Effect of Jio for Indian Telecom Industry

With entry of Jio, Telecom Industry is bound to undergo several major changes. Already, India being one of the least profitable market, is predicted to be occupied with more competition and less profit margins. This is at least what most of the analyst will be telling. The effect is such that, Airtel and Vodafone which are the two largest telecom operators with combined subscriber base of nearly half of Indian Mobile users, are too pushed to combat mode into fight to retain their market dominion status. Especially with Reliance Jio offering free voice calls and charging solely for data, nearly all other telecom operators are forced to shift their business model from voice revenue to data revenue model. With current trial period, Jio has already acquired more than 50 million subscribers.

Till now, most of the revenue of these telecom operators were from the voice segment followed by data segment with shrinkage in messaging base. But with this new model of revenue earning, all telecom operators will have to focus more on data earnings and forgo voice revenues. While most analyst will site it as a bad deal, this may not be so.

Revenue Share from different segments for Telecom Operators

With rapid development in Information Technology and availability of Cheaper Chinese Smartphones, Indian Market has seen rapid growth of mobile users. In fact, internet has been penetrating in India at a rate more than expected. With this expected rate, subscribers in metros or Tier I cities that generate high revenues are moving rapidly to more of data usage than voice usage. Its impact can easily be seen from the declining usage of SMSs, which in Metros are limited to SPAMs and Adverts. Most of the smartphone users are inclined to using more of WhatsApp, Messenger and other Apps for chatting and messaging quickly. With more and more availability of Cheaper Smartphones and increase in literate Mobile users from growing young population, Data usage is almost sure to increase many times whereas usage of traditional voice calls and SMS features will see shrinkage or limited to urgent and official purposes only. Unlike, earlier when Youths used to use Mobiles for talking hours, they are more shifted to long duration calls on WhatsApp or use traditional calls only at discounted rates. While still majority of population live in Rural areas where this penetration of data mayn’t be that lucrative, slowly with boom in digitisation and even the new push given by demonetization, data usages are almost sure to increase many folds than what they are now.

Estimates Demographics of India for Grouping with Age Data

This data boom is not just limited with increase in subscribers of data, but also of data volume. For example, now an average user will need ten times more data then what he/she needed just few years ago. Unlike, in the past, data usage of users is increasing. Now on an average, one requires at least 6 GB Data for a month in Metros to surf all needs if they were to use data from a single source for all purposes and are moderately dependent on digital mode of information sharing. This may not sound like high, yet it’s much more than below 1 GB on average consumption of Mobile Data per user under traditional revenue model.

Per user data need in India in Metros/Tier-I cities

Like every challenge brings new opportunities, this high competition in Data Markets not only bring challenges to Telecom Operators for loss in revenue from traditional voice models, it also brings new opportunities to earn more with better data plans and increase per user revenue with low deviation of average user spending. With plans as ₹100 for all unlimited voice calls and SMS, these telecom operators can generate better revenue from voice usage and focus more on data usage where they can easily earn more with rational pricing of data at ₹30 per GB for high volume users under schemes that requires minimum spending of just ₹100 on data per user. While coming anywhere near this rates would have been a much bigger challenge under earlier market, under renewed competition and shifting of all operators to a common model, this is much assured beneficial model for all except few with limited spectrums of 2G and 3G. To survive under this model, all that will be required will be to have more acquisition of 4G spectrums and few consolidations of markets where, in few circles too much concentrations are in lower spectrum bands.

Rather being threat to telecom operators, this shift of telecom operators may be more of threat to Internet Service Providers as most of population will be entering new world of Internet through Mobile Connections, rather than through traditional ISP. But, in a market where ISPs have limited coverage and resources to scale up their operations to rural areas, telecom operators are easily placed at better place and better space sharing can be managed between telecom operators and traditional ISPs as well. So, under new model of revenue, telecom operators are not going to turn into non-lucrative investments as they are almost sure to remain lucrative segment. Although for few, short term volatilities may be high and few costs as additional SIMs and connections due to shift of users from single mobile subscription to dual subscription will increase; in distinct future they are all to surely benefit from it.

Tags : India ISPISPJioTelecom Operator
Raju Chaurassiya

The author Raju Chaurassiya

Often in a major event, minute details are ignored which are crucial for such events. I love to dig such minute details of the events i focus on. And yes, i love writing a lot!..