company from the TRAI. Under the offer, subscribers on Jio Prime making their first recharge payment of Rs 303 or higher, had gotten another 3 months complimentary services. That is no longer the case. In a note, Jio said on the TRAI advisory that:

“Jio is in the process of fully complying with the regulator’s advice, and will be withdrawing the 3 months complimentary benefits of JIO SUMMER SURPRISE as soon as operationally feasible, over the next few days. However, all customers who have subscribed to JIO SUMMER SURPRISE offer prior to its discontinuation will remain eligible for the offer.

Which means that those 72 million (and more) subscribers who have already subscribed to Jio will continue to get this three month complimentary offer, and those signing up for Jio Prime from the date of withdrawal till April 15th won’t.

Damage already done

The offer, without the three extra months, already has users sign up. The rush was such that Jio’s payment gateway wasn’t able to handle it, and at times, even Billdesk seemed to struggle.

Post the March 31st deadline, Jio extended it by 15 days, and gave the additional carrot of another 3 months free. The result: Jio had been able to convert a majority (at least 72% of its 100 million users) into paying subscribers. A Prime membership costs Rs 99 per year, and gives access to free data (capped at 1GB per day) and free voice calls valid up till March 2018 at an added monthly rate of Rs 303 per month. Those who don’t sign up will have to pay substantially higher rates, as per the previously announced Jio plans. The Prime offer is a conversion and customer acquisition offer: converting free users into paying users.

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Hypothetically, if Jio withdraws the offer within 3 days (the 10th of April), it would have only lost 5 days of user acquisition, and even then, there could now be a mad rush even among those who hadn’t switched.

It’s not clear as to how many of these users actually switched from other operators to Jio, but a Rs 303 per month ARPU is a higher than other telecom operators already.

Some thoughts on the Jio Effect

The fact that Jio has been allowed by the TRAI to give this free data offer for as long as it has, has both positives and negatives:

1. On the positive side: the data consumption has escalated to an unprecedented level, and other competing telecom operators have had do drop rates, which again helps reset the base-line pricing for data services. The one thing that is likely, is that we’ll never go back to the days where telecom operators were leeching off data customers. Lets not forget Airtel’s shameful auto-renewal practices of 2014, where if you finished your quota of data, as a post-paid user, your plan would be auto renewed without consent, and only for the rest of the billing cycle (even if you only had a day to go). And then there is the unreliable “smart bytes” program, which gave users much grief. Users now have cheaper data, telecom operators, now competing with Jio, have been forced to improve their network, and websites have seen a dramatic growth in video consumption.

2. On the negative side: the death of competitors in the telecom ecosystem has been instigated and sped up by Jio. We’re nearing a situation where we have a near-dead Reliance Communications, the MTNL-BSNL combine is largely irrelevant, and only three key telecom operators remain: Idea+Vodafone, Airtel and Jio. It’s not clear whether these players will compete from here on, but in the long term, there will be truce, and truce of the kind that existed between Airtel, Idea and Vodafone, where they were, for the want of a better phrase, frenemies: apparently collaborating to the exclusion of other telecom operators, and then splitting the pie between them. Tariff increases were, not-surprisingly, done around the same time. They had tower sharing, and later on, spectrum sharing. Lest we forget, Airtel, Idea and Vodafone, had 69% of India’s active mobile connection base, and it was BSNL that dropped down the charts.

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The status quo has been changed twice in the time that MediaNama has been around: first, post the 2G scam, when several new telecom operators launched, and Tata Docomo’s per-second-billing brought prices down for all operators – so much so that Airtel started telling investors to look at “revenue per minute” and not ARPU. And now with Jio. The Airtel-Idea-Vodafone gang has come out on top once before – I mean, just look at the state that RCOM and Tata Teleservices are in, and how other telecom operators like Uninor, MTS and Videocon have folded, but Jio is going to be a different battle.

It will serve consumers well for them to remain adversarial, and if they don’t, then it’s important for the government to bring in competition. In the tech space, most companies are playing a last-man-standing game, but that invariably ends up hurting customers and suppliers. The regulator needs to ensure, given that spectrum is a public resource leased to telecom operators, with the intent of maximising citizen benefit, that the space remains competitive.


Written By

Founder @ MediaNama. TED Fellow. Asia21 Fellow @ Asia Society. Co-founder SaveTheInternet.in and Internet Freedom Foundation. Advisory board @ CyberBRICS

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.



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