It’s been a year since RIL started the commercial services of Jio in India (on September 5, 2016, to be exact). And within a year, the company has entirely transformed the telecom landscape in India. One could, of course, talk about increased consolidation, decreased revenue/profitability and far cheaper data rates in this period, but these have been covered amply enough in the past, by this and other websites and publications as well. What has not been covered is the real contribution of the company to the country, which goes well beyond the balance sheet and survey reports!
RIL as a company does not have a very positive reputation in India compared to other conglomerates such as Tata. In fact, RIL has always been associated with crony capitalism, and a bitter feud between the Ambani brothers did not help its cause either. Be that as it may, RIL (not to be confused with ADAG) has gone from strength to strength in terms of profitability and is India’s most profitable private company. Now, I am no RIL fan boy. I have written several articles appreciating Jio’s strategy but have been critical of the company as well. However, as Jio completes one year in the Indian telecom sector, there’s one thing we should all appreciate: the increased availability of the Internet in the country thanks to Jio.
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From being a power but difficult to access the Internet…
The Internet has been a great enabler. According to a McKinsey report, the Internet accounted for 21 percent of the GDP growth of developed countries. Now it is well nigh impossible for anyone to be able to put a numerical figure on the Internet’s impact, considering the second order and third order effects Internet access has on the society. However, almost all of us can agree that Internet access truly helps in the growth of a country and its citizens. This is more so the case for countries like India that have relied upon services exports for their GDP growth rather than manufacturing.
Like many countries, India faces a stark digital divide in terms of Internet access. While most people living in cities and other urban areas have access to high quality wired and wireless internet, people living in villages and other small towns have never had access to the good quality wireless internet. Most of the incumbent telecom operators did a great job in extending voice coverage to villages and other uneconomical areas. However, they never took a similar initiative in case of data networks like 3G and understandably so, considering that voice accounts for the vast majority of their revenue, unlike data which was and still is, less than 25 percent of revenue for most incumbent telecom operators.
There have been efforts by the likes of Google and Facebook to spread Internet access in the country and/or make it more affordable, but they have had their limitations. Facebook’s internet.org initiative was vociferously attacked by Net Neutrality critics, and even a rebranding to Free Basics could not save it. Eventually, Facebook had to shut down Free Basics when TRAI passed an order barring differential data pricing. Google has partnered with Indian Railways to provide free Internet at several railway stations. The initiative has been successful, but by limiting itself to stations, its impact is also limited.
The Government has launched various initiatives to ensure connectivity in rural and other hard to reach areas but none of them have yielded any meaningful results yet. The NFON project which aims to bring fiber broadband to every village in India keeps getting delayed. Meanwhile, there is no way to track where the funds of USOF get deployed. BSNL’s 3G coverage has not increased meaningfully over the past few years, and the carrier keeps promising on 4G, but never delivers.
…to the Mobile Internet for everyone, everywhere!
Considering all this, India really needed someone to step in and improve access to the Internet. While it was known that RIL was planning a pan-India launch with Jio, little was known about the depth of the coverage. However, soon after the company launched Jio on September 5th, 2016, it quickly became clear that Jio’s coverage and its depth were something that had never seen before.
Reports from companies like Open Signal quickly made it clear that at least regarding 4G availability, Jio has unmatched reach and quickly catapulted India to a position where it rivaled developed nations such as the US in terms of 4G availability, even though ARPU in India is far lower.
It must be noted that Open Signal’s data is dependent only on the phones that have the app installed on them. However, that data set is large enough to draw meaningful conclusions. As can be seen from the images above, Jio’s LTE availability was the same as T-Mobile’s in the US. Jio did not just launch an extensive 4G network in India but in the process made several other incumbent telecom operators speed up their 4G roll out as well.
Not just networks, a phone too!
But an extensive 4G network alone was not enough as smartphones were also quite expensive for people living in rural India. To tackle this issue, Jio launched the JioPhone which is a 4G VoLTE feature phone that is effectively free and requires a one-time deposit of Rs 1500. Once the deposit is made, users can use the JioPhone by recharging with an array of data sachets ranging from as low as Rs 24 to Rs 153.
To call the JioPhone a hit would be an understatement. The phone is expected to have touched almost 6 million pre-bookings, and pre-bookings were so huge that Jio has had to suspend them temporarily. Samsung was the largest smartphone vendor in India last quarter and shipped close to 6.72 million smartphones. While Samsung basically shipped that in 3 months, Jio managed to rack up 6 million pre-bookings for the JioPhone with an advance of Rs 500 paid on each pre-booking. The time it took Jio to rack up 6 million pre-bookings was less than 24 hours.
JioPhone’s utility goes beyond the price. While with each iteration Google makes Android more functional for power users, it also ends up making it more complex for first-time users. Give someone who’s used a feature phone all their lives a smartphone running Android Oreo or Nougat, and I am sure they would have a hard time dealing with it. The JioPhone, on the other hand, is by design supposed to be something that feature phone users can directly jump onto without any hesitation.
While the Government keeps talking about projects like Digital India, it is companies like RIL that are truly making it come true. With the kind of coverage that Jio has and the kind of device JioPhone is, I can absolutely imagine some farmer in some remote corner of the country benefitting from mobile Internet connectivity.
Happy birthday…and thanks!
I am a firm believer that Internet access can play a pivotal role in helping people change their lives for the better, especially in services led and mobile first economies like India. The kind of opportunities that Internet access can open and the kind of services that Internet access can make accessible are immeasurable. In the bigger picture over here, India has already benefitted from Jio. Jio already has an extensive pan India 4G network up and running, JioPhones are expected to be delivered from September 21 onwards. Anyone who has lived in an area that did not have proper Internet access or could not afford smartphones can now do so thanks to RIL. Mind you; it remains to be seen if RIL can earn a decent return on the USD 30 billion it has invested in Jio till now.
It would be naive to suggest that Jio is not doing this to make money. At the end of the day, Jio is a publicly listed private company whose primary aim is to make money for its shareholders. However, one must also consider the other side. RIL as a company has never been good in B2C initiatives. Reliance Retail is yet to make a profit despite being in operation for more than a decade. Meanwhile, RIL’s strength in B2B areas is so good that its oil refining and petro chemicals businesses generate enough profits not just to absorb the losses of other divisions but also make it the most profitable company on a net basis.
Had Mukesh Ambani wished, he could have easily invested the USD 30 billion he invested in Jio in some other B2B initiative where the company’s strengths lie. However, he did not. And instead invested that USD 30 billion in telecom, a field that is so known for its poor ROI that Sunil Mittal once said that he would get better returns if he had put his telecom investments in a bank.
We do not know how profitable his investments will be. But we – and we suspect most of India – is not complaining.
And as Jio completes one year of service, we can but echo the sentiments of a number of our readers by using two words: