It’s been close to a year since Reliance Jio launched in India and within this time, the company has turned Indian telecom on its head. Tariffs have reduced dramatically, telecom operators are either merging with each other or being acquired, 4G roll-outs in the country by various telecom operators have reached a fever pitch, and to top it all off there is soon going to be a Rs 1500 4G VoLTE feature phone available to the general public which is practically free.
With greater data comes…lesser speed!
But there has also been one less than pleasant consequence of all this – network speeds have dramatically reduced all over the country, and the effect is particularly felt in metros and other Tier 1 cities. This is to be expected as, after Jio’s launch, data rates in India have been among the cheapest in the world. As India is a mobile-first country, the reduction in data rates led to an exponential increase in mobile data carried in the country. People who generally consumed 1-2 GB of data per month started consuming 1-2 GB per day after Jio’s launch. In fact, Jio as a standalone telecom operator has the cheapest data rates in the whole world and at the same time carries more data than any other telecom operator in the world. It is not only Jio that is carrying more data than before, but most other telecom operators have also reported a remarkable increase in data carried on their networks (hardly surprising, as many of them cut rates to keep up with Jio). For example, both Airtel and Idea have posted a 100 percent quarter-on-quarter increase in terms of data carried on their networks in the latest quarterly results.
While the data carried on the networks of Indian telecom operators has increased, the spectrum and towers in operation have more or less remained the same. This has meant that the increase in data consumption has taken a direct toll on the speeds of cellular networks in the country, which is quite visible in metros and Tier 1 cities, where getting just 1-2 Mbps on a 4G connection has become quite common now.
Addressing the need for speed…
There are two ways to restore speed in the country, assuming data consumption continues to grow. The first solution would be to bolster the capacity of cellular networks by asking TRAI to make more high band spectrum available for auction and building many more macro cellular towers as well as small cells. However, given the economics of the Indian telecom industry which relies upon very low ARPU, such an arrangement might not be economically viable.
The other solution would be to bolster the penetration of fixed broadband in the country, which, at present levels, is very low. Most of the data consumption happening on cellular networks in India is because of a select group of individuals who are power users, and the concentration of these power users is especially high in metros and Tier 1 cities. This is exactly why you might find good speeds when you enter a village or a Tier 3 town but will see speeds dip in a city or a metro. In my own personal experience, Jio’s cellular speeds have been excellent in several small towns that I have visited but have struggled in cities. What this indicates is that while the present cellular network capacity on an average might be ideal, there is a serious need to fulfill the appetite of power users in cities who are clogging up precious bandwidth on cellular networks and bringing down speeds.
…by getting those wires back!
This is where fixed broadband comes in. Fixed broadband is the best way to serve the needs of power users in metros and cities. Jio’s rock bottom data prices have revealed that there’s a huge appetite for data in India that needs to be fulfilled. Now, while wireless will certainly be an important avenue for fulfilling this, it is high time that efforts and attention be put towards the wired broadband segment as well. High deployment costs and the unwillingness of companies to invest in fixed broadband infrastructure has left the fixed broadband market in India relatively underdeveloped compared to the wireless broadband market. Considering the kind of investment Jio has made in building a world-class 4G network in India, it is widely expected that the company will do the same in the fixed broadband market as well.
At the 2017 AGM, along with the announcement of the 4G VoLTE feature phone, Mukesh Ambani also announced that trials for Jio Fiber are underway and the service would be commercially launched in the coming months. Just like the wireless market, Jio is rumored to be planning on giving a free three-month trial for its wired broadband service, and then provide great speeds and great FUP at highly competitive rates. The bet over here is that just like Jio managed to convince the entire wireless industry into making 1 GB/day the norm from 1 GB/month, the company could pull off something similar in the wired broadband market as well. There are high hopes from Jio Fiber, and people are hoping it will totally change the current data caps and speeds to quite an extent.
One of the biggest impediments to the adoption of fixed broadband in India has been its high initial cost. Fixed broadband rates in India start anywhere from Rs 500 and go all the way up to Rs 10,000. Compared to that, wireless broadband is available for as cheap as Rs 8 /day in some cases. While I doubt that Jio would want to follow a sachet-like approach in the case of fixed broadband where they reduce the cost of start up plans, I firmly believe the company has one trick up its sleeve to at least improve the value proposition of Jio Fiber.
Just like Jio has used Jio TV to fill in the content void in case of Jio Phone, I believe the company would use the same Jio TV app to improve the value proposition of Jio Fiber. Jio Fiber is rumored to come with a router, and for some extra money, a user would also get a NVIDIA Shield based STB through which they can not only watch all their normal television content using the Jio TV app but also binge-watch Netflix, Hotstar, and other such apps. Jio is thus taking a clear aim at DTH companies. There are currently close to 60 million DTH connections in India, at least three times more than the number of wired broadband connections, which are around 20 million. This leaves a void of 40 million people. If Jio can convince even a fraction of these 40 million people to sign up for Jio Fiber and switch from their existing DTH provider, it could significantly expand the fixed broadband market for itself.
Will the Jio magic work again, minus wires this time!
Jio changed the Indian telecom market with its radical data plans. People now no longer have to think twice before installing a graphics rich game or watch a YouTube video on their mobiles over a data connection. So it is hardly surprising that many expect the company to pull off something similar in the wired broadband market, where India trails rest of the world. The future adoption of technologies like AR and VR in India depends heavily on a solid fixed broadband infrastructure, as 5G is quite some time away. Will Jio bring its magic to the wired Internet? Who would dare bet against it?